Dominic Grieve, the Attorney-General, is expected to ask the High Court or the charity tribunal to rule on whether the £339m assets of the National Fund charity could be paid to the Treasury.
The fund was set up with £500,000 in 1927 to pay off the national debt. Its governing documents say it must accumulate capital until it is able to pay off the entire debt.
Since that time its only payments have been for governance and financial management, which last year totalled more than half a million pounds.
The fund is now the 23rd-richest charity registered with the Charity Commission, but its assets are still only 0.03 per cent of the country’s £1.02tn debt.
Third Sector has previously reported that the commission and Barclays Wealth Management, the fund’s corporate trustee, were in talks about changing the charity’s objects, possibly to allow it to become a grant-giver.
Grieve’s involvement emerged after Third Sector submitted to the commission a request under the Freedom of Information Act for correspondence relating to the fund.
The correspondence reveals that in June last year Alice Holt, head of legal services at the commission, wrote to Macfarlanes, the solicitors for Barclays, saying that Grieve felt it was "appropriate to remove" the rule that the charity must pay off the whole debt.
She added: "We understand that the Attorney-General is minded to consider whether in his role as parens patriae (parent of the nation) he should refer the matter to the court to allow it to consider whether such an administrative scheme would be expedient in the interests of the charity.
"The effect of such a scheme would be the immediate application of the fund for its purposes. That is to say to the reduction of the national debt."
A previous letter from the commission to Barclays said that the regulator favoured a 'cy-pres' scheme, which allows the trustee to change the fund’s objects.
However, the commission has now said it will defer to the Attorney-General’s advice. Barclays is not expected to contest his view either.
A spokesman for the Attorney-General said he had not yet sought a court ruling on the fund. "We’re still considering a number of issues," he said.
A spokesman for Barclays said: "Since being appointed trustee of the National Fund in 2009, Barclays has been engaged with the Charity Commission to determine how best to use the funds – and while this has been a complicated, technical process, we have made good progress.
"We look forward to working with the Attorney-General and the Charity Commission to complete this work."
Payment of the national debt is considered a charitable purpose. However, Tom Murdoch, a lawyer at Stone King, said that an organisation should also show it provided a public benefit in order to be a charity.
"Given how remote the chances are of the fund getting large enough to pay off the national debt, or even to substantially assist with paying it off, and given that it doesn’t have any other charitable activities, it would be hard to argue that the National Fund is currently providing a public benefit," he said.
He said that the Attorney-General’s view that the money should go to the government might well be legally correct.
"We might not regard that as ideal," he said. "But it is a separate political question whether the government should accept funds that might be more popularly used for more recognised charitable purposes."The fund’s most recent set of accounts show that in the year to April 2011 it paid £576,000 in professional fees, including £253,000 to Barclays Wealth Management and £188,000 to investment managers.