Have you decided that you want to start a charity?
That’s great news. But as head of registration of new charities at the Charity Commission I’d ask you to step back a moment and think whether this is the right thing to do.
Running a charity of any size is a big responsibility. The public holds charities in high esteem and expects them to be run well.
It takes time, and a real desire to learn and understand how to do it properly. After all, you may be handling other people’s money, or they may be using the service you are providing, so there is a lot at stake.
My three big questions are:
1) Is a new charity the only way you can achieve your goal?
It’s worth checking whether there’s a charity already doing something similar to what you have in mind. Working with or through an existing charity could have several advantages, such as saving on new administration and staffing costs.
There are over 160,000 registered charities in England and Wales so it’s likely you will find one you could join forces with.
Setting up a new charity is a tough undertaking, so we’d always suggest doing your research first.
2) Should it be a charity, rather than another kind of organisation?
There are many not for profit organisations and social enterprises: not all of these are charities. For example, a community interest company (CIC) or an organisation registered with HM Revenue and Customs as a community amateur sports club (CASC) can’t be a charity.
3) What are the advantages and disadvantages of charities?
There are many advantages to being a charity including
- tax breaks;
- a good level of public trust;
- a defined purpose, acting for the public benefit.
But charities also have restrictions. For example:
- If you set up a charity you must apply to register it with the commission if it is a charitable incorporated organisation (CIO) or its annual income is more than £5,000, unless it is a specific type of charity that doesn’t have to register.
- Charities must follow charity law, which includes telling the Charity Commission and the public about their work.
- Charities can only have purposes the law recognises as being charitable - they can’t have a mix of charitable and non-charitable purposes.
- Charities must be independent - a charity can work with other organisations but must make independent decisions about how it carries out its charitable purposes.
- Charities must be run by trustees who are normally unpaid volunteers - they can only be paid where it is authorised.
- Charities can’t usually benefit anyone connected with the charity, for example giving work to a trustee’s family member or company, unless it is authorised.
- Charities can’t take part in certain political activities, such as campaigning for a change in government.
- Strict rules apply to trading by charities.
- Registered charities must provide public, up-to-date information about their activities and finances.
- Charities are outward facing - they can’t be set up to benefit the narrow interests of a closed group.
If setting up a new charity is the right thing for you, please read our guidance on how to do this.
If you are going to be a trustee of your charity, make sure you know what your role is by reading our Essential Trustee guidance.