The Cy-Pres Doctrine – When a Charitable Gift Fails
"To the Children’s Hospital on Main Street I leave $100,000.00." On its face there is nothing wrong with this bequest. If all goes to plan, upon the Deceased’s death the Children’s Hospital will receive the money, and the Deceased’s intentions to benefit the charity will be carried out. What if, however, subsequent to the Deceased executing their will the "Children’s Hospital on Main Street" moves two streets over and is now located of Lake Street? What if the "Children’s Hospital on Main Street" is actually now actually the "Children’s Hospital on Lake Street"? Does the gift fail? Can the testator’s intentions to benefit the Children’s Hospital be undone by a simple change of address?
Through the doctrine of cy-pres not all hope is lost for the Children’s Hospital. The cy-pres doctrine can be roughly thought of as the "near to" doctrine. It allows the court to apply funds which were intended for one charitable purpose (but for which distribution has now become impossible or impracticable) to instead apply those funds to another charity which has a "near to" charitable purpose. In our own example, through the doctrine of cy-pres, the "Children’s Hospital on Lake Street" can receive the $100,000 that was intended for the "Children’s Hospital on Main Street".
In order to apply the cy-pres doctrine, the court must first find that the charitable purpose has become impossible or impracticable. Examples of a charitable purpose being found impossible or impracticable can include a charity changing its name, the incorrect name being included within the actual trust document itself, or even when although the charity to which you left the money still exists, the task you left it for has now become impracticable (i.e. leaving money to the church to build a new steeple, but by the time you die the steeple has already been built).
Subsequent to the finding of impossibility or impracticability, you must next look to when the impossibility or impracticability with respect to the property being transferred occurred. If the failure occurred before the trust has taken effect (i.e. before the person dies in the case of a will), the court must also find that there was a "general charitable intention" on the part of the testator before the cy-pres order can be made. If, however, the failure occurs after the trust has taken effect, there is no need for the court to also find a general charitable intention on the part of the testator, and the cy-pres order is automatic.
In looking for whether there was a "general charitable intention" on the part of the testator, the court will look to the general circumstances surrounding the execution of the gift, and whether it was the intention of the testator to benefit only the specific cause to which they referred, or the more general heading or purpose to which the money was left to. If it was the testator’s intention to simply benefit a specific cause then the cy-pres doctrine cannot be applied and the gift must fail. If, however, the testator intended to merely benefit the charitable purpose under which the gift fell, then through cy-pres the gift can be saved. Take for example the scenario used before of a person who left money to the church so that they may build a new steeple, but by the time the testator actually dies the church is no longer in need of such funds. If the court concludes that it was the intention of the testator to only give money to the church so that they may build a new steeple (and not simply to the church generally) the gift will fail. If, however, the court concludes that it was testator’s intention to benefit the church in general then through the doctrine of cy-pres the gift can be saved, and the money can go to the church.
Ian Hull – Click here for more information on Ian Hull.