Charitable Trusts in Gibraltar: Legal Framework and Common Structures

Gibraltar offers a well-established and flexible legal environment for charitable trusts, combining English trust law principles with a clear statutory framework. Charitable trusts are governed primarily by the Charities Act, the Trustees Act, and, where relevant, the Purpose Trusts Act.

Together, these statutes provide the legal basis for the creation, administration and regulation of trusts established for public benefit purposes.

Legal Framework

The Charities Act regulates the recognition and oversight of charities in Gibraltar. It requires that a charitable trust be established exclusively for charitable purposes and operate for the public benefit, with appropriate standards of governance, transparency and accountability. Certain charities are subject to registration and ongoing reporting obligations.

The Trustees Act governs the general powers and duties of trustees. It imposes fiduciary obligations, including duties to act honestly and in good faith, to exercise reasonable care and skill, and to manage trust assets prudently. Gibraltar courts and practitioners continue to rely heavily on English trust law principles and case law when interpreting these duties.

The Purpose Trusts Act provides a statutory framework for the establishment of non-charitable purpose trusts, subject to specific safeguards such as the appointment of an enforcer. While charitable trusts can exist independently of this legislation under traditional trust law, the Act is often relevant where a structure includes both charitable and non-charitable purposes, or where settlors wish to take advantage of the certainty offered by a statutory purpose trust regime.

Common Types of Charitable Trusts in Gibraltar

Gibraltar law does not impose a rigid classification of charitable trusts. In practice, however, the following structures are commonly used:

1. Charitable Purpose Trusts

These trusts are established for defined charitable purposes such as the relief of poverty, the advancement of education or health, environmental protection, or the advancement of religion. Gibraltar follows English law principles in determining what qualifies as charitable, which means these trusts must be established for the benefit of the public rather than private individuals.

2. Discretionary Charitable Trusts

Trustees are granted discretion to apply income or capital among a range of charitable purposes or beneficiaries. This flexibility allows trustees to respond to evolving needs or priorities over time.

3. Fixed-Interest Charitable Trusts

These trusts provide a fixed or determinable benefit, such as a specified income stream, to one or more named charitable organisations. They are often used where predictability and certainty of funding are key objectives.

4. Trust-Based Charitable Foundations

Frequently established by families or high-net-worth individuals, these are long-term philanthropic structures created as trusts rather than foundations. They are commonly used for legacy planning, structured giving, and the ongoing involvement of family members in charitable governance.

Conclusion

Charitable trusts in Gibraltar offer a robust and adaptable vehicle for philanthropic activity. The jurisdiction’s legal framework combines established English trust law concepts with modern statutory provisions, allowing charitable objectives to be structured with clarity, flexibility and appropriate oversight.

By selecting the most suitable trust structure, and where appropriate, integrating statutory purpose trust elements, settlors can align their charitable giving with their values, governance preferences and long-term planning goals.