Charitable trusts are one of the oldest forms of charity and, although less common today when setting up a new charity, they still play an important role.
Trusts are typically established by an individual, family or small group of people who wish to set aside assets for charitable use, with those assets being managed by trustees in accordance with a trust deed. Trust governance is intentionally light touch, as there is no membership structure and relatively little prescribed formality beyond what is set out in the trust deed itself, together with obligations imposed by statutory trust law and common law (judicial decisions or precedent).
This simplicity can be attractive, particularly where a charity’s activities are limited in scope. However, it also places greater responsibility on trustees. Charitable trusts do not have separate legal personality, meaning trustees may be personally responsible for obligations that cannot be met from the trust’s funds.
Trusts can also be less adaptable over time. Appointing or removing trustees generally requires formal documentation, and trust law rules around income accumulation can limit flexibility in long‑term financial planning.
For these reasons, charitable trusts tend to be best suited to grant‑making charities rather than organisations that employ staff, enter into contracts or undertake activities that carry operational or financial risk.
How we can help
If you are considering setting up a charity, reviewing your existing legal structure or planning for growth, please get in contact with our Charities and Third Sector team.