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| The law |
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Refer to an accountant |
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1. When may a pooling Scheme be made? |
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A pooling Scheme may be made when: |
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- two or more charities administered by the same body of trustees, make an application; and
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- actual amalgamation of the charities concerned (either by Scheme under s.16 of the 1993 Act, or by the use of s.74 of the Act, or in some other way) is not feasible, or is not considered appropriate by the trustees.
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(The charities concerned may be, or include, special trusts.) |
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Section 1.4 of OG 49 A1 explains why a Scheme is necessary. |
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The Trustee Act 2000 may reduce applications for pooling Schemes although trustees may well still prefer to apply for a pooling Scheme rather than participate in the acquisition of an investment with "shared control". Trustees should always be clear about their reasons for wishing to have a pooling Scheme, but we need not press them to explain why they prefer a pooling Scheme to arrangements involving "shared control" of investments. See section 2.1 of OG 49 A1. |
 
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2. Application of funds causing difficulty |
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The purpose of a pooling Scheme is to rationalise the investment, rather than the application of charity funds. It is important to bear this in mind when considering whether or not a pooling Scheme is needed. If the charities concerned are finding it difficult to apply their funds, the solution may be to rationalise the charities themselves rather than to make a pooling Scheme to rationalise their investments. |
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If there appears to be a difficulty in applying the funds in question, then the following possibilities might be considered: |
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- a transfer of property between the charities in furtherance of one of the charity’s objects;
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- amending the objects of the charities to enable such a transfer to be made;
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- the use of s.74 or s.75 of the 1993 Act (the small charities provisions);
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or, if these provisions cannot be used, and the circumstances fall within s.13(1)(c) of the 1993 Act or one of the other cy-près occasions set out in s.13(1): |
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- inviting an application for a Scheme under s.16 to amalgamate the charities. (A failure of the original trust purposes would in any case require the trustees to apply for such a Scheme by virtue of s.13(5).)
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3. Typical cases |
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Some typical cases in which a pooling Scheme might be made are, where: |
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- a national charity also administers a number of linked charities;
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- an independent school administers a large number of prize and/or scholarship funds;
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- an HSB administers numerous charities for the benefit of one or more hospitals.
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4. Situations when a pooling Scheme is likely to be unnecessary or inappropriate |
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4.1 Temporary situations
4.2 Designated funds only involved
4.3 Funds to be held on deposit
4.4 Trustees of proposed participating charities connected but trusteeship not identical |
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4.1 Temporary situations |
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There is little point in setting up a pool charity to cover a temporary situation. For example, restrictions placed on income by a donor might create a special trust. The trustees might not be able to spend all the money immediately and, might, therefore, need to invest it for a short time. Unless the special trust and the original charity both had a general power of investment, this money could not be pooled with the general funds of the charity except through a pool charity. It would probably not be worthwhile to create a pool simply to deal with this temporary situation. The advantages of being able to pool the money for a short period would probably not justify the time and effort involved (although this would, of course, be for the trustees to judge). (If an appropriate pool already existed the special trust funds could, of course, be added to the pool if the trustees felt this was expedient.) |
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4.2 Designated funds only involved |
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Designated funds are not separate trusts but merely part of another fund (usually the unrestricted general fund). They have simply been set aside by the trustees for a particular purpose. Because of this, it is not necessary to create a pool charity to deal with them. (Of course, the fund of which the designated fund is a part may need to be pooled in its own right.) |
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4.3 Funds to be held on deposit |
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A pooled fund to hold sums on deposit would be set up by a s.25 Scheme rather than a s.24 Scheme – see section 6 of OG 49 A1. |
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4.4 Trustees of proposed participating charities connected but trusteeship not identical |
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If the trustee body of all the participating charities and the proposed pool charity are connected in some way but not identical, any pooled fund set up would be a hybrid pool charity – see section 3.4 of OG 49 A1. Legal advice should be sought at the outset. |
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