The restraints applicable on creation of a charity arise from perpetuities rules or from accumulation provisions that cause a failure to satisfy the common law or statutory definitions of charity. Perpetuities restraints are especially relevant to the matter of which generation gets to decide the intergenerational distribution of benefits and the chapter therefore outlines the perpetuities rules, including as amended or abolished by statute. Australian, Canadian, New Zealand, United States and United Kingdom examples are provided, with the examples set out in three broad categories: express statutory time limits on accumulation under charitable trusts along the line of the Thellusson Act, statutory rephrasing of common law accumulation rules and abolition of accumulation restraints. The chapter concludes by surveying separate rules to the perpetuities constraints that go to the validity of a charitable trust or incorporated charity and that can be affected by accumulation provisions. This discussion draws primarily on cases and legislation from Australia, the United Kingdom and New Zealand.

This chapter explores the issue of how decision-making about the distribution of benefits should itself be distributed across generations. It outlines that under the existing rules, there are gaps in the ability of the present generation to change the rate of accumulation or distribute retained assets, even if they think that to do so would increase public benefit. Thus, the chapter investigates potential normative bases for reforming the decision-making balance between past, present and future decision-makers so as to determine the additional circumstances in which the present generation ought to be able to alter accumulation. It does so by reference to cy-près reform discussions and to principles of intergenerational justice. The chapter then identifies potential ways in which the existing rules might be reformed to better accord with these normative bases, drawing on examples from the United Kingdom and the United States. The potential reforms include broader cy-près and administrative scheme grounds and greater discretion for charity controllers to amend administrative machinery and purposes, but coupled with a period of protection for donor intent.

Chapter 2 describes the charity sector (Australia, Canada, New Zealand, the United States and the United Kingdom) and its regulation and investigates the goals of the charity sector and of charity law. In addition, it sketches some broad contours of the extent of charity accumulation and examines the key reasons for and implications raised by accumulation. In discussing the key implications, the chapter identifies normative principles relevant to assessing the intergenerational deferral of benefits, the issue of which generation gets to decide that intergenerational deferral and the potential for enhanced agency costs.

The book concludes that accumulation rules do not clearly incorporate a normative basis for determining an intergenerational allocation of benefits and so should be reformed to require regard to principles of intergenerational justice. Further, while the present generation is able, in some circumstances, to disregard spending restrictions and ongoing accumulation requirements, it is asserted that current charity controllers should have greater ability to disregard accumulation restrictions or requirements so as to adopt different principles of intergenerational justice, or to pursue the same principles of intergenerational justice, but in a more efficient way. Finally, the book argues that there is a range of legal restraints that seek to reduce the agency costs from accumulation and that the critical issue is the ability of regulators to work cooperatively to fill in gaps.

This chapter, along with Chapters 5 to 6, examines the legal duties that constrain accumulation once a charity has been created. Controller duties (e.g. directors’ duties and trustee duties) are the focus of this chapter. Clearly, duties of loyalty, good faith and of care and diligence can potentially play a restraining role in relation to agency costs, the risk of which can be heightened by accumulation. Further, controller duties also raise the possibility of regulating the retention and distribution of charity assets by controllers, thus affecting the intergenerational distribution of benefits. The chapter provides an overview of the controller duties arising from each of the main legal forms adopted by charities and analyzes the impact of those duties on accumulation. Particular attention is paid to duties arising on the exercise of discretionary powers, such as the duties to act upon genuine consideration and to act impartially. Examples are provided primarily from Australia, the United Kingdom and the United States.

The chapter explains why the charity sector matters and, in particular, why the accumulation of assets by charities is such a weighty issue. It defines what is meant by ‘charity’ and articulates how charities form a subset of the non-profit sector. It also defines the meaning of accumulation. Having done so, the chapter articulates the questions that the book seeks to answer and the methodology adopted to do so. Those questions being: what legal constraints apply to accumulation by charities and do those constraints address the key ethical and efficiency implications raised by accumulation? To the extent that existing legal constraints do not address the key implications raised by accumulation, how could they be reformed to better address those issues?

Chapter 7 recapitulates how Chapters 3 to 6 demonstrate that charity controllers are subject to a range of duties and mechanisms that ensure some regard be given to both present and future potential benefit recipients but that those duties and mechanisms largely lack a normative benchmark, such as intergenerational justice, to determine the timing of benefit distribution. Chapter 7 thus examines whether intergenerational justice could act as a normative basis for charity controllers’ choices about how to allocate benefits between current and future generations. It also considers the role that efficiency might play in such decision-making. The chapter then investigates the practicalities of attempting to incorporate principles of intergenerational justice into rules that constrain charity accumulation. Both general issues of practicality and specific reform options are considered. The aim is to better incorporate a normative basis for benefit distribution while at the same time protecting the potential benefits from accumulation and retaining consistency with the goals of charity law. Examples are drawn from the United States, Australia, Canada and the United Kingdom.

This chapter examines a range of alternative mechanisms arising from a charity’s legal form or status as a charity that potentially restrain a charity’s accumulation activities. Key amongst them are administrative (or deviation) schemes and cy-près schemes, which enable modification of the administrative machinery or charitable purpose of charities. As these mechanisms permit the rate of accumulation to be directly altered or accumulated assets to be distributed, they are explored under the sub-heading ‘directly controlling accumulation’. External administration, including winding-up or replacement of charity controllers, is a fairly drastic and indirect method of controlling accumulation that is separately considered, as well as member action in controlling accumulation. Examples are drawn primarily from the United States and Australia, but with material discussion of the United Kingdom, Canada and New Zealand also.