Steps to take when starting a charity

With over 200,000 charities registered in the UK (England, Northern Ireland, Scotland, and Wales), setting up a charity is a popular option for those who want to make a difference. But it’s important to make sure you’re doing it for the right reasons and find out what’s involved.

 

The NCVO says you need the right motivations for setting up a charity. These are:

• “Meeting a genuine need of a significant group of people”
• “Addressing a gap in the services voluntary organisations provide”
• “Bringing a unique experience or understanding of the issue you want to address”

There are different rules for charities depending where in the UK you’re based. If you’re in England and Wales, the Charity Commission sets out the laws for charities. In Scotland, it’s the Scottish Charity Regulator and in Northern Ireland, it’s The Charity Commission for Northern Ireland.

 

We outline the steps below for setting up a charity:

 

 

Carry out research when setting up a charity

 

Setting up a charity takes time and commitment. So, before you rush into anything, do your research and carry out background reading. There is a lot of help and useful resources online, including information from the NCVO and the regulators’ websites.

 

The Charites Aid Foundation says it’s important to check you’re not duplicating the efforts of other charities working in this area. If you are, it’s worth considering whether you would make more of an impact by fundraising for them.

 

The Charity Commission for Northern Ireland adds: “Setting up and running a charity takes a lot of work. You may want to think about joining forces with an already established charity rather than starting a new charity. This could be efficient use of time and funds.”

 

 

Choose a name for your charity

 

The Charity Commission sets out rules about choosing a name for a charity. These include not using:

• A similar name of an existing charity
• Words that you don’t have permission to use, such as a trade mark
• Offensive words or acronyms

When deciding on a name for a charity, search the charities register to check names of existing charities.

 

There are different registers for charities in Scotland and charities in Northern Ireland.

 

 

Recruit trustees for your charity

 

Every charity needs trustees. These are the people who are responsible for making sure a charity is doing what it was set up to do. Trustees use their skills and experience to support an organisation to achieve its aims.

 

 

Choose a legal structure for your charity

 

If you’re setting up a charity in England or Wales, there are four types of charity structures that you can choose:

• Unincorporated associations
• Trusts
• Charitable companies (limited by guarantee)
• Charitable incorporated organisations

The Charity Commission says that “the type of structure you choose affects how your charity will operate”. This includes who will run it and whether trustees will be personally liable for what the charity does.

 

Most charities in Scotland are unincorporated associations or companies limited by guarantee. Some are then trusts and others are Scottish charitable incorporated organisations.

 

In Northern Ireland, charities can set themselves up either as an unincorporated association, charitable company or charitable trust.

 

 

Prepare a governing document for your charity

 

A charity must prepare a governing document that explains its charitable purpose (what it sets out to achieve).

 

Each of the three regulators have information on their website about how to prepare a governing document:

 

England and Wales

Scotland

Northern Ireland

 

Each different charity structure has its own type of governing document. The Charity Commission website has templates for each charity structure to help guide you.

 

 

Register your charity

 

Charities in England and Wales must register with the Charity Commission if they have – or expect to have – an annual income of over £5,000. They must also register with the Charity Commission if they are not an exempt or expected charity.

 

Meanwhile, charities that have an annual income of less than £5,000 aren’t required to register with the Charity Commission. They can’t voluntarily register unless they are a charitable incorporated organisation.

 

Charities in Scotland must register with the Scottish Charity Regulator if they meet the “charity test”. This means an organisation that has only charitable purposes and provides public benefit in Scotland or somewhere else.

 

Charities in Northern Ireland must apply for registration with The Charity Commission for Northern Ireland if they:

• Have solely charitable purposes
• Are governed by the law of Northern Ireland
• Are an institution (an independent body that has control and direction over its governance and resources)

For more on registering your charity, check out: How to register your charity.