This decision has confirmed:
- the original “spirit” of a gift should be followed as closely as possible
- it's not for the Court to question the wisdom or effectiveness of a valid charitable gift
Had a different view been taken (contrary to the above), a potentially dangerous precedent may have been set that would have risked damaging donor trust and adversely affecting future donation income.
The positive to take from this case, therefore, is while there may be a sense of missed opportunity over the application of these specific funds, protecting (as far possible) the sanctity of donor wishes may be more valuable in the long term.
The National Fund: Reducing National Debt and Zedra Fiduciary Services (UK) Ltd v Attorney General [2023] EWCA Civ 1332
In 1928, a National Fund trust was established by banker Gasper Farrer, with the aim of eventually paying off the national debt of the United Kingdom (in its entirety).
Farrer donated £500,000, which increased over the years to around £600 million. Although a sizeable sum, it pales into significance when compared to the national debt of around £2.3 trillion.
Aware of the fact the National Fund was never going to fulfil its intended purpose, the trustees applied for a “Cy-près Scheme” (see below) that would instead have allowed the funds to be used for general charitable purposes. The basis of their argument was the overall intention of the donor must have been to benefit the British public. That being the case, applying the funds for general charitable purposes would confer a more meaningful benefit and have a greater impact on the British public.
The Court of Appeal, however, upheld the decision of the High Court and ruled the National Fund must be applied to reduce the national debt. This option was the closest to the original purpose and spirit of the gift, recognising and respecting the donor’s wishes.
The Cy-près doctrine
“Cy-près” is a direct translation from French meaning “as near as possible”.
The doctrine has 2 principal aims to:
- allow charitable funds/assets to be used for a similar/related purpose when the original purpose becomes unworkable
- respect and (where possible) preserve the intention and wishes of the donor.
If you'd like to discuss any of the above, please don't hesitate to contact Adam Williams.
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