q & a guide to setting up a charity

Vo l u n t a r y S e c t o r S u p p o r t

Q&A Guide to setting up a Charity

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This Q & A is designed to help you better understand the criteria you will need to meetin order to become a registered charity and whether it is the best course of action foryou to take. It is designed to answer some basic questions and to help shape you’rethinking in this area

Q What is a charity?A A charity is a particular type of voluntary organisation, and must conform to a number

of regulations set out in charity law. The Charity Commission is the independentregulator for charitable activity in the UK.

Their website is therefore the key link for all information and documentation www.charity-commission.gov.uk.

However, depending upon your reason for wanting to set up a new charity and what youwant to achieve, there may be other, and better, ways of achieving your aims that you mightlike you to think about.

Q What should you think about beforesetting up a new charity?

A There are 3 key things to think about before setting up a charity

1. Is a charity the best route to take

2. Does a similar organisation already exist

3. Understand how a charity must operate and the implications.


Let’s look at each of these in more detail:

1. Best route to take:The following particular situations are among those where setting up a new charity may notbe the best way to proceed. In these situations care is needed and advice should be soughtbefore going ahead:

• I want to commemorate someone by setting up a charity in their name

• I want to do something in response to a national or international disaster.

• I am applying for Lottery money and need to set up a registered charity

• I want to set up a charity to assist a specific person suffering from a (rare) disease/disorder.

• I want to make a difference in Society by pursuing a political aim such as seekinga change in the law in the UK or overseas.

The attached Charity Commission link will take you through each of these situationsand review alternative options that you may wish to consider:

http://www.charity-commission.gov.uk/Start_up_a_charity/Set_up/best_way_forward.aspx#7

If your reasons for setting up a new charity are different to these, you should nextconsider:

2. Are there existing charities with the samepurposes and activities as yours?

There are around 180,000 registered charities in England and Wales, and perhaps as manyagain smaller unregistered ones. One or more of these may very well be doing the kind ofcharitable work your new charity would do, and in the same area. You need to make sure youare not duplicating effort.

It's also worth exploring whether there are existing charities with the same (or similar)purpose as your own - with limited funding available, sharing resources and working togethercould make it easier for you both to achieve your objectives in the long-term. The CharityCommission have an online database of registered charities that includes facts and figuresabout the work and finances of each charity.


3. Understanding how a charity must operate.

Finally, before deciding to set up a new charity, it is important that you understand the basicrequirements regarding how a charity must operate.

• All charities must operate within the constraints of charity law.

• Charities must have, and carry out, wholly charitable purposes and activities. Not all purposes,even those that may be beneficial or philanthropic, are necessarily charitable.

• All charities must also be set up for the public benefit.

The attached website link will take you to the Charity Commission section on charitablepurposes and public benefit where requirements are specifically detailed.

http://www.charity-commission.gov.uk/Charity_requirements_guidance/Charity_essentials/Public_benefit/default.aspx

People who run charities are called charity trustees (even if their group is called themanagement committee, or something else. It is important that you are confident thatthe people who will run your charity the proposed trustee body understand what isexpected of them.

The attached link on the Charity Commission web site will give you a good overview of whatis required of them:

http://www.charity-commission.gov.uk/Charity_requirements_guidance/Charity_essentials/The_essential_trustee.aspx


Another very useful document which will help you better understand all the governancefactors involved in running a charity is the Governance Guide to Voluntary Sector a copyof which can be found on our self help guide section of our website.

Q If you start up a charity do you need toregister it?

A Many people starting a charity assume they need to register with the CharityCommission or think that a registered charity number is necessary to carry outvoluntary work. However, in the UK today there are probably over 500,000voluntary organisations but fewer than 180,000 of these are registered charities.

When an organisation has an income of £5,000 or more then it is required by law to registerwith the Charities Commission and you will be required to submit evidence in the form of abank statement or latest annual accounts with your application.

It is not Charity Commission policy to register charities that do not meet this minimumrequirement, but it is a complex process and it is beneficial to check the Charity Commissioninformation via the attached web site link.

http://www.charity-commission.gov.uk/Start_up_a_charity/Do_I_need_to_register/Types_of_charity_index.aspx

This section explains:

• Types of charity that don’t have to register

• What to do if your charity’s annual income is less than £5k

This link also provides information on specific types of charity that don't have to registerExcepted and Exempt charities and on Charitable Incorporated Organisations.

Q Why would you want to become aregistered charity?

A • Income generation some grant-makers only fund registered charities and likewise,individuals may be more willing to donate (either time or money) to registered charities

• Tax breaks charities qualify for a number of tax exemptions and reliefs on income andgains, and can take advantage of Gift Aid (a means of reclaiming tax on donations)

• Discounts many organisations offer free or discounted help to charities


However, if your income does not exceed £5,000, you can still enjoy these benefits withouthaving to meet the regulatory requirements of registered charities.

Q I have considered the alternatives andstill want to set up a new charity whatnext?A If, having considered all the alternatives, you think that setting up a new charity is the

best way to do what you want to achieve, or if you have already set up a charity andwant to register it, you should now go to the attached links on the Charity Commissionweb sites.

These links explain the registration process and what you need to do before applying toregister.

http://www.charity-commission.gov.uk/Start_up_a_charity/Guidance_on_registering/default.aspx

http://www.charity-commission.gov.uk/Start_up_a_charity/Register_a_new_charity/default.aspx

Q What other options are there?A If you don't meet the legal requirements for setting up a charity, or decide that it isn't

the right approach to achieve your objectives, there are alternative options.

A very good free decision making tool designed to help you understand what legal andgovernance structure is most appropriate for you, whether you wish to establish acharity, social enterprise or co-operative organisation can be found via the attached link.The tool Get Legal has been created by NCVO.

http://www.getlegal.org.uk/user/registers.html

Community Impact Bucks has also produced a self help guide to “Voluntary &Community Legal Structures”. This details the various legal structures that might beconsidered for not for profit organisations.

We have also produced a number of other self help guides that you may find useful.These can be down loaded from the Community Impact Bucks website:www.communityimpactbucks.org.uk

Community Impact BucksTel: 0845 389 0389 www.communityimpactbucks.org.uk

PROMOTING EXCELLENCE IN VOLUNTARY AND COMMUNITY SERVICES


Guides available include:

- Guide to Project Planning.

- Guide to Funding

- Guide to Business Planning.

- Good Practice Guide to Involving Volunteers

- Guide to Sustainable Funding and Financing Options.

Please contact Community Impact Bucks on or e mail [email protected] you require specific individual help and support.

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