Setting up a charity can be complex, but the benefits are clear, and if you follow the Charity Commission's* procedures the process should be straightforward.
What is a charity?
According to the Charity Commission, a charity is an organisation set up to benefit the public through:
- the relief of financial hardship
- the advancement of education
- the advancement of religion
- certain other purposes for the benefit of the community
So, as long as the cause you're planning to support falls under one of the above, you should be able to get your charity established legally.
What are the benefits for charities?
As a registered charity you're unlikely to pay income tax, capital gains tax, stamp duty or inheritance tax, and you can take advantage of Gift Aid, a simple way to reclaim the tax on donations made by UK tax payers.
Charities also pay no more that 20% of normal business rates on their premises and can get special VAT treatment.
Things to consider before registering your charity
- how you will raise funds, having a plan in place can help with cash flow
- could you work with an existing charity instead? It can be better to merge your efforts with other, already established charities if your causes are similar
- who will be the trustees?
- what type of governing document you need
Charity trustees have a variety of responsibilities, which may carry liabilities. They will be responsible for breaches of the law attributable to them in the conduct of their charity. For example, they will:
- be liable to the charity for breach of their trust or fiduciary obligations under trust or company law
- be responsible generally for any breaches of the criminal law they commit
- sometimes be liable under civil law to third parties either for breaches of contract or for infringement of another’s rights
How to register your charity
To register your charity you will need to fill in the application form available from the Charity Commission. You can download an application pack from their website.
You will need to supply declaration forms from each of the charity's trustees, and information explaining how your charity will achieve its aims.
Before registering you will also need to have adopted a governing document. Depending on the nature of your charity, this may take the form of:
- trust deed
- memorandum and articles of association
* For more information, please visit the website links above. This information refers primarily to setting up a charity in England and Wales. If your charity will be based in Scotland you should refer to the Office of the Scottish Charity Regulator.