[suffocation1992]

£900,000 to be held on trust to found a scholarship for poor students who wish to take a business management masters degree in a highly academic university in England. The amount of each scholarship must not be more than £9,000 a year.

My thoughts:
- charitable purpose (advancement of education or relief of poverty).
- public benefit - unclear; charities must not discriminate and must be open to everyone - selecting a business masters degree and selecting a highly academic university as criteria are discriminatory
- if charitable, only general charitable intention needed to satisfy certainty of objects
- seems like it will fail as a charity because it doesn't seem to meet public benefit - as such it is likely to go cypres to a similar alternative.

What is the relevance of the 'the amount of each scholarship must not be more than £9,000 a year'?? Is this hinting at perpetuity? i.e. if the maximum is 9,000 a year and the total trust money is 900,000 then that means the trust can last at most, for 100 years. But perpetuity doesn't apply to charities???

Please help!

[ktwolves]

Why can't it be a trust for private purposes?
You may want to discuss the setting up of a Private Purpose Trust, with various devices that may be employed to avoid the rules against voiding the trust purely for private purpose as well, or you have that sorted out already.

[suffocation1992]

(Original post by ktwolves)
Why can't it be a trust for private purposes?
You may want to discuss the setting up of a Private Purpose Trust, with various devices that may be employed to avoid the rules against voiding the trust purely for private purpose as well, or you have that sorted out already.

Am I missing somethign fundamental, as I am quite worried you have said that.

From my knowledge at the moment, you can't have a private non-charitable purpose trust in England, unless it falls within the exceptional and limited Re Endacott concessions. Thus it must be charitable?

If you can help me with the 'various devices' you mention, I should be so grateful as you may have highlighted a gaping hole in my knowledge

[Norton1]

(Original post by suffocation1992)
Am I missing somethign fundamental, as I am quite worried you have said that.

From my knowledge at the moment, you can't have a private non-charitable purpose trust in England, unless it falls within the exceptional and limited Re Endacott concessions. Thus it must be charitable?

If you can help me with the 'various devices' you mention, I should be so grateful as you may have highlighted a gaping hole in my knowledge

Looking at Ktwolves record it's highly unlikely. Nevertheless I shall await with interest.

[ktwolves]

Purpose
Making the gift for a purpose determinable in the event of failure (Re Tyler). The device will not only fulfil the purpose, it will also enable the purpose to be carried out in perpetuity.
Indirect Beneficiary
The trust though express as a purpose, is directly for the benefit of individuals, is in general outside the mischief og the beneficiary principle (Re Denley)
Locus Standi
Gift to unincorporated non-profit organisation. A corporation is a legal person but an un-incoporated organisation is not, so the trust may be construed as a gift to members of the assocations to further the purpose of the organisation or to qualify the receipants of scholarships as members or
as a grant of a power to apply the gift for the purpose of the organisation.
Gifts to members (human beneficiaries, enforcement)
Absolute gift to members subject to the constitution of the organisation, such that the court may decree performance..

[suffocation1992]

(Original post by ktwolves)
Purpose
Making the gift for a purpose determinable in the event of failure (Re Tyler). The device will not only fulfil the purpose, it will also enable the purpose to be carried out in perpetuity.
Indirect Beneficiary
The trust though express as a purpose, is directly for the benefit of individuals, is in general outside the mischief og the beneficiary principle (Re Denley)
Locus Standi
Gift to unincorporated non-profit organisation. A corporation is a legal person but an un-incoporated organisation is not, so the trust may be construed as a gift to members of the assocations to further the purpose of the organisation or to qualify the receipants of scholarships as members or
as a grant of a power to apply the gift for the purpose of the organisation.
Gifts to members (human beneficiaries, enforcement)
Absolute gift to members subject to the constitution of the organisation, such that the court may decree performance..

None of which apply to my example, but thanks anyway.

[gethsemane342]

(Original post by suffocation1992)
£900,000 to be held on trust to found a scholarship for poor students who wish to take a business management masters degree in a highly academic university in England. The amount of each scholarship must not be more than £9,000 a year.

My thoughts:
- charitable purpose (advancement of education or relief of poverty).
- public benefit - unclear; charities must not discriminate and must be open to everyone - selecting a business masters degree and selecting a highly academic university as criteria are discriminatory
- if charitable, only general charitable intention needed to satisfy certainty of objects
- seems like it will fail as a charity because it doesn't seem to meet public benefit - as such it is likely to go cypres to a similar alternative.

What is the relevance of the 'the amount of each scholarship must not be more than £9,000 a year'?? Is this hinting at perpetuity? i.e. if the maximum is 9,000 a year and the total trust money is 900,000 then that means the trust can last at most, for 100 years. But perpetuity doesn't apply to charities???

Please help!

A charitable purpose must be for the public benefit but the test isn't whether people are closed off for education (which this presumably is) - this is for a section of the public. You need the personal nexus test at the least (Independent Schools Commission) which doesn't apply here because there's more than one highly academic university in England which presumably does this degree. Closed scholarships are a recognised category of educational trusts which satisfy the public benefit requirement.

[suffocation1992]

(Original post by gethsemane342)
A charitable purpose must be for the public benefit but the test isn't whether people are closed off for education (which this presumably is) - this is for a section of the public. You need the personal nexus test at the least (Independent Schools Commission) which doesn't apply here because there's more than one highly academic university in England which presumably does this degree. Closed scholarships are a recognised category of educational trusts which satisfy the public benefit requirement.

Thank you very much!

[new_romantic]

(Original post by suffocation1992)
£900,000 to be held on trust to found a scholarship for poor students who wish to take a business management masters degree in a highly academic university in England. The amount of each scholarship must not be more than £9,000 a year.

A charitable purpose is something which falls into the statutory list of charitable purposes, Charities Act 2011, advancement of education is S3(1)(b) (or something like that I cba to check). Then it must also be for the public benefit. Independent Schools Council Upper Tribunal decision 14 October 2011 clarified 2 limbs to this test. Firstly the purpose is for the public benefit on an evidential level (i.e a school for pickpockets advances education but isn't for the public benefit), appears to be satisified by a business managment scholarship. Secondly, it must be for a sufficient section of the public. A sufficient section means no personal nexus between donor and beneficiary (Education Grants Association, scholarships for employees kids not charitable). ISC Tribunal case confirmed poor must not be excluded, clearly are not here. Appears to be in the public benefit and therefore a charitable purpose trust.

Note perpetuities does not apply to charities so that is not an issue.

I talked about charity stuff since thats how you started it so I assumed that was the context of the question, but how about looking at whether the 3 certanities are present? What is being created, discretionary trust?

[ktwolves]

£900,000 to be held on trust to found a scholarship

The gift of £900,000 has more chance to survive as a private trust of exclusive purpose if given to members of society bound by contractual rules to apply as a scholarship than to be construed as for a public benefit charitable purpose.

[suffocation1992]

(Original post by ktwolves)
£900,000 to be held on trust to found a scholarship

The gift of £900,000 has more chance to survive as a private trust of exclusive purpose if given to members of society bound by contractual rules to apply as a scholarship than to be construed as for a public benefit charitable purpose.

What is a 'private trust of exclusive purpose'

[ktwolves]

As an ab gift, exclusive as in private.

It appears as you have correctly analysed that the trust may not survive as a charitable purpose as it primarily not an advancement of education neither it is to relieve poverty. The trust cannot fail, in order to appy Cy'pres, for certainty of intention or subject matter are clear, the only proplem is to deal with uncertain beneficiaries by way various devices.

p.s
- £900,000 to be held on trust to found a scholarship (Trust for a purpose)

- for poor students (a class of individuals by means test)
- who wish (provide opportunity)
to take a business management masters degree (for individual's career advancement)
- in a highly academic university in England. (Discretionary Trust)
- The amount of each scholarship must not be more than £9,000 a year. (Limit to power).
It is quite clear to me at least dwelling on charitable purpose won't score too many marks, as it is not controversial that it is not.

[abzdfg1234]

(Original post by ktwolves)
ha

Have you even studied trusts? How can you get it so wrong??

[ktwolves]

(Original post by danfl2004)
Have you even studied trusts? How can you get it so wrong??

You may disagree that the non-charitable purpose trust can be saved as an absolute gift (Applying the beneficiary principle or enforcement principle or both), you must have your reasons for thinking so, the question is why are you holding back your wonderful insights?

Perhaps abuse is due to an Inability to think out of a box, which is hereditary, I am afraid there are no known cures.

[abzdfg1234]

(Original post by ktwolves)
You may disagree that the non-charitable purpose trust can be saved as an absolute gift (Applying the beneficiary principle or enforcement principle or both), you must have your reasons for thinking so, the question is why are you holding back your wonderful insights?

Perhaps abuse is due to an Inability to think out of a box, which is hereditary, I am afraid there are no known cures.

Well there is no need to argue it is a non charitable purpose trust and try and fit it into one of exceptions to the beneficiary principle. You want to argue it is charitable because of the numerous tax advantages which are a huge consideration.

[ktwolves]

(Original post by danfl2004)
Well there is no need to argue it is a non charitable purpose trust and try and fit it into one of exceptions to the beneficiary principle. You want to argue it is charitable because of the numerous tax advantages which are a huge consideration.

That is one valid practical argument. Academically, one should not just stop there.

I see OP will fail as a charitable trust a mile away, you disagreed. That would be fine by anyone including me, especially when dealing with law.

[gethsemane342]

(Original post by ktwolves)
That is one valid practical argument. Academically, one should not just stop there.

I see OP will fail as a charitable trust a mile away, you disagreed. That would be fine by anyone including me, especially when dealing with law.

A trust for a scholarship is pretty clearly for the advancement of education. In fact scholarships have been recognised several times as being for the advancement of education and it fits in the preamble as ... well ... the education of scholars... I'm with danfl - have you actually studied charities?

At any rate, due to the lack of an unincorporated association to be bound by contractual rules, if this was a private trust it would fail. The highly academic university doesn't count because THEY don't hold the money to give to the student, the student gets the money from the trust to give to the university.

[ktwolves]

(Original post by suffocation1992)
£900,000 to be held on trust to found a scholarship for poor students who wish to take a business management masters degree in a highly academic university in England. The amount of each scholarship must not be more than £9,000 a year.

My thoughts:
- charitable purpose (advancement of education or relief of poverty).
- public benefit - unclear; charities must not discriminate and must be open to everyone - selecting a business masters degree and selecting a highly academic university as criteria are discriminatory
- if charitable, only general charitable intention needed to satisfy certainty of objects
- seems like it will fail as a charity because it doesn't seem to meet public benefit - as such it is likely to go cypres to a similar alternative.

What is the relevance of the 'the amount of each scholarship must not be more than £9,000 a year'?? Is this hinting at perpetuity? i.e. if the maximum is 9,000 a year and the total trust money is 900,000 then that means the trust can last at most, for 100 years. But perpetuity doesn't apply to charities???

Please help!

What this question is actually asking is, as a trustee, how would you execute the donor's intention. The important thing is that the court will be reluctant to allow the trust to fail to prevent fraud.

As we recognised it to be a purpose trust. There are two ways to deal with purpose trust
1. Public Purpose - Recognising it as for charity purpose, benefiting a wide section of public; in this case either as trusts for relief of poverty or advancement of education. You can argue your hearts out that the donors intention is for charity or it is not and get good marks. There are no right or wrong answers.

Or that the donors intention is that of a private purpose.
2. Private Purpose - As private purpose trusts are generally void for want of beneficiary, having locus standi to enforce the trust, it has to be interpreted as an outright gift. In order to give effect to the intention of the donors, the outright gift must come with powers to ensure the purpose is fulfilled. Many scholarships in unversities which carry the names of donors are of this type.

[suffocation1992]

(Original post by ktwolves)
What this question is actually asking is, as a trustee, how would you execute the donor's intention. The important thing is that the court will be reluctant to allow the trust to fail to prevent fraud.

Thanks everyone else for your help, it makes sense now!

[new_romantic]

(Original post by ktwolves)
What this question is actually asking is, as a trustee, how would you execute the donor's intention. The important thing is that the court will be reluctant to allow the trust to fail to prevent fraud.

As we recognised it to be a purpose trust. There are two ways to deal with purpose trust
1. Public Purpose - Recognising it as for charity purpose, benefiting a wide section of public; in this case either as trusts for relief of poverty or advancement of education. You can argue your hearts out that the donors intention is for charity or it is not and get good marks. There are no right or wrong answers.

Or that the donors intention is that of a private purpose.
2. Private Purpose - As private purpose trusts are generally void for want of beneficiary, having locus standi to enforce the trust, it has to be interpreted as an outright gift. In order to give effect to the intention of the donors, the outright gift must come with powers to ensure the purpose is fulfilled. Many scholarships in unversities which carry the names of donors are of this type.

Surely if it is an outright gift that is what it is, whoever gets it can spend it exactly as they like. So it clearly wouldn't be construed as an absolute gift. Fiduciary or personal powers are not the same as gifts, the property is held in a different way, at least thats my understanding.