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Shell Charities

Comment 1st July 2010

There are currently circumstances where it may be advisable for a transferor charity (i.e. where a charity has transferred its assets to as successor charity) to be artificially retained on the register of charities as a shell charity. This involves submitting possibly nil accounts and having unecessary meetings. The only benefit to the transferor charity is the certainty of not losing gifts especially testamentary gifts – which of course may be substantial. On the other hand the whole operation may be a waste of time if no gifts or very small gifts are all that are received.

My idea is that there could be an amendment to the law so that transferor charities could be dissolved but for the purposes of gifts, testamentary or otherwise, they would be deemed to be active and registered and that such gifts should automatically be made to the transferee charity. A register of dissolved transferor charities could be kept, giving details of the transferee charity.

The law of wills could be altered so that if a testator really wanted to avoid the operation of the dissolved charities register the will would have so to specify in clear and unambiguous terms.

Why does this matter?

The idea is to try and reduce unnecesary and time-consuming work to small charities. Loss of legacies is important to any charity and the idea would be to ensure no loss of legacies with the residual power to the testator of avoiding the system if that is what he/she really wanted.

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