An appeal to allow more than half a billion pounds held by the dormant National Fund charity to be distributed to other voluntary organisations has been rejected in court.
The Fund was set up by banker Gaspard Farrer in 1928 with the aim of paying off the UK’s national debt following the First World War.
But the Fund’s trustee Zedra Fiduciary Services had argued that the assets should instead be used either to fund existing charities or create a new charitable trust.
The High Court judgment last year said that giving the Fund’s assets to charities did not meet its original purpose to “benefit the nation” as the money would only support “such part of the citizens of the United Kingdom that benefited from the charities to whom the grants were made”.
Last week’s Court of Appeal judgment upheld the previous ruling, stating that “it cannot be said that it was any part of Mr Farrer’s intention to establish a permanent endowment fund for general charitable purposes”.
“In my judgment, the judge’s evaluative conclusion is one which he was entitled to reach. I would dismiss the appeal,” the judgment states.
Creation of the National Fund
The anonymous donor who founded the National Fund was identified in 2021 as banker Gaspard Farrer.
Other philanthropists contributed to the Fund but it has not received any donations since 1985.
Following research into the Fund by Civil Society, the Labour Party pushed the government to make the money available to other charities.
However, the attorney general brought a case in 2018 to argue that its assets should be transferred to the Treasury instead to align with its original purpose to pay off the national debt.
The Fund’s investments and other assets amounted to £605m in April 2022, according to the Charity Commission website, while the UK national debt stood at £2.60tn at the end of September 2023.
Options for transferring funds to charities
The judgment noted three ways possible models for transferring the Fund’s assets to charities, as suggested by former Acevo chief executive Stephen Bubb.
“Sir Stephen has suggested three possible models for the new trust. Option A is to make an immediate distribution of the National Fund for charitable purposes.
“Option B is to establish a new grant-making trust. Option C is to establish a new ‘wholesaler’, making grants and loans through other existing charitable organisations.”
The Court of Appeal noted, as had the High Court, that the Fund’s assets could be put to more “suitable and effective” purposes by being transferred to charities.
However, it said this was outweighed by the fact that transferring the money to the Treasury was more in “the spirit of the original gift” and that doing so would ensure the money “is applied for charitable purposes which are close to the original purposes”.