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Our Guide To Starting A Charity In The UK

Guide to starting a charity in the UK
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There are many wonderful charities in the UK that do fantastic work all over the world. From philanthropic organisations to those which focus on the environment, UK charities are at the forefront of bringing change and progress to the planet. If you have a cause that you feel strongly about and want to take action to address the issue, starting your own charity can be the ideal way.

Starting a new charity in the UK can be surprisingly easy as long as you follow all of the necessary steps and make sure that you know exactly what you are doing.

To help you get started, here is our step-by-step guide on how to start a charity UK.

1. Choose trustees to run your charity

The first thing you will need to do is find your charity’s trustees. These are the people who will make decisions on how your charity is run and will oversee its daily operations.

You need to appoint trustees as soon as you set up a new charity. As the charity’s founder, you cannot act as a trustee for the organisation yourself (unless it is going to be a one-person charity.) This is because you cannot hold yourself accountable if there are issues with the charity which the trustees need to look at.

A UK Charity must have at least three trustees who are responsible and accountable for making sure that your values and intentions do not change as time goes by. It is best if these trustees reside in the United Kingdom but this isn’t strictly necessary as long as you can find someone with relevant skills to oversee things from abroad.

You need to appoint one trustee to be the chairperson (they don’t actually run anything but they lead the meetings and oversee that everything is running smoothly), one trustee to be in charge of finance (they will manage your accounts and make sure that money isn’t misappropriated or spent without reason) and then you can appoint up to two other trustees who can specialise in whatever areas are most important for your charity. This could include fundraising, IT development, law, or human resources.

It’s also worth noting here that a charity trustee must not use their position for personal gain. They cannot receive any kind of payment from the organisation either directly or indirectly and anyone caught doing this should resign immediately.

Trustees don’t need any special qualifications or experience, but they must be over eighteen and should be committed to running the charity in an honest way and sticking by their duties under the law. The Charity Commission is responsible for ensuring that trustees are complying with their duties and responsibilities as laid out by law, but they cannot offer any guidance on how to find them or manage your relationship with them beyond this point.

2. Decide on your charitable purposes

Before you apply for official recognition from the government so that you can run a charity, you will need to think about what it will actually do, who runs it, where its money goes and other important considerations like whether it will be a solely UK-based organisation or if you will operate internationally.

Your charitable purposes can be anything from helping children and young people to funding research into a specific disease or providing grants to other charities. You need to write down your charitable purposes as part of the charity application process, so you need to make sure you are as clear about what they are before you start filling in the forms.

The written purpose of your charity needs to clearly state what its aims are and how you will achieve them. The UK’s Charity Commission has various charitable purposes that is recognises as being valid which you can view here. The Charity Commission and HMRC will assess your purpose statement, as well as the other information you provide before they decide whether or not to recognise your UK charity. They must do this within six months of receiving all required documents from you – if they don’t then the registration process becomes invalid which means that you would have to start again with a new application form.

They will look at things like:

  • How much money has been raised for running costs?
  • Where will your charity’s income come from?
  • Is your charity sustainable?
  • Will your charity rely on one source of funding making it vulnerable in any way?
  • How much money is being spent on charitable activities?
  • Is there a need for this charity in the local community or sector that you plan to operate in, and will its work have a demonstrable impact?

If the governing authorities decide that your charity proposal is both feasible and has charitable value, they will issue you with a ‘letter of acknowledgement’ to confirm that your UK charity is recognised and registered.

3. Choose your charity’s name

Choosing the right name for your charity is a very important step because it will set the tone for your activities. You can use anything that isn’t already someone else’s registered trademark and that you think reflects your organisation.

The Charity Commission manages a list of all names which are currently available so it is worth checking this before you finalise your charity name.

Remember, the Charity Commission and HMRC will carry out online searches before they give their approval to ensure that your proposed name is available so there could be a delay in getting registered if someone else has already claimed it as theirs.

Fans of wrestling, wildlife or both will remember the case of WWF when the World Wide Fund for Nature and the World Wrestling Federation disputed the use of the acronym. Eventually, the World Wrestling Federation lost the case in court and changed its name to World Wrestling Entertainment (WWE).

4. Choose your trust structure

There are four different structures for UK charities: charitable company, charitable trust, charitable incorporated organisation and unincorporated charitable association. You need to choose the right one from the start because changing it later can lead to problems with funding organisations and government agencies that might not recognise an altered legal structure.

  • Charitable Company

This is the most common structure for UK charities and offers members limited liability. A charitable company must have at least two directors, although it can be run by one director who takes on multiple voting roles. This type of charity has an unlimited lifespan unless its governing document states otherwise.

  • Charitable Trust

You need to appoint trustees if your organisation chooses a charitable trust as its legal structure. They are required to act in accordance with their duties set out in law which means they will only use the trust’s funds for purposes laid down within your charter documents.

  • Charitable Incorporated Organisation (CIO)

These organisations allow membership agreements that confer rights on individual members or classes of members so there may not be any requirement for charitable purposes to be stated in its governing document. A CIO is a hybrid structure somewhere between the above two types of charities and it can also have an unlimited lifespan.

  • Unincorporated Association

These are groups that come together for a common purpose but do not take on any legal structures. The members are responsible for running matters related to their activities themselves usually by holding regular meetings among themselves or with sub-groups that form part of the larger group. The money raised goes towards achieving the objectives set out by those involved rather than being held centrally as assets.

5. Complete your charity governance documents

Once you’ve decided what type of organisation your UK charity will become, it’s time to produce the governing documents. These are a set of rules that will guide your charity’s operations and these include:

– Your charity name, its objects/purposes (what it does), address, registration number if applicable

– Charity trustee details including their names, addresses – any business experience relevant for trusteeship purposes

– The process by which you can make changes to these documents in future e.g how many trustees must agree to the change or whether there needs to be a formal meeting with voting rights attached etc.

6. Register your UK charity name with Companies House & HMRC

Once you have chosen your charitable structure from above and completed all other governance matters such as setting up committees and signing off on your governing documents, it’s time to register the name of your charity with HMRC (Her Majesty’s Revenue & Customs) and Companies House. This is fairly straightforward and just requires you to fill out a form online. It is free to register and it only takes a little time to complete the process if you have everything in order.

7. Buy charity insurance

If you’re planning on doing any fundraising or accepting donations then having adequate insurance is critical. This should cover all activities that are related to charitable purposes. If something then goes wrong during a charity event, you’ll be covered by insurance for your legal liability as well as other risks such as personal injury or damage to property.

8. Raise funds for your UK charity

Many charities rely on grants from government bodies but there are several ways in which organisations can raise funds without relying entirely upon this such as through member contributions, community initiatives like sponsored runs or marathons, fundraising events like cake sales, sponsored swims or concerts, or applying for grants from other charitable trusts and foundations.

9. Set up a charity bank account

It is always a good idea to set up a bank account solely for your charity’s incomings and outgoings. Not only will this make it easier for you to keep track of your charity’s finances, but it will also draw a clear line between your personal finances and those of your charity. This is important because should anything go wrong, the charity will be protected by strict rules that govern how trustees’ personal assets are used.

10. Check the tax rules for charities

UK charities benefit from a number of tax exemptions and other benefits such as Gift Aid which allows them to reclaim certain kinds of income tax paid by donors on gifts. This enables people who donate money to make an even bigger difference than before through these government schemes designed for charitable bodies only. There is also Capital Gains Tax exemption available but this does not apply if there has been any business activity involved with the property or assets held by the organisation. For example, if your charity owns land and rents it out, capital gains tax may have to be paid.

11. Understand the UK laws governing charities

It is important to understand the laws and legislation surrounding charitable organisations in order to ensure that you are acting lawfully at all times. There is no legal definition for what constitutes ‘charitable purposes’ but there are some key guidelines which include:

  • The advancement of education
  • Promotion of religion or spirituality
  • Helping people who may be considered disadvantaged e.g through age, health or poverty
  • The advancement of citizenship or community development
  • Environmental or natural issues

You also need to be aware of who is and who is not allowed to be a founder or trustee of a charity. For example, someone with an unspent conviction for fraud or some other type of deception crime can not be involved in a charity in the UK.

Final thoughts

There are so many people who have causes they care deeply about and want to do something about them but don’t know how to start a charity UK. The most important thing is to make sure you take every step necessary as explained above and that you follow the laws governing charitable organisations to the letter. Any wrongdoing when founding or running a charity, including any attempts to profit from the organisation can have serious legal consequences. Make sure that everything you do is above board and that you have the right trustees and directors in place to realise your purpose and your charity will have everything it needs to make a real difference in the world.

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