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
PROMOTING EXCELLENCE IN VOLUNTARY AND COMMUNITY SERVICES
www.communityimpactbucks.org.uk Community Impact Bucks is a registered charity no:1070267 company no: 3508718
Q&A Guide to setting up a Charity This Q & A is designed to help you better understand the criteria you will need to meet in order to become a registered charity and whether it is the best course of action for you to take. It is designed to answer some basic questions and to help shape you’re thinking 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 independent regulator for charitable activity in the UK.
Their website is therefore the key link for all information and documentation www.charitycommission.gov.uk. However, depending upon your reason for wanting to set up a new charity and what you want to achieve, there may be other, and better, ways of achieving your aims that you might like you to think about.
Q What should you think about before setting 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.
Page 2
Q&A Guide to setting up a Charity 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 not be the best way to proceed. In these situations care is needed and advice should be sought before 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 seeking a change in the law in the UK or overseas. The attached Charity Commission link will take you through each of these situations and 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 next consider:
2. Are there existing charities with the same purposes and activities as yours? There are around 180,000 registered charities in England and Wales, and perhaps as many again smaller unregistered ones. One or more of these may very well be doing the kind of charitable work your new charity would do, and in the same area. You need to make sure you are 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 together could make it easier for you both to achieve your objectives in the long-term. The Charity Commission have an online database of registered charities that includes facts and figures about the work and finances of each charity.
Page 3
Q&A Guide to setting up a Charity 3. Understanding how a charity must operate. Finally, before deciding to set up a new charity, it is important that you understand the basic requirements 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 charitable purposes 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 the management committee, or something else. It is important that you are confident that the people who will run your charity the proposed trustee body understand what is expected of them. The attached link on the Charity Commission web site will give you a good overview of what is required of them: http://www.charity-commission.gov.uk/Charity_requirements_guidance/Charity_essentials/ The_essential_trustee.aspx
Page 4
Q&A Guide to setting up a Charity Another very useful document which will help you better understand all the governance factors involved in running a charity is the Governance Guide to Voluntary Sector a copy of which can be found on our self help guide section of our website.
Q If you start up a charity do you need to register it? A
Many people starting a charity assume they need to register with the Charity Commission or think that a registered charity number is necessary to carry out voluntary work. However, in the UK today there are probably over 500,000 voluntary 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 register with the Charities Commission and you will be required to submit evidence in the form of a bank statement or latest annual accounts with your application. It is not Charity Commission policy to register charities that do not meet this minimum requirement, but it is a complex process and it is beneficial to check the Charity Commission information via the attached web site link. http://www.charitycommission.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 register Excepted and Exempt charities and on Charitable Incorporated Organisations.
Q Why would you want to become a registered 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 and gains, and can take advantage of Gift Aid (a means of reclaiming tax on donations) • Discounts many organisations offer free or discounted help to charities
Page 5
Q&A Guide to setting up a Charity However, if your income does not exceed ÂŁ5,000, you can still enjoy these benefits without having to meet the regulatory requirements of registered charities.
Q I have considered the alternatives and still want to set up a new charity what next? 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 and want to register it, you should now go to the attached links on the Charity Commission web sites.
These links explain the registration process and what you need to do before applying to register. 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 and governance structure is most appropriate for you, whether you wish to establish a charity, 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 be considered 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
Page 6
Q&A Guide to setting up a Charity 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 info@communityimpactbucks.org.uk if you require specific individual help and support.
PROMOTING EXCELLENCE IN VOLUNTARY AND COMMUNITY SERVICES
Community Impact Bucks Tel: 0845 389 0389 www.communityimpactbucks.org.uk