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Choosing a Charitable Structure
It is advisable to seek legal advice when setting up a charity, as the type of organisation you wish to set-up may be more onerous than first thought. It is essential in this respect to ensure that officials of the charities are informed about their responsibilities and duties, including the filing of audited accounts and have familiarity with current legislation relating to charities.
Trust
A Trust is a relationship created at the direction of an individual(s), in which one or more persons hold the individual's property subject to certain duties to use and protect it for the benefit of others.
Individuals may control the distribution of their property during their lives or after their deaths through the use of a trust. There are many types of trusts and many purposes for their creation. A trust may be created for the financial benefit of the person creating the trust, a surviving spouse or minor children, or a charitable purpose. It is with charitable purposes that Frontline Philanthropy is concerned.
Limited Company
If a charity is a large organisation, which will own property, employ staff, provide charitable services under contractual agreements and enter into commercial contracts, it may be appropriate to form a limited company. Most charitable companies are Companies Limited by Guarantee, though a Company Limited by Shares, the shares being held in a trust established for this purpose, is also a well-known structure.
Why the Isle of Man?
Isle of Man trust law has its origins in, and owes most of its continued development to, English trust law, to which it is virtually identical. The Isle of Man courts have a wealth of precedent upon which to call, not merely from England but from all Commonwealth jurisdictions where trusts are recognised, in addition to the substantial body of Isle of Man case law on the subject.
The Isle of Man has one of the most ancient and most stable parliamentary systems of government in the world and its law reflects this. Properly constituted, a charitable trust will in the Isle of Man be immune from attack and immensely strong in its work.
Isle of Man Charities
The Isle of Man Charities Act 1962 contains a broad definition of what “charity” means under Isle of Man law: “Trusts expressed to be for the purpose of benevolence, philanthropy, or social welfare which are for the public benefit shall be charitable trusts.”
Charitable causes may also include :
- Relief of Financial Hardship
- The Advancement of Education
- The Advancement of Religion
It is important to note that the technical and artificial meaning attached to the idea of “charity” under, for example, English law does not apply in the Isle of Man. For this reason, it is important to seek advice from professionals to ensure that the charitable cause of the trust meets eligibility under Isle of Man legislation.
All charities registered in the Isle of Man must have a ‘substantial and genuine connection with the Island, and the Isle of Man Attorney General under the Charities Registration Act 1989 monitors those claiming charitable status.
Having first satisfied Isle of Man public registration requirements, the charity can go on to benefit whatever causes have been chosen. It will be tax neutral in the Isle of Man. It can be irrevocable or revocable. The trustees will appoint investment advisors and will pay careful attention to the wishes of the founder.
Instead of benefitting society at one remove, the founder is on the front line as a philanthropist. There will be tangible achievements within his or her lifetime, and the opportunity to guide and inspire the trustees while at the same time being able confidently to rely on their independence of thought and action.
Frontline Philanthropy will advise you on a case by case basis how best to ensure that your project will achieve charitable status and then continue to be regarded as charitable under Isle of Man law.
