Non-profit Trust
A Non-Profit Trust is a legal entity created to promote charitable, religious, educational, or other socially beneficial objectives, without the intention of making a profit. These trusts are widely used in many countries to operate charitable organizations or foundations.
Here's a breakdown of what a non-profit trust is and how it works:
🔍 What Is a Non-Profit Trust?
It is a legal arrangement in which a settlor (founder) transfers property or funds to a trustee(s) to manage for a charitable or non-profit purpose.
The trustees manage the assets according to the trust deed and in alignment with its stated goals.
The beneficiaries are typically the public or specific groups (e.g., underprivileged children, students, patients).
📜 Key Features
Feature Details
Legal Basis Governed by the Trusts Act (e.g., Indian Trusts Act, 1882 in India; various state laws in the U.S.)
No Profit Distribution Surplus must be used to further the trust’s objectives
Registration Typically required with a government body for tax exemptions and legal recognition
Tax Benefits Donors and the trust itself may get tax exemptions if registered under the appropriate laws (like 501(c)(3) in the U.S. or 12A/80G in India)
Governance Managed by trustees; no shareholders or owners
📂 Common Purposes
Education (schools, scholarships)
Healthcare (clinics, hospitals)
Poverty relief
Environmental causes
Animal welfare
Arts and culture
🧾 How to Set One Up (General Steps)
Define your mission and charitable goals.
Draft a trust deed outlining:
Name of the trust
Objectives
Details of the settlor, trustees
Management rules
Register the trust with the relevant authority.
Apply for tax-exempt status (e.g., IRS in the U.S., Income Tax Dept. in India).
Maintain records and file annual reports, as required by law.
✅ Advantages
Legal structure to receive donations
Tax exemptions
Perpetual existence
Credibility with donors and institutions
⚠️ Challenges
Regulatory compliance
Governance and accountability
Fundraising sustainability
