Smart Giving

Tax effective giving - charitable trusts


A charitable trust or foundation is a legal entity which can be set up by anyone who has decided they want to commit to setting aside some of their assets or income for charitable causes.

It does not require a substantial sum of money to set up a trust. Often the initial endowment is a lump sum from a bonus, an inheritance, or the sale of shares. But because a charitable trust is classified as a charity, it can receive money through tax-efficient giving methods.

Setting up your own trust provides a framework for planning charitable giving in a systematic way. Many people involve their family as trustees, and find it an enjoyable way of developing a shared family commitment to support charity.
There are several ways of setting up a trust, but the basic model requires:

  • A donor or "settlor" (which may be you, your family or business)
  • Trustees (which could be you and members of your family, as well as someone outside the family such as your lawyer, or a family friend)
  • Charitable purposes (that define the type of causes the trust intends to support)
  • A Trust Deed (which forms the trust's constitution)

The trustees hold and control the trust's assets. They manage the investment of capital and decide how the income of the trust is to be distributed, and ensure that it is in line with the charitable purposes of the trust.

Trusts are completely independent of Government or any external control. The only external supervision comes from the Charity Commission.

Although with expert help it is relatively easy to set up a charitable trust, it does require effort at the start and you would probably need to involve a lawyer or accountant.

Association of Charitable Foundations

CAF or the 

Community Foundation Network would all be able to help you set up a charitable trust.