Establishing a Charitable Trust in Ireland
Since the enactment of the Charities Act 2009 any charitable organisation that wishes to operate in the State is required to register with the Charities Regulatory Authority (CRA). This applies not just to charitable organisations such as Companies Limited by Guarantee but extends also to Charitable Trusts. An example of a Company Limited by Guarantee with a charitable objective includes organisations such as Cystic Fibrosis Ireland, Gorta and Concern. It must be noted that the while the Charities Regulatory Authority will determine whether or not an organisation is a charitable organisation, it is a matter solely for the Revenue Commissioners to determine whether an organisation is entitled to the various tax exemptions available to charities. The mere fact that an organisation does not generate a profit will not automatically entitle it to charitable tax exemption. Rather, the objects and actual activity of the organisation will be the primary focus of the Revenue Commissioners in assessing the organisations entitlement to tax exemption.
A Charitable Trust is defined in the 2009 Act as a trust established for a charitable purpose. It requires the trustees to apply the property of the trust to the furtherance of its charitable purpose. It follows that the trustee is the legal owner of the property and is bound by the terms of the trust to apply trust property for the benefit of the beneficiary. Examples of a Charitable Trust include the Irish Heart Foundation and Leopardstown Park Hospital Trust.
There are four classes of trust which have been accorded charitable status under Irish law; trusts for the, (1) relief of poverty, (2) advancement of education, (3) advancement of religion and (4) one which is beneficial to the community as a whole which does not fall under the other three headings.
In the recent case of In the matter of the Charities act 1961 and in the matter of an Application by Christopher Carolan Executor of the Deceased’s Will v Gerald Jordan, Dorothy Keegan and James Jordan (unreported) [ 2014 ] IEHC 678, the presiding High Court Judge set out succinct examples of what would constitute a valid charitable trust in Ireland. He held that “[t]rusts for charitable purposes in the legal sense include trusts for the relief of aged, impotent and poor persons and such objects as are analogous thereto, and there can be little doubt that a trust for the relief of poor, aged, maimed and infirm officers and soldiers would ordinarily be regarded as a valid charitable gift.”
This case concerned the application of the doctrine of cy-près to the last Will and Testament of the deceased. It was held that the wording of the will was not sufficient to infer general charitable intention and the court could not apply the doctrine of cy-près, resulting in the residuary estate of the deceased being distributed in accordance with the provisions of the Succession Act 1965.
In registering a Charitable Trust applicants must disclose the charitable purpose for which the trust is to be established. The “charitable purpose” is the benefit it is intended to bestow on the proposed recipient. Under the 2009 Act, it is essential that the Charitable Trust is of i.e. not for a particular individual or individuals.
In the case of Southwood v Attorney General, an English case concerning the establishment of a Charitable Trust for the advancement of education in the area of militarism and disarmament, Chadwick L.J. held that “it is not enough that the objects should be expressed to be the advancement of education; it is necessary that the advancement of education in the manner intended should promote public benefit”. In circumstances where the intended beneficiary is an individual, the appropriate trust to establish is a Discretionary Trust as opposed to a Charitable Trust.
What constitutes “public benefit”? The authorities on this suggest that there must be a substantial amount of potential beneficiaries. There are exceptions to this rule such as trusts established with the intention of bestowing a benefit on members from a particular section of society. In this instance, the potential number of beneficiaries must be determinable. An example of such a trust is the Irish Rugby Football Union Charitable Trust which provides financial assistance to individuals who are permanently disabled as a result of an injury sustained in rugby. Such financial aid goes towards medical and care expenses necessary for the injured individuals.
Alban O’Callaghan © McKeever Rowan 16th July 2015
This article is a general review of the law on the subject and is not intended to be a complete statement of the law. Specific legal advice must be sought on a case by case basis. For further information please contact Helen Dillon at firstname.lastname@example.org or Alban O’Callaghan at email@example.com.
T: +353 (0) 1 670 2990
F: +353 (0) 1 670 2988