How to set up a charity (CC21a)
The Charity Commission has produced a guide for setting up charities. The full guide can be found at the following: https://www.gov.uk/how-to-set-up-a-charity-cc21a?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CharityCommissionUpdates+%28Charity+Commission+updates%29
The guide highlights seven key steps for the set up of a new charity. There are as follows:
Step 1: Decide if a charity is the right option
Charities are created to provide public benefit and therefore there exist allowances such as reduced business rates, tax relief and access to grants and funding. Will first need to establish that the type of organisation can be a charity, and that the legal restrictions will not limit the objectives. Alternatives solutions are working with an existing charity or setting up a named fund or non-charitable social enterprise instead.
Step 2: Decide on your charity’s purpose
The charity’s purpose is the reason it exists and what it helps to achieve. This purpose can determine whether an organisation is classed as a charity. By law the charity must be run consistently with its purpose. For further information on writing a charitable purpose see our blog Writing Charitable Purposes.
Step 3: Choose a charity structure
There are four main types of charitable structure: charitable incorporated organisations (CIO), charitable companies limited by guarantee, unincorporated associations and trusts. The choice of structure should be linked to how the charity will operate and whether it will be a corporate body and if it will have wider membership. Further information on charitable structure is in our blog: Charity Types: How to Choose a Structure (CC22a).
Step 4: Write a governing document
The governing document is a legal document detailing the how a charity will be run and ultimately establishes the charity. The requirements will change based on the charity’s structure but there are several key required items of information including the objects of the charity, information on trustees, remuneration details and the powers the charity has.
Step 5: Choose a name
The name is essential to the charities brand and is the first introduction into the charities aims. Misleading or already used names can result in required changes and the charity will have to cover the costs involved.
Step 6: Find trustees
Trustees are the members of the governing body. They will make the key management decisions and therefore must be chosen wisely. Experience and skills are necessary.
Step 7: Fund your charity’s work
Funds raised must be kept securely and be properly accounted for. Unless your charity is a specific type of charity that doesn’t have to register, you must apply to register your charity with the commission once it has an income over £5,000. If your charity is a charitable incorporated organisation (CIO) you must apply to register it whatever its income.
Date: 11th November, 2014
Articles from this Author
1st August, 2017
Charity Governance Code
7th July, 2017
ICAEW Audit insights: charities – positive impacts in challenging times
21st November, 2016
Academies update-Academies Financial Handbook 2016
20th April, 2016
Trustees – would you be able to manage any financial difficulties that could affect your charity?
For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole