What is a charity? What is a charitable trust? It’s fair to say the both are not the same and fair to say that you should be aware of who you are dealing with when you hand over the running of your company to a …..charitable …..trust.

In England and Wales for example, charitable trusts are a form of express trust dedicated, they say, to charitable goals. However, there are a variety of advantages to charitable trust status, including exception from most forms of tax and freedom for the trustees not found in other types of English trust.

Applicable charitable purposes are normally divided into four categories- trusts for the relief of poverty, trusts for the promotion of education, trusts for the promotion of religion and all other types of trust recognised by the law, which includes trusts for the benefit of animals and a locality. There is also a requirement that the trust’s purposes benefit the public (or some section of the public), and not simply a group of private individuals- although that being said, private individuals may benefit( immensely) from the charitable trust depending on how much profit is made – and where that charitable trust is investing its time and energy.

For example: a charitable trust going to work in Mumbai for a school may not make as much profit as a charitable trust going to work for a private school in Kuwait – although it could be argued that education ( and charity) is much more needed in  India than the oil rich Gulf State…..

One could also argue that huge salaries earned by charitable trust workers seem to defeat the purpose of the exercise…..From time to time charitable trusts may decide to apply for funding to assist with the operation of their organisation. There are many organisations who may be able to assist with funding, each with different criteria to meet. this could be viewed slightly cynically when you learn that some charitable trusts, in New Zealand for example, made up to $40million profit in 2010.

So Kuwaiti businessmen, don’t be fooled into a false sense of philanthropy when a Charitable trust comes knocking on your door, with offers to help improve your business- and all ‘in a good cause’….that good cause may be no more than filing thinner tax returns.

You should also ask yourselves why you are paying for a service where the net surplus profits are ‘ploughed back’ into another country’s economy……shouldn’t your money be going back into your own economy?