Legal Research On The Investment Regulations Of Charitable Trust Funds

Charitable trust is the use of trust system in philanthropy, which originated from England trust system used in religious donations.That means the trust is established to benefit the public or a range of the public for charitable purpose. And it is usually established by the property, which is provided by the settler, and then the trustee manages and processes the property and puts the trust income into charitable purpose designated in the trust indenture. This part of property is to achieve charitable trust purpose and exists independently, which is called as charitable trust funds.An important trend of modern trust is to make trust more active, the trustee undertakes the more active duties in the management of trust property, one of the above is to invest the trust property. In trust law, “investment” means the trustee carries out the investment in order to secure the trust property and achieve the trust purpose, which can make the trust property generate optimal profits or value rise. Although our country’s “Trust Law” does not explicitly stipulate that the trustee should enjoy the capital authority, the capital authority of trustee is generally regarded as implied authority, and is an automatic authority when the trustee actively manages the charitable trust property. To invest the charitable trust funds is that the trustee fulfills the duty to maintain and increase the value of charitable trust funds, and is also the demand of active management for achieving charitable purpose. Especially in the development of charitable business in our country, charitable trust is regarded as the 2important mission of investment.Therefore, the core of the research in this paper is how to invest the charitable trust funds. Compared with the countries with perfect legal system in the field of charity such as Britain and America, the development of charitable trust in our country is relatively backward. Since “Trust Law” launched the charitable trust in our country in 2001, the gaps in the system and the practical reasons caused the successful establishment of only eight charitable trusts in accordance with legal rules, the trustees of these charitable trusts are all the trust companies. After investigating trust indentures and property management reports of charitable trusts in our country, this paper finds that there are three common faults for our country’s charitable trusts in the field of investment: the first is the non-transparent investment information, the second is the undefined investment policy, the third is the vague duty of trustee and the weak risk control measure. This is because the investment activity of charitable trust funds in our country is lack of clear standards and guidelines.Therefore, the third, fourth, fifth chapters of this paper focus on these three faults, and make clear some aspects of investment regulations about charitable trust funds in our country, and minutely introduces how to standardize the capital authority of trustee of charitable trusts.The first is to make clear that legislation should vest the trustee of charitable trusts with the discretion for investment, which is the objective basis to make corresponding legal restriction on investment authority of trustee. And to guard against the trustee with “Absolute power leads to absolute the abuse of power”, clearing principles followed by charitable trust funds. The principles includes “Follow the trust documents legally and strictly”, “Devoted to the best interest of beneficiary”, “To balance the safety, profitability and liquidity”. Then this paper integrates the scope of maintaining and increasing the value of charitable funds limited by existing law in our country and the legislative proposals of charity law on regulating the investment of charitable companies by some experts and scholars, and combines the history of Anglo-America trust law with the means of our country’s social security funds to handle these problems, and proposes to abandon the legal investment catalog as for the limitation of investment scope, and proposes to adopts the mode of negative list, and then explores the ethical investment in the field of charity. This paper considers some investments which probably are forbidden by our country, especially including discussion about ethical investment in the field of charity.On the premise of establishing investment principles and scope of investment, taking examples by investing principles in Trustee Act in Britain, Trustee Investment Act and prudent investor rules in Uniform Prudent Investor Act and Uniform Prudent Management Of Institutional Funds Act, this paper recommends our Trustee Association to develop guidelines with the content of “investment standards of prudent trustee obligations” for instruction.The final is that this paper starts from improving the information disclosure rules about the investment of trustee, improves the supervision system combining trust supervisor with supervisory agency, so as to make the investment activity of charitable trust funds in our country follow the clear regulations.