New Zealand has an extraordinary number of family trusts. This love affair with trusts, perhaps not surprisingly, is not limited to family trusts and is mirrored in the number of charitable trusts.
One issue with the number of charitable trusts is the fragmentation of potential resources and how these can be diminished through administration, legal and accounting costs.
The recent decision in The Mabel Elizabeth James QSM Charitable Trust Board (Incorporated) highlights a practical approach to this issue. The trust in question had modest funds and was increasingly limited in the amounts available for distribution due to the ongoing administrative costs. The trustees took the pragmatic approach of incorporating as a board so that the trustees could apply to the High Court for a liquidator could be appointed under s 25 of the Charities Act. It is noted that a liquidator cannot be appointed to an unincorporated trust (although a receiver can be – see Court Appoints Receiver to Trust).
In considering the matter the court found that the requirements to appoint a liquidator (including the “just and equitable” test) were made out, ordered the appointment of the nominated liquidator and also ordered that the trust fund be divided between four nominated charitable trusts whose objects were in accord with The Mabel Elizabeth James QSM Charitable Trust.
Such decisions come under the general category of “small” or “unremarkable” that will not generate much interest. This is perhaps unfortunate as many trustees of similarly challenged charitable trusts would be wise to consider the appropriateness of the same for the better observation of charitable purposes in general. Anyone questioning this view might find some general searches of the Charities Register illuminating to get a feel for how many charities exist in support of similar or identical purposes. Divide and conquer, although often proposed, may not always be the best strategy, at least in the realm of charitable giving.
- The Mabel Elizabeth James QSM Charitable Trust Board (Incorporated)  NZHC 581
- Charities Act 1957, s 25