Charitable and private trusts both begin with property and an intention to benefit others, but they differ in who benefits, how long they may last, and how they are treated by regulators.
What is the difference between a charitable and a private trust?
A private trust exists for identifiable beneficiaries , typically family members or named individuals. A charitable trust exists for purposes that benefit the public, such as the relief of poverty, advancement of education or health, or support of religious and community causes. Because the benefit is public, a charitable trust may be perpetual, while a private trust is subject to legal limits on how long interests can remain pending before they vest.
How are the two structures regulated?
- Both are administered under the trust instrument and the Trustee Act, and trustees of either may seek incorporation under the Trustees (Perpetual Succession) Act.
- Charities that intend to receive donations and operate publicly often consider registration under the Public Benefit Organisations Act, which carries its own governance and reporting obligations.
- Tax treatment differs between the two structures, and professional advice should be taken on the applicable position for each.
Which structure should a family foundation use?
The answer depends on purpose and scale. If the aim is to benefit defined relatives, a private trust is usually appropriate. If the aim is a scholarship fund, a clinic, or a community facility that will raise funds from the public, a charitable vehicle with a governing board and reporting discipline is generally the better fit. Some families use both: a private trust for relatives and a separate charitable vehicle for philanthropy.
Whichever route is chosen, the drafting stage matters most. Objects must be expressed with sufficient certainty, and the roles of trustees, donors, and family members should be separated clearly to avoid governance disputes later. Our governance and advisory practice advises foundations, boards, and families on these choices, and the statutes involved , including the Trustee Act , can be consulted on Kenya Law. An overview of our wider work is on our practice areas page.
For guidance on your specific situation, contact CS Advocates LLP , call, WhatsApp, or book a confidential consultation at our Westlands, Nairobi office.