Perpetual charitable trusts
In general terms a charitable trust is a trust for one or more of the following purposes:
- the relief of poverty;
- the advancement of religion;
- the advancement of education; or
- other purposes beneficial to the community.
A central feature of a charitable trust is the continuity and indefinite period of duration for the trust. A charitable trust operates for so long as there is trust capital or income, often in perpetuity.
The trust terms of a charitable trust are specified by the donor at the time the donor makes the gift that establishes the trust. This means that the trust terms for a charitable trust are 'locked in' at the time the trust is established. Accordingly, the trust terms can only be changed upon application to the Attorney-General for Victoria or the Supreme Court of Victoria. These applications, called cy près applications, are made under the Charities Act 1978 (Victoria).
The original gift of cash or assets that establishes a charitable trust is called the 'endowment'. The endowment:
- forms the capital base of the charitable trust; and
- generates income which is then applied for the purpose specified by the donor.