Explain the circumstances in which a charitable gift can be applied as cy-près?





Cy-près

If a private trust is not successful, the remaining funds revert to the settlor of the resulting trust; but, if a trust established for charitable purposes is unsuccessful, the leftover assets may be utilised in another way. The court or Charity Commission allocates "cy-près" monies to a charitable purpose that is akin to (i.e., comparable to) the first, failed, philanthropic objective.

 

How may a charitable goal be unsuccessful?

There might be:

1. Initial Failure

If a charitable purpose first fails, monies are only allocated cy-près (to an analogous charitable purpose) if it is shown that the settlor had a general charitable aim. The property reverts to the resulting trust if there is no general charitable intent (to the settlor or estate of the testator).

  • Under common law, a benevolent purpose was only first unsuccessful if it was impossible to use the monies for the designated charitable purpose.
  •  Giving money to a hospital that has already closed, for instance
  •  The common law position has been strengthened by the Charities Act section 62 (formerly the Charities Act 1960 section 13).
  • As a result, a charitable purpose will now suffer first failure not only if it is impossible to apply the money for the stated charitable purpose, but also if the purpose is already amply covered by other resources or is not a "suitable and effective" use of the available funds.

 

2. Subsequent Failure

 The trust property will be used automatically cy-près in the event that a charitable purpose is later unsuccessful. If the settlor/testator does not expressly declare that the property shall apply cy-près in the event of failure, the property will not be applied.

 

The following are the most common questions we get from our customers.

i. The charitable goal cannot be accomplished; or

ii. The generous intent is lost; or

iii. The goal is accomplished, leaving an excess of finances.

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