Trust:Charitable Trust, Public Trust, and Private Trust as NGOs.
Trust:Public charitable trust and Private Trust shall be established for nonprofit specific purposes, relief of poverty, education, medical relief, and much more.
The public charitable trust is a possible form of nonprofit entities in India. Typically, public charitable trusts can be established for a number of purposes, including the relief of poverty, education, medical relief, provision of facilities for recreation, and any other object of general public utility.
Indian public trusts are generally irrevocable.
No national law (except the broad principles of the India Trusts Act 1882, which governs private trusts) governs public charitable trusts in India, although many states (particularly like Maharashtra, Gujarat, Rajasthan, and Madhya Pradesh) have Public Trusts Acts. Public charitable trusts, as distinguished from private trusts, are designed to benefit members of an uncertain and fluctuating class. In determining whether a trust is public or private, the key question is whether the class to be benefited constitutes a substantial segment of the public. There is no central law governing public charitable trusts, although most states have “Public Trusts Acts.”
Typically, a public charitable trust must register with the office of the Charity Commissioner having jurisdiction over the trust (generally the Charity Commissioner of the state in which the trustees register the trust) in order to be eligible to apply for tax-exemption.
In general, trusts may register for one or more of the following purposes:
Relief of poverty or distress / Education / Medical relief / Provision of facilities for recreation or other leisure -time occupation (including assistance for such provision), if the facilities are provided in the interest of social welfare and public benefit.
At least two trustees are required to register a public charitable trust. In general, Indian citizens serve as trustees, although there is no prohibition against non-natural legal persons or foreigners serving in this capacity. The legal title of the property of a public charitable trust is vested in the trustees. Trustees of a public charitable trust may not, however, in any way use trust property or their position for their own interest or private advantage. Trustees may not enter into agreements in which they may have a personal interest that conflicts or may possibly conflict with the interests of the beneficiaries of the trust (whose interests the trustees are bound to protect). Trustees may not delegate any of their duties, functions or powers to a co-trustee or any other person, except that trustees may delegate ministerial acts. In essence, trustees may not delegate authority with respect to duties requiring the exercise of discretion.
Trustees of religious or charitable trusts are charged with discharging their duties with the degree of care that an ordinary prudent person would exercise with respect to his personal property. This is a slight variant on the duty of care applies in many U.S. jurisdictions, which requires directors and officers to act with the degree of diligence, care and skill that ordinarily prudent persons would exercise under similar circumstances in like positions (as opposed to in the management of their personal affairs).
Public charitable trusts are highly regulated. For instance, in many states, the Charity Commissioner must approve purchases or sales of immovable property by a trust or Loan in advance. Indian public charitable trusts are generally irrevocable. If a trust becomes inactive due to the negligence of its trustees, the Charity Commissioner may take steps to revive the trust. Furthermore, if it becomes too difficult to carry out the objects of a trust, the doctrine of cypres, meaning “as near as possible,” may be applied to change the objects of the trust.