CHARITABLE TRUSTS:

A Comparative Study of India, United Kingdom and the United States

I. INTRODUCTION

Charitable trust is a form of trust in which the donor (trustor or settlor) places substantial funds or
assets into an irrevocable trust (a trust in which the basic terms cannot be changed or the gift
withdrawn) with an independent trustee, in which the assets are to go to charity on the death of
the donor, but the donor (or specific beneficiaries) will receive regular profits from the trust during
the donor's lifetime. The IRS will allow a large deduction in the year the funds or assets are
donated to the trust, and the tax savings can be used to buy an insurance policy on the life of the
donor which will pay his/her children the proceeds upon the donor's death. Thus, the donor
(trustor) can make the gift to charity, make a return on his/her money and still arrange to make a
large gift at death to his/her heirs. The disadvantage is that the assets are permanently tied up or
committed.
Trusts are not the only legal structure used by charities. Whilst older charities are often trusts ,
modern charities are more likely to be companies limited by guarantee.1 The third common form
of structure used by charities is an unincorporated association. In addition, charities may exist as
friendly societies, industrial and provident societies or as a corporation. Whatever the structure
adopted, a charity is subject to the controls and limitations imposed by charity law. Charity law
is both case law and statute based with statute law in particular affecting those charities
registrable with the charity Commission. 2So that, for example, all charities are required to keep
accounting records 3and the charity Commission have wide powers to intervene in all save
exempt charities if there has been misconduct or mismanagement or it is necessary to act to
protect the property of a charity.4 In addition, all registrable charities with an income above
£10,000 a year are obliged to send an annual report, with accounts, to the charity Commission.5
It is thus immediately apparent that charitable trusts operate in a different legal environment to
family and commercial trusts. Charities enjoy considerable tax benefits. For example, they are
not liable to income tax on income from land, investments, annual payments and primary
trading6 nor capital gains tax on gains applied for charitable purposes only.7 There are also a

1
See Charities: A Framework for the Future (1989) Cm 694, p. 3
2
All charities are registrable save exempted, excepted and those with no land or permanent endowment and income of less
than £1,000 a year. [Charities Act 1993, s. 3]
3
Charities Act 1993, ss. 41(1), 46; Companies Act 1985, s.221.
4
Charities Act 1993, s.18.
5
Charities Act 1993, s.45.
6
Income and Corporation Taxes Act 1988, s. 505.
7
Taxation of Chargeable Gains Act 1992, s. 256(1).

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number of tax provisions to encourage donations to charity. For example, a donor pays no
income tax on income paid to a charity under a deed of covenant lasting more than three years8
i
and no capital gains tax on a disposal of an asset to a charity charities thus operate in a
different fiscal environment to family and commercial trusts
Charitable are public trusts not private trusts. They provide benefits for the public; any private
benefit must be incidental to the public benefit. 9Although a charity may be endowed by a private
individual or individuals, a large number of charities receive their funds from the public whether
in response to appeals or as the consideration for service provision. charities do not exist to
make profits for participators or to provide income for specified private individuals; any surplus
which is made must be applied for the public charitable purposes. Charitable trust thus operate
in a very different social context from family and commercial trusts.
The unique position of charities was emphasized recently by Mummery L.J. in Gaudiya Mission
v. Brahmachary10 when he said
"Under English law charityhas always received special treatment. It often takes the
form of a trust; but it is a public trust for the promotion of purposes beneficial to the
community, not a trust for private individuals. It is, therefore, subject to special rules
governing registration, administration, taxation and duration." 11

II. CHARITABLE TRUSTS IN GENERAL

A charitable trust is a trust established for charitable purposes. Charities may take the form of
charitable trusts, companies or unincorporated associations. In general the same rules of trust law
apply to charitable and non-charitable trusts. However some special rules apply only to charitable
trusts. Details will vary between different jurisdictions. However at common law the most important
of these special rules for charities, which continue to apply in most trust law jurisdictions, are as
follows:
1. charitable trusts are exempt from the rule against perpetuities, which (in short) would
otherwise require a trust to come to an end after a certain period. Charitable trusts may
continue indefinitely;

8
Income and Corporation Taxes Act 1988, s. 660(3).
9
Williams Trustees v. I.R.C. [1947] A.C. 337 at 457; Royal College of Surgeons of England v. National Provincial Bank Ltd
[1952] A.C. 631.
10
[1997] 4 All E.R. 957.
11
Ibid

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 2. charitable trusts come under the doctrine of cy pres, under which (in short) if the charitable
purposes of the trust cannot be fulfilled, then they can be replaced by new and more
appropriate charitable purposes;
3. charitable trusts are formed for charitable purposes; normally trusts must be for the benefit
of a beneficiary or a class of beneficiaries, and non-charitable purpose trusts are normally
(outside of specific exceptions) void; and
4. charitable trusts do not fail if their objects are insufficiently certain.

Doctrine Governing the Charitable Trust

In common law jurisdictions the Cy-près doctrine (pronounced as "see-PREH") is a legal doctrine
of the Court of equity. The term can be translated (from French to English) as "as near as
possible" or "as near as may be."12
The Cy-près doctrine allows the Court to amend the terms of a charitable trust as near as possible
to the original intention of the testator or settlor, where the original intended purpose is impossible,
impracticable or illegal. This prevents the trust from failing.
A typical example where a court would apply Cy-près would be a trust established to turn public
opinion against slavery. Once slavery was abolished, the trust's stated purpose had become
impossible to effect. The court will then modify the particular purpose of the trust, leaving it within
the same general charitable purpose.
This is exactly what occurred in the leading American case of Jackson v. Phillips.13 There, the
testator bequeathed to trustees money to be used to "create a public sentiment that will put an
end to negro slavery in this country."14 Thereafter slavery was abolished by the Thirteenth
Amendment to the United States Constitution. The funds were nevertheless applied Cy-près to the
"use of necessitous persons of African descent in the city of Boston and its vicinity."15
In the United States there is a Uniform Trust Code ("UTC"), which is a model code that various
jurisdictions (e.g. States) may adopt by statute.The UTC codifies that Cy-près applies only to
charitable trusts where the original particular purpose of the trust has become impossible or
impracticable, and the terms of the trust do not specify what is to happen in such a situation.The
UTC provides, in part, that "if a particular charitable purpose becomes unlawful, impracticable,

12
Black's Law Dictionary, p. 349.
13
Jackson v. Phillips, (1867) 96 Mass. 539.
14
Id. at 541.
15
Id. at 597

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impossible to achieve, or wasteful ... the court may apply Cy-près to modify or terminate the trust
... in a manner consistent with the settlor’s charitable purposes."16
However, the UTC further provides that the court may not apply Cy-près where "[a] provision in
the terms of a charitable trust ... would result in distribution of the trust property to a noncharitable
beneficiary" and also that Cy-près may not be used to violate the rule against perpetuities.17

III. CHARITABLE TRUSTS IN ENGLAND

The development of charities and their regulation in England may be treated as having four
stages; (1) the period before 1601 when charities were enforced by chancery but there was little
or no legislation in aid of their enforcement; (2) the time between 1601 and 1812 when the
principal governing legislation was the Statute of Elizabeth (43 Eliz. c. 4, 1601) and efforts were
made to investigate and secure the enforcement of idle charities through commissions and orders;
(3) the years 1812–1853 during which there were enacted the Charities Procedure Act of 1812
which was intended to simplify proceedings for enforcement, and the Charitable Donations
Registration Act of 1812 which unsuccessfully attempted to secure the registration of charities in a
governmental office, and during which commissions attempted to list existing charities and certify
to the Attorney General those needing attention; and (4) the period from 1853 to date during which
the Charitable Trusts Act of 1853 and its amendments and the Charities Act of 1960 have been in
effect and have established an administrative agency to aid in the supervision and enforcement of
charities, namely, the Charity Commission. The Commission has established a register of
charities and endeavored to secure the execution of such gifts through consultation with the
trustees, the issuance of orders, and court proceedings. Reports are required to be made by
charities to the Commission.18
The preamble to the Statute of Charitable Uses19gave illustrations of then current charitable trust
purposes but was not intended to set forth an exhaustive list of trusts then existing or which legally
might be created. It has been considered of such importance in exhibiting the spirit of charities to
warrant saving it from repeal when the remedial part of the statute was abrogated.20It might well
be treated as showing the kind of objects which in the seventeenth century were regarded as of
social benefit, but surely could not reasonably be considered as a definitive measure of twentieth
century social purposes.

16
Section 413(a) of the Uniform Trust Code.
17
Section 413 (b)of the Uniform Trust Code.
18
See Report of Nathan Parliamentary Committee, No. 8710 (1952).
19
43 Eliz. c. 4, 1601.
20
Mortmain and Charitable Uses Act 1888, 51 & 52 Vic. c. 42, § 13.

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The remedial portion of the Statute of Elizabeth permitted the Lord Chancellor to use the
machinery of the established church and private persons to inquire into abuses of charities and
attempt to rectify them. It was obviously unfitted to American conditions and is no longer in accord
with the spirit of modern England.
Although for a short time at the beginning of the nineteenth century some doubt was expressed
whether charitable trusts had any standing in equity outside of the Statute of Charitable Uses, and
therefore were not wholly dependent on that act for their existence,21it soon became clear that
equity had compelled performance of these charities before 1601, that their recognition and
enforcement was a part of the inherent jurisdiction of equity, and that the famous statute was
merely intended to recite some of the common charitable objects of that day and to provide new
machinery to save them from neglect and violation. An early English text writer22affirms the
existence of charitable trusts as enforceable equitable institutions before 1601.23 Dicta of various
judges24expressed the view that equitable jurisdiction over charities antedated the statute.
Decisions in the early nineteenth century enforced charitable trusts which were founded prior to
1601;25 Lord Chancellor Sugden took jurisdiction over an Irish charity, although the Statute of
Charitable Uses was not in effect there;26 and the Commissioner of Records in 1841 printed
records of fifty suits in chancery begun prior to 1601 in which relief was given for failure to execute
charitable trusts.27 Shortly thereafter the Supreme Court of the United States reviewed the
situation and abandoned an earlier opinion28that charities depended on the statute for their
existence. In an illuminating opinion by Mr. Justice Story, the Court held charitable trusts were
enforceable by chancery before 1601 and hence formed a part of American jurisprudence, even in
a jurisdiction like Pennsylvania which had not taken over the Statute of Charitable Uses as a part
of its law.29 Similar views have been expressed by modern English authorities on the subject.
Two English acts passed in 1812 provided summary procedure for the enforcement of Charities
by chancery, on the petition of two individuals, with the approval of the Attorney or Solicitor
General, and required the registration of all charities in a county office.30

21
Trustees of the Baptist Association v. Hart's Ex'rs, 1819, 17 U.S. (4 Wheat. 1), 4 L.Ed.2d 499.
22
Duke, Charitable Uses, 163, 359, 1676.
23
Charities in Tudor and Stuart times. Keeton, 26 Sol. 181.
24
Eyre v. Countess of Shaftsbury, 2 P.Wms. 119.
25
Atty. Gen. v. Skinners' Co., 2 Russ. 407.
26
Incorporated Society v. Richards, 1 Dru. & War. 258,
27
Vidal v. Girard, 1844, 43 U.S. (2 How.) 127.
28
Philadelphia Baptist Ass'n v. Hart, 1819, 17 U.S. (4 Wheat.) 1.
29
Vidal v. Girard, 1844, 43 U.S. (2 How.) 127.
30
Charitable Donations Registration Act 1812, 52 Geo. III, c. 102.

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From 1812 to 1853 various statutes were passed facilitating inquiries into the state of charities.31
In 1853 a comprehensive Charitable Trusts Act32 was enacted which thereafter was frequently
amended. In 1925 the original act and amendments were consolidated into the Charitable Trusts
Acts of 1925.33 By these statutes a Board of Charity Commissioners was set up to supervise and
enforce charitable trusts, with some exceptions. The board had both administrative and judicial
powers. Formerly, its secretary was the official trustee of charity lands, acting in cases of
vacancies or as a substitute, but generally not superseding the trustee selected by the settlor. The
board could examine witnesses and demand accounts, give advisory opinions, supervise
administration, approve and establish schemes, and vary the execution of the trusts. The judicial
powers of the board included the powers of a court of chancery in cases where the annual income
was less than ₤5850, and similar power in larger cases if the trustees applied for the aid of the
board. The board was supposed to care for non contentious cases. Only the more difficult and
disputed cases were left to the courts. As a court the board had power to punish for contempt.
In 1950 a parliamentary committee (known as Lord Nathan's Committee) was appointed to
consider the status of charities and of their administration. It made a report in 1952 which contains
a valuable and exhaustive discussion of the history of charities in England, recommendations for
change which had been submitted, and the views of the committee regarding such suggestions.
As a result of the Nathan Committee Report the entire law with regard to charities was revised and
codified in Charities Act, 1960. The Charity Commissioners were continued and an official
custodian for charities was added. The Minister of Education was given coordinate powers over
educational charities. Registration of charities with the commissioners was required, and they
were given power to institute inquiries, call for documents and search records, call for accounts
and audit them, apply cy pres (concurrently with the court), entrust property to the official
custodian, establish common trust funds for investment, advise charity trustees, and generally to
enforce and supervise charities. The law of mortmain was repealed. Certain charities were made
exempt from the act, for example, universities and colleges, the British Museum, and religious
charities. Provision was made for an official custodian for charities who was to be a corporation
sole appointed by the Charity Commissioners “to act as trustee in the cases provided for by this
Act”, and provision was made for him to take over charitable trust property by court order or by
consent of the originally appointed trustees.34

31
Historical background to the Charitable Donations and Bequests Act, 1844, 86 Ir. L. T. 1, 13, 23; Charitable trusts:
Early Legislation, 97 Sol. J. 19.
32
16 & 17 Vic. c. 137.
33
15 & 16 Geo. V. c. 27.The Administration of Estates Act, 1925.
34
Some recent developments in the law of charities. Cross, 72 L.Q.R. 181.Charities Act, 1960. Marshall, 24 Modern
L.Rev. 444.Changes in the law of charities. Keeton, 20 Sol. 31.See also Benas, 110 L.J. 184, 299; 111 Id. 496; 221
L.T. 271.Report of the charity commissioners for the year 1963. Evans, 28 Modern L.Rev. 85.

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IV. CHARITABLE TRUSTS IN THE UNITED STATES

Charities and charitable trusts play an important role in American society by providing funds to
many worthy causes.35 Throughout the history of the United States, many of the country's most
famous and wealthiest citizens have used charitable trusts to donate part or all of their wealth to
needy causes in American society.
The cy pres doctrine, originally conceived in its present form in the eleventh century, was equity's
answer to the inherent problems of an institution with perpetual existence.36 Cy pres allows a court
to modify the dispositive purpose of a charitable trust, but courts have continually applied the
doctrine narrowly to preserve the settlor's intent.37 Historically, the purpose of a charitable trust
was difficult to change, but modern scholars, who have proponed a broadened cy pres doctrine,
have eroded the settlor's power to define a charitable purpose capable of existing in perpetuity.
Influenced by prevailing theories, the American Law Institute and the National Conference of
Commissioners on Uniform State Laws redrafted the sections on cy pres in the Restatement
(Third) of Trusts and in the Uniform Trust Code (UTC), respectively, to allow courts to exercise cy
pres in a broader range of circumstances.
Although the modern discourse surrounding the cy pres doctrine argues that the narrow
application of the doctrine can result in an ineffective and an inefficient use of trust assets, this
Comment makes three proposals to ensure that future settlors can continue to rely upon the
judiciary to uphold their intent for many years into the future. First, courts should apply the narrow
interpretation found in established case law to the terms impossible, impracticable, or illegal under
the new UTC and the Restatement (Third). Second, the term wastefulness, which the drafters
inserted in their latest revisions of the UTC and the Restatement (Third), should apply only when
the trust faces a surplus that the trustees are unable to apply, in its entirety, to the original
charitable purpose. In such a scenario, a court should limit its application of cy pres to only the
surplus portion of the trust corpus--a term for which this Comment offers a definition influenced by
the law and economics school of thought. Third, courts should destroy the now meaningless
dichotomy between the equitable deviation doctrine and the cy pres doctrine to promote stability in
the law and to protect the testator's intent from a whimsical judge. The first two proposals ensure
that courts would preserve the narrow set of circumstances in which a court can apply the cy pres
35
Thomas Parrish, The Foundation: A Special American Institution, in The Future of Foundations 7 (Fritz F. Heimann
ed., 1973).
36
Marion R. Fremont-Smith, Governing Nonprofit Organizations 173 (2004).
37
The settlor is the individual who creates a charitable trust by giving property (referred to as the trust corpus or trust
res) in trust for a charitable purpose through a will or other governing instrument. See George Gleason Bogert &
George Taylor Bogert, The Law of Trusts and Trustees § 1 (rev. 2d ed. 1984).

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doctrine, but all three proposals endeavor to allow testators to effectuate their intent long after
their deaths while still addressing the economic efficiency concerns of modern scholars.

History of Charitable Trusts

Although gifts to charity have existed in antiquity,38 English Courts of Chancery first created
charitable trusts, which were enforceable in equity.39 Charitable trusts were popular in England,
but they were commonly abused or mismanaged. As a result of widespread abuse, Parliament
enacted the Statute of Charitable Uses of 1601, which acted as an enforcement mechanism to
prevent the mismanagement of charities. The Statute of Charitable Uses created a new remedy
for the misapplication of property held in a charitable trust; the statute did not create the
jurisdiction of the chancery court, which already existed prior to the enactment of the Statute. The
Statute merely created a new remedy to enforce charitable trusts by providing the chancellor with
the auxiliary power to investigate and to enforce breaches of charitable trusts through a special
commission. The statute did not create the chancellor's jurisdiction over charities, and it did not
supersede or supplant the existing remedy allowed by the chancery courts.
The use of charitable trusts and private charities crossed the Atlantic Ocean with the colonization
of America,40 but after the American Revolution, the framers of the U.S. Constitution did not
specifically enumerate the enforcement of charitable trusts as one of the powers of the federal
government. Charitable trusts were left to the states, and many states passed laws allowing for
the creation of charitable trusts. Some states, however, passed laws to repeal all English statutes,
and they did not support charities or charitable trusts because of a desire to completely rid
themselves of all former vestiges of English rule.
Seven states and the District of Columbia rejected the doctrine of charitable trusts. For many
years, the only method of providing for a charity in these states was either to leave property to an
existing charitable corporation or to leave property to a trustee instructed to create a charitable
corporation within the period allowed by the Rule against Perpetuities.
The development of the law surrounding charitable trusts in this country has been retarded by the
U.S. Supreme Court's 1819 decision in Trustees of the Philadelphia Baptist Ass'n v. Hart's
Executors, which addressed the legality of a charitable trust from Virginia. The Court erroneously
38
Marion R. Fremont-Smith, Foundations and Government 11 (1965) (noting that the concept of charity and
organizations for charitable purposes existed in many early cultures). Examples of early charitable gifts include the
following: the Ptolemies' endowment for a library in Alexandria; Plato leaving funds for the support of his Academy;
and numerous private associations that supported the poor, education, hospitals, asylums, and old people's homes in
the early Roman Empire.
39
See the discussion in the earlier chapter.
40
The following seven states and the District of Columbia rejected the doctrine of charitable trusts: Virginia, West
Virginia, Maryland, New York, Michigan, Wisconsin, and Minnesota.

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held that this particular charitable trust failed because the Court believed that the legality of
charitable trusts derived from the Statute of Charitable Uses of 1601. Since Virginia had
specifically repealed all English statutes and acts of Parliament in 1792, Chief Justice Marshall's
opinion reasoned that the charitable trust was invalid because Virginia repealed the Statute of
Charitable Uses. Marshall's opinion was based on the historical misconception that the Statute of
Charitable Uses created charitable trusts, a misconception based on false historical evidence and
dicta in certain English cases that suggested that trusts without defined beneficiaries did not exist
prior to the Statute of Charitable Uses. The Supreme Court corrected the error it made in Hart in a
subsequent decision twenty-five years later, but Virginia, Maryland, the District of Columbia, and
West Virginia followed Hart for nearly one-hundred years, and Hart influenced the development of
charitable trust law in New York, Michigan, Wisconsin, and Minnesota.
The Supreme Court's decision in Hart inspired further historical research into the origins of equity
jurisdiction over charitable trusts. The result of this research definitively determined that charitable
trusts did not rely on the Statute of Charitable Uses for their validity. In 1844, the Court heard
Vidal v. Girard's Executors, and it reversed its holding from Hart.41 The Court held that it was
mistaken in its earlier holding in Hart.42 It found that Pennsylvania's repeal of the Statute of
Charitable Uses was immaterial because the legality of charitable trusts stemmed from earlier
English common law. Although Vidal stimulated intense public interest in charitable trusts, the
public interest was not capable of changing the decisions of state courts and legislatures, which
continued to follow the Hart decision for many decades.

Legal Requirements for the formation of charitable trusts

The requirements to create a charitable trust are primarily the same as the requirements to create
a private trust, with only two exceptions.43 First, courts require a charitable trust to have an
indefinite number of beneficiaries. More precisely, courts require that the beneficiaries of a
charitable trust are undefined; a charitable trust may not have specific beneficiaries. Second, the

41
Vidal v. Girard's Ex'rs, 43 U.S. (2 How.) 127 (1844) (involving the validity under Pennsylvania law of a testamentary
charitable trust from the will of Stephen Girard for the establishment of a school or college for "poor white male
orphans" in Philadelphia). The Supreme Court was not finished with Stephen Girard's trust. It would come before the
Court again over a century later because the college's racial restrictions were a forbidden state action under the
Fourteenth Amendment Equal Protection Clause. See Pennsylvania v. Bd. of Dirs., 353 U.S. 230 (1957).
42
Vidal, 43 U.S. (2 How.) at 196.
43
Bogert & Bogert, The creation of a private trust has three requirements: (1) intent that the property be held in benefit
for one other than the settlor; (2) at least one beneficiary; and (3) an interest in the property, which must be in
existence or at least ascertainable, that is to be held for the benefit of the beneficiary. Id. § 1. A trust will not fail for the
lack of a trustee because a court can appoint one.

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settlor must create a general charitable purpose. Justice Gray succinctly defined a valid charitable
trust and its acceptable purposes:
A charity, in the legal sense, may be more fully defined as a gift, to be applied
consistently with existing laws, for the benefit of an indefinite number of persons,
either by bringing their minds or hearts under the influence of education or religion,
by relieving their bodies from disease, suffering or constraint, by assisting them to
establish themselves in life, or by erecting or maintaining public buildings or works or
otherwise lessening the burdens of government.44
Essentially, a charitable trust requires the following: (1) a settlor with intent to create a charitable
trust; (2) the delivery of specific property that becomes the trust corpus; (3) a charitable purpose;
and (4) an indefinite number of beneficiaries.45 The Restatement (Second) of Trusts defines a
charitable trust as "a fiduciary relationship with respect to property arising as a result of a
manifestation of an intention to create it, and subjecting the person by whom the property is held
to equitable duties to deal with the property for a charitable purpose."46 The primary difference
between a private trust and a charitable trust is the size and nature of the class of beneficiaries -
charitable trusts consist of funds beneficial to a community as a whole.47
The purpose of a charitable trust may not be merely benevolent.48 The Restatement (Second)
provides a widely recognized list of acceptable charitable purposes based on the illustrative list of
charitable purposes found in the Statute of Elizabeth.49 Charitable purposes include:
(a) the relief of poverty;
(b) the advancement of education;
(c) the advancement of religion;
(d) the promotion of health;
(e) governmental or municipal purposes; [and]
(f) other purposes the accomplishment of which is beneficial to the community.50
Although the Restatement (Second) allows these enumerated purposes of a charitable trust, a
charitable trust's purpose may not be in breach of public policy or facilitate the execution of a
crime or of a tort.51

44
Jackson v. Phillips, 96 Mass. (14 Allen) 539, 556 (1867).
45
Edith L. Fisch et al., Charities and Charitable Foundations 174 (1974).
46
Restatement (Second) of Trusts § 348 (1959).
47
Domenic P. Aiello & Tracy Adler Craig, Cy Pres: Reformation of the Charitable Trust, 81 Mass. L. Rev. 110, 111-12
(1996).
48
Shenandoah Valley Nat'l Bank of Winchester v. Taylor, 63 S.E.2d 786, 789-90 (Va. 1951).
49
Edith L. Fisch, The Cy Pres Doctrine in the United States 10 (1950) (quoting Statute of Charitable Uses, 1601, 43
Eliz. c. 4 (Eng.)).
50
Restatement (Second) of Trusts § 368 (1959); see also Taylor, 63 S.E.2d at 789.
51
Marion R. Fremont-Smith, Foundations and Government 11 (1965) (noting that the concept of charity and
organizations for charitable purposes existed in many early cultures). Examples of early charitable gifts include the

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The charitable trust’s most important attributes are the many advantages that state and federal
law afford to it. Unlike private trusts in most states, charitable trusts receive an exemption from
restrictive property rules limiting the vesting of property interests, durational limits placed on trusts,
and limits placed on the accumulation of trust income. For example, a charitable trust may exist
indefinitely because its duration is not limited by the Rule against Perpetuities. Charitable trusts
may continue their operation so long as they remain funded and distribute their income to the
intended beneficiaries. In addition to the multiple state law benefits, federal and state tax laws
create preferential treatment for charitable trusts. Unlike a private trust, qualified charitable trusts
are exempt from state and federal income tax and from the estate tax. In addition, most states do
not impose property taxes on the assets of charitable trusts. Most important to this Comment,
however, is the charitable trust's exemption from the Rule Against Perpetuities, which allows a
trust to operate indefinitely.

V. HARITABLE OR RELIGIOUS TRUST IN INDIA

Religious Trusts
The creation of religious charitable trusts is governed by the personal laws of the religion. The
administration of these religious trusts can either be left to the trustees as per the dictates of the
religious names or it can be regulated to a greater or lessee degree by statute such as the
Bombay Public Trusts Act, 1950 discussed above. In case of Hindus, the personal law provisions
regulating the religious trusts have not been codified and are found dispersed in various religious
books and epics.

Essentials of Religious and Charitable Trust under Hindu Law

There are four essential requirements for creating a valid religious or charitable trust under
Hindu Law:
o Valid religious as charitable purpose of the trust as per the norms of Hindu Law.
o Capability of the author of the trust to create such a trust.
o The purpose and property of the trust must be indicated with sufficient precision.
o The trust must not violate any law of the country.

The religious and charitable purpose are neither delineated nor defined with precision
under the Hindu Law.

following: the Ptolemies' endowment for a library in Alexandria; Plato leaving funds for the support of his Academy;
and numerous private associations that supported the poor, education, hospitals, asylums, and old people's homes in
the early Roman Empire.

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However, acts of piety and benevolence such as gifts to idols, establishment of
Dharmasala, mutts or monasteries, performance of 'Sradhs' of the author of the trust or his
family excavation of tanks, wells etc, establishment of hospitals, educational institute etc.
qualify as religious and charitable under the Hindu Law.

No document in writing is necessary to constitute valid religious and charitable trust by a
Hindu. Only there has to be a clear and unequivocal manifestation of an intention on the
part of the author to create such a trust.

Such intention may be manifested by performing the ceremonies of sankalpa and
samarpan. But these ceremonies are not essential for the Validity of the trust.

Wakf – The Muslim Charitable Trust

The word wakf as per Islamic law has two meanings:
(i) inalienable lands belonging to the Government which are charitable.
(ii) Pious endowments with reference to the subject matter of trusts the second meaning is
relevant.

Essentials of Wakf
Wakf has to be a permanent endowment in perpetuity. It cannot be either contingent or revocable.
No instrument in writing is required to create a wakf. An oral dedication can as well create a wakf.
Neither delivery of possession nor appointment of mutawallis is required. But the subject of wakf
must be clearly defined. A wakf can also be made by a will or by long user. Any Muslim who has
attend majority and is of sound mind can make a wakf .A minor or his guardian as on behalf of the
minor cannot make a wakf. Again, a wakf cannot be made for an illegal object. A wakf nama by
which immovable property of value of Rs.100 as more is dedicated by way of wakf requires
registration. The property which is either capable of being used without being consumed or which
is though consumable in itself but is capable of being converted into property of a permanent
nature can form the subject matter of a wakf. A wakf can be created for any purpose which is
considered religious, pious, or charitable by the Mohammedan law. Any wakf created with the
object of obtaining the approval of the almighty or a reward in the next world is pious as per
Mohammedan law.
Few instances of a pious or a religious purpose may be mosques, provisions for imams, colleges,
bridges, assistance to poor people to perform pilgrimage to Mecca, and distribution of alms to the
poor. Wakf may be made for the rich as well poor people alike or for the affluent and thereafter for
the poor or for the poor people alone. All persons regardless of their financial status can be made
beneficiaries of a wakf. Even family members and descendents of the wakif, that is the person

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creating the wakf, can be made beneficiaries. Under Hanafi law, the wakif himself can also be a
beneficiary.
Under Muslim law, the administration of a wakf is vested in the Mutawalli but since 1923 a number
of Central and State Acts, have restricted and regulated the administration powers of a mutawalli
so as to ensure transparency and proper execution of a wakf. For instance the Wakf Act1954
makes registration of a wakf, whether created before or after the commencement of the Act, at the
office of a wakf commissioner mandatory. Thereafter, the Mutawalli's of these registered wakfs are
required to prepare budget and accounts of the wakf for the appraisal of the wakf commissioner
and the wakf board. In certain cases, the wakf board can assume direct Management of the wakf.

VI. CONCLUSION

The arrangement by which real or personal property given by one person is held by another to be
used for the benefit of a class or the general public. The law favors charitable trusts, sometimes
called public trusts, by according them certain privileges, such as an advantageous tax status.
Before a court will enforce a charitable trust, however, it must examine the charity and evaluate its
social benefits. The court cannot rely on the view of the settlor, the one who establishes the trust,
that the trust is charitable.
In order to be valid, a charitable trust must fulfill certain requirements. The settlor must intend to
create this type of trust. There must be a trustee to administer the trust, which must consist of
some res or trust property. The charitable purpose must be expressly designated. A definite class
of persons comprised of indefinite beneficiaries within it must actually receive the benefit. The
requirements of intention, the trustee, and the rest are the same in a charitable trust as they are in
any other trust.
A charitable purpose is one designed to benefit, ameliorate, or uplift mankind mentally, morally, or
physically. The relief of poverty, the improvement of government, and the advancement of religion,
education, and health are some examples of charitable purposes. Trusts to prevent cruelty to
animals, to erect a monument in honor of a famous historical figure, and to beautify a designated
village are charitable purposes aimed, respectively, at fostering kindness to animals, patriotism,
and community well-being.
As a general rule, a charitable trust can be eternal, unlike a private trust, which must comply with
the rule against perpetuities, a principle limiting the duration of a trust. With respect to a private
trust, the designated beneficiary is the proper person to enforce the trust, but in a charitable trust,
the state attorney general is the one to enforce it. The settlor, his or her heirs or personal

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representatives, the members of the general public, and possible beneficiaries cannot maintain a
lawsuit for the enforcement of the trust.

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