Charitable Trust Deed (Kenya)

A Charitable Trust Deed in Kenya formalises a transfer or grant of property interests, binding the parties to its recitals.

Section 3 of the Trusts Act No. 11 of 2020 defines a trust as a legal relationship in which one person (the trustee) holds property for the benefit of another (the beneficiary) or for a charitable purpose. Section 5 of the Trusts Act requires that a trust be evidenced in writing, signed by the settlor, and acknowledged before a Notary Public or Commissioner for Oaths. Charitable purposes recognised under Kenyan law — drawing on English charitable law principles received through Section 3 of the Judicature Act (Cap. 8) — include the relief of poverty, the advancement of education, the advancement of religion, and other purposes beneficial to the community. The High Court of Kenya (Civil Division) has upheld charitable trusts serving purposes such as scholarship provision, community health programmes, environmental conservation, and arts and culture promotion.

The Trusts Act No. 11 of 2020 imposes clear duties on charitable trustees under Sections 25 to 38: the duty to act in accordance with the trust deed; the duty to exercise reasonable care and skill; the duty to distribute trust assets only for authorised purposes; the duty to keep proper accounts; and the duty to invest trust funds prudently under Section 37, which requires the investment policy to be set out in writing. Breach of these duties may result in the High Court surcharging the trustee for losses under Section 50 of the Trusts Act.

For a Charitable Trust Deed to attract exemption from income tax under Section 13 of the Income Tax Act (Cap. 470) administered by the Kenya Revenue Authority (KRA), the trust's income must be applied exclusively for charitable purposes and the trust must hold a valid Exemption Certificate from KRA. Charitable trusts engaged in social welfare, educational, or religious activities frequently also register under the Non-Governmental Organisations Co-ordination Act (Cap. 134) through the NGO Co-ordination Board, which confers further regulatory recognition and enables access to international donor funding.

A Charitable Trust Deed in Kenya must be distinguished from a private family trust (which benefits specific named individuals) and a commercial trust (which involves profit distribution). Under the Trusts Act No. 11 of 2020, a charitable trust is a purpose trust — it is not enforceable by any individual beneficiary but may be enforced by the Attorney General of Kenya under the constitutional mandate to protect the public interest, and by any person with leave of the High Court under Section 54 of the Trusts Act.

The Charitable Trust Deed sets the irrevocable framework for the trust. Once executed and registered with the office of the Public Trustee of Kenya under the Public Trustee Act (Cap. 168), the assets transferred to the trust vest in the trustees and cannot be reclaimed by the settlor. The deed must therefore be drafted with precision, incorporating the objects clause, trustee appointment and removal procedures, investment powers, amendment provisions, and dissolution and cy-pres provisions aligned with the Trusts Act No. 11 of 2020.

A Charitable Trust Deed in Kenya is required in several distinct situations where individuals or organisations wish to dedicate assets to public benefit on a permanent or long-term basis.

A Charitable Trust Deed is needed when a founder wishes to establish a foundation, scholarship fund, community development organisation, or religious endowment that will operate independently of any individual's estate. Registration of the trust under the Trusts Act No. 11 of 2020 and the Non-Governmental Organisations Co-ordination Act (Cap. 134) through the NGO Co-ordination Board gives the trust legal personality and enables it to open bank accounts, receive donor grants, and enter contracts in its own name.

A Charitable Trust Deed is required when a testator wishes to direct assets under a Last Will and Testament to a charitable purpose rather than to named individuals. Section 5 of the Trusts Act No. 11 of 2020 permits testamentary trusts to be established by will, but where the charitable purpose is complex or long-term, a separate inter vivos Charitable Trust Deed executed during the settlor's lifetime provides a more controlled structure and allows the trust to commence operations before the settlor's death.

A Charitable Trust Deed is needed when a corporate entity or high-net-worth individual in Kenya seeks income tax exemption under Section 13 of the Income Tax Act (Cap. 470). The Kenya Revenue Authority (KRA) requires a formally executed and registered trust deed as part of the exemption application process. Without a compliant trust deed, the entity cannot obtain KRA tax-exempt status and donors cannot deduct contributions from their own taxable income.

A Charitable Trust Deed is required when an organisation wishes to receive grants from bilateral donors (including the United States Agency for International Development, the UK Foreign, Commonwealth and Development Office, or the European Union) or from Kenyan county governments under the County Governments Act No. 17 of 2012. Most major grant programmes require the applicant to produce a trust deed and certificate of registration from the NGO Co-ordination Board.

A Charitable Trust Deed is needed when multiple families or community members wish to pool resources into a permanent endowment for the benefit of a school, hospital, mosque, church, or community facility. The deed defines each contributor's role, protects the pooled assets from individual creditors under the Trusts Act No. 11 of 2020, and sets the governance framework for the fund. Without a formal trust deed, jointly-held assets are vulnerable to claims by any contributor's personal creditors or to disputes among contributors' heirs under the Law of Succession Act (Cap. 160).

A valid Charitable Trust Deed in Kenya under the Trusts Act No. 11 of 2020 must contain the following essential elements to be legally effective, registrable, and enforceable.

Parties and Recitals: Full legal names and addresses of the settlor(s) and the initial trustees. The deed should recite the settlor's intention to establish a charitable trust, identify the initial trust property being settled, and confirm that the trust is irrevocable. Under Section 5 of the Trusts Act No. 11 of 2020, the deed must be signed by the settlor and witnessed before a Commissioner for Oaths or Notary Public.

Name and Objects: A distinctive name for the trust, and a detailed objects clause defining the charitable purposes with precision. The objects must fall within recognised charitable categories under Kenyan law — relief of poverty, advancement of education, advancement of religion, promotion of health, environmental conservation, or other community benefit purposes. Vague objects clauses have been struck down by the High Court as insufficiently certain to constitute a valid charitable purpose.

Trustee Appointment and Removal: Minimum and maximum number of trustees (at least two, and typically no more than seven for governance efficiency), procedure for appointing replacement trustees, and grounds for removal. Section 20 of the Trusts Act No. 11 of 2020 requires trustee appointments to be documented in writing. The deed should specify whether a corporate trustee — such as the Public Trustee of Kenya established under the Public Trustee Act (Cap. 168) — may serve as a professional trustee.

Trust Property and Investment Powers: Description of the initial assets transferred to the trust, and the trustees' powers to receive additional donations and bequests. Investment powers must be stated expressly: Section 37 of the Trusts Act No. 11 of 2020 requires trustees to adopt and document a written investment policy that balances risk, return, and the trust's charitable objects. All income and capital gains must be applied exclusively for the charitable objects — no distribution to the settlor or trustees is permitted.

Governance and Accounts: Frequency of trustee meetings, quorum, decision-making procedure, and annual accounts requirements. Under the Non-Governmental Organisations Co-ordination Act (Cap. 134), charitable trusts registered as NGOs must submit audited annual accounts to the NGO Co-ordination Board. Accounts must be prepared by a Certified Public Accountant (CPA) registered with the Institute of Certified Public Accountants of Kenya (ICPAK). The Kenya Revenue Authority (KRA) requires the trust to file annual tax returns even where income is exempt under Section 13 of the Income Tax Act (Cap. 470).

Amendment and Dissolution: Procedure for amending the trust deed, and cy-pres provisions where the original charitable objects become impossible or impractical. Section 51 of the Trusts Act No. 11 of 2020 empowers the High Court to apply the cy-pres doctrine to redirect trust assets to purposes as close as possible to the original objects. On dissolution, the remaining assets must be transferred to another charitable trust or institution with similar objects — distribution to the settlor or trustees is prohibited.

Governing Law and Dispute Resolution: Kenya law shall govern the deed, with disputes referred to the High Court of Kenya (Civil Division) or to the Nairobi Centre for International Arbitration (NCIA) under the Arbitration Act No. 4 of 1995 as the parties may agree.

Forms-legal.com provides this Kenya Charitable Trust Deed template as a practical drafting framework. Given the long-term legal consequences and tax implications of establishing a charitable trust, each settlor should obtain advice from an Advocate of the High Court of Kenya enrolled with the Law Society of Kenya (LSK) before executing the deed.