Charitable trust

A charitable trust (or charity) is a trust organized to serve private or public charitable purposes.

Charities in different countries

Australia

In Australia, non-profit organisations and charities are registered with the Australian Taxation Office as deductible gift recipients (DGR).

Related Topics:
Australia - Australian Taxation Office

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Canada

Canada has over 75,000 registered charities, of which more than 40% are places or worship such as churches and mosques. Other registered charities include institutions such as universities and libraries. About 23% of registered charities exist to help the disadvantaged. Annual giving in Canada is over $90 billion CDN, if one puts a dollar figure on volunteer time. The most charitable province is Newfoundland, which has the highest rate of individual donations per capita. Canadians give, on average, $239 dollars per year to charity. About one third of Canadians volunteer annually and 5% of corporations make donations. In Canada, approximately two-thirds of the funding for charitable foundations comes from the government.

Related Topics:
Canada - Churches - Mosques - CDN - Newfoundland - Corporations

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The level of government funding has recently caused controversy as cutbacks have led to problems with such programmes as food banks. Another controversy is the denial of charitable status to environmental and political groups. There have also been calls for greater regulation of the charitable sector. Recent years have seen a new breed of charities that pour most of their donations into marketing. These groups grow quickly and attract many donors but a far smaller fraction of each donation goes to help the needy.

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• Charities in Canada are registered with the Canada Revenue Agency (CRA).

United Kingdom

There were over 200,000 registered charities in the UK at the start of 2005.

Related Topics:
UK - 2005

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• The 180,000+ charities in England and Wales are registered with the Charity Commission for England and Wales. The Charity Commission has an online register listing them all.
• The 20,000 or so charities in the Scotland are registered with the Inland Revenue. However, in 2006 a bill will be passed, registering charities with The Office of the Scottish Charity Regulator (OSCR).
• The 5,000 or so charities in Northern Ireland are registered with the Inland Revenue. There is no central register of these charities.

United States

In the United States of America, the Attorney General of each state maintains a registry of charitable organizations. Donations to charities in the United States are deductible for income tax purposes if the organization has exempt status from the Internal Revenue Service, usually under non-profit organization sec. 501(c)(3) of the tax code. Any organization meeting the rules of that section can be classified a charity in the US, including trusts, foundations, and corporations.

Related Topics:
United States of America - Attorney General - Income tax - Internal Revenue Service - Non-profit organization - Charity

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US tax law also allows trusts that do not qualify as exempt under 501(c)(3) to get significant tax advantages if they are set up with specific provisions.(http://www.irs.gov/irm/part4/ch52s05.html). These are called Charitable Remainder Trusts (CRT) and Charitable Lead Trusts (CLT). Charitable Remainder Trusts are so named because the remainder of the assets in the trust passes to a designated charity at the death of the grantor or one or more beneficiaries. A current tax deduction is given for the portion that is determined to be the expected amount the charity will receive in the future, which is called the remainder. During the lifetime of the primary beneficiary, a percentage of assets or a fixed dollar amount are paid to the primary beneficiary. There are two primary types of CRTs: Charitable Remainder Unitrusts (CRUT), where a percentage of assets is received by the lifetime beneficiary, and Charitable Remainder Annuity Trusts (CRAT), where a fixed dollar amount is received every year. Charities or other trustees are also allowed to set up pooled trusts that operate similarly to individual CRTs except that they receive contributions from multiple donors. This allows each donor similar benefits as an individual CRT without the expense of creating the trust themselves.http://cobrands.public.findlaw.com/estate_planning/nolo/ency/3045416C-EDC6-48F2-A310DAF212E2361D.html The Charitable Lead Trust is essentially the reverse of a Charitable Remainder Trust (http://www.michiganestateplan.com/CM/ResourceLinks/Glossary.asp). In this form, the lifetime payments go to the charity and the remainder returns to the donor or to the donor's estate or other beneficiaries. Thus the two types of CLTs are CLUTs and CLATs, which are analogous to CRUTs and CRATs.

Related Topics:
Tax law - Trusts - Pooled trust

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Similarly named and often confused with CRUTs and CRATs are Grantor Retained Unitrusts (GRUT) and Grantor Retained Annuity Trusts (GRAT) (http://www.irs.gov/irb/2005-11_IRB/ar10.html). The difference is that GRUTs and GRATs do not involve charitable beneficiaries and therefore are not given the charitable deduction.

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