The difference between family and private trusts: a comprehensive comparison
The National Center for the Development of the Non-Profit Sector in Saudi Arabia clarified the fundamental and organizational differences between "family trusts" and "charitable trusts," highlighting the complementarity between the two models in serving the community, despite the clear differences in establishment requirements and target groups. This clarification comes as part of the Center's ongoing efforts to regulate and institutionalize charitable work, ensuring its sustainability and maximizing its impact.
Family funds: Strengthening kinship ties and institutionalizing solidarity
Family trusts are characterized by a unique feature that is primarily based on blood ties and kinship. The center explained that the identity of these trusts is formed based on the relationship between the founders and the beneficiaries, and their services are exclusively limited to the family circle. This model aims to transform traditional family giving from mere random individual assistance into a structured, institutional effort that meets the economic and social needs of members of the same family.
These funds derive their importance from the deeply rooted social and religious values of Saudi society, representing a practical embodiment of the concept of "kinship ties." By organizing this giving, family funds ensure that support reaches those in need within the family regularly, thus strengthening internal solidarity, preserving the dignity of relatives in need, and contributing to resolving social problems within the family before they escalate.
Community funds: Legislative flexibility and broader development prospects
In contrast, community trusts enjoy broad legislative flexibility that distinguishes them from family trusts. Their governing regulations do not require any kinship between members, thus opening the door wide for individuals or groups to establish trusts, either as individuals or legal entities. The scope of these trusts extends beyond the family to encompass diverse segments of society united by a common interest or developmental need, such as colleagues in the same workplace, residents of the same neighborhood, or groups of friends and professionals.
Community funds seek to stimulate community participation by launching sustainable development initiatives that serve the public interest, taking advantage of the broad scope provided by the regulations to adapt their objectives and mechanisms according to the nature of the beneficiaries and the programs offered, away from strict ratio restrictions.
National context: Alignment with the Kingdom's Vision 2030
The focus on regulating and clarifying the differences between these two approaches comes within the context of the major transformations taking place in the Kingdom's non-profit sector, in line with the objectives of Vision 2030, which seeks to increase the non-profit sector's contribution to the GDP and expand its social impact. By establishing clear regulatory frameworks for family and charitable funds, the state ensures greater efficiency in charitable spending and enhances transparency and governance.
This precise organization leads to the integration of roles; while family funds ensure the social stability of the extended family (the basic building block of society), community funds are launched to address broader societal and developmental issues, ultimately forming an integrated system for sustainable social and economic development in the Kingdom.
