charitable trusts

Charitable trusts are trusts which have as their objects, the benefit of the general public or a significant portion of it.

The two essential features of charitable trusts are that, before a trust can qualify as a charitable one, the element of public benefit must be present and the class of the intended beneficiaries must not be on the basis of personal relationship. If these elements are absent in a trust, it cannot be regarded as charitable. However, trusts for the relief of poverty are exempted from this requirement of public benefit because such trusts may be restricted to family members or other restricted class of people.

Charitable trusts is classified into the following:

• a. Trusts for the relief of poverty.
• b. Trusts for the advancement of education.
• c. Trusts for the advancement of religion.
• d. Trusts for other purposes beneficial to the community.

The following are the advantages of charitable trusts:

• a. Trusts will fail if the purpose is not stated with sufficient certainty. This rule does not however apply to charities. Provided the wording of the gift allows it only to be spent on charity, it does not matter that the charitable purpose is only vaguely stated, or that no purpose is stated at all. Moggridge v Thackwell (1792) 1 Ves Jr 464.
• b. Charities are not bound by this rule and may therefore last forever.
• c. Charities enjoy considerable tax advantages and this is often a significant motive in seeking charitable status.