What is a Charity?
A charitable organisation or a charity is a type of organisation whose prime objectives include serving the public for the purposes of development.
Generally, this involves acts of philanthropy and other activities that are in the interest of the public or the common good.
Can Charities Make a Profit?
Charities may not use the funds they make to profit an individual person. There are generally 6 steps to setting up a charity in the UK.
How Do You Find Trustees for a Charity?
Starting a charity involves finding trustees, this must be up to 3 people. This is the recruitment, appointment and induction of the aforementioned.
To be a trustee an individual must be:
- A trustee must be 16 years old if the charity is a company or a Charitable Incorporated Organisation (CIO).
- At least 18 years old to be a trustee of any other charity.
- The individual(s) must be properly appointed and know how long they will be appointed for.
- If the trustee is not properly appointed their decisions may be invalid because it can potentially create disputes by putting the charity asset at risk.
- If the trustee is that of a charity that provides ‘regulated activities’ for children and/or adults the trustee needs to have a DBS.
Overall, Trustees have the overall control of a charity and are responsible for making sure the charity is meeting the goals or agenda it was set up to fulfil. This means they should:
- Plan what the charities do and what it wants to achieve.
- Explain how the charities activities are intended to further support its purpose.
- Understand how the charity benefits the public.
However, if a trustee or other individual uses funds for the wrong purposes it becomes an offence/serious matter. For example, the trustee may have to repay the spent funds to the charity.
Therefore, Trustees can be disqualified for the above reason or others. This then means they can no longer maintain a position as a trustee or cannot become a trustee initially based on any of the following:
- Being bankrupt.
- Having unspent convictions for particular offences.
- Being on the sex offenders register.
What Does It Mean for a Charity to Have a ‘Charitable Purpose For Public Benefit’?
A charity in England and Wales must be set up under purposes that are charitable to public benefit.
This must be reported in an annual trustees report.
For this reason, the charitable purpose may also be named ‘objectives.’ For example, if a charity has more than one purpose it has to be defined by law as one of the following:
- Relieving poverty.
- Protecting the environment.
- Human rights.
- Community development.
How Do You Choose a Name for Your Charity?
Choosing a name for a charity has to adhere to some rules Your charity name must not:
- Contain anything offensive, this included offensive acronyms.
- Be the same or too similar to the name of another charity.
- Use any trademarked words without the correct permissions.
- Break any intellectual property laws.
- Be misleading or advertise falsely the cause the charity supports.
At this time, you can use the database on the GOV.UK website to check any names so there is no confusion and the Charity Commission has the right to make a charity change its name if it contravenes any rules.
Also, if a charity is being named with the use of non-English words for example a Welsh name the meaning of the non-English word must be translated where needed.
What Is the Typical Structure for a Charity?
There are typically four structures for a charity:
- Charitable Incorporated Organisation (CIO).
- Charitable Company (Limited by a guarantee).
- Unincorporated association.
What is a Governing Document?
A governing document is a rule book for a charity that explains how the charity is run.
Also, it helps to give a charity/organisation legal existence. As a result, the governing document identifies the name, states the purpose and describes the structure and procedures of the charity organisation.
For example, a governing document sets down guidelines for trustees that include:
- Rules about the trustee’s expenses
- Rules about payment to any trustees
- How to close the charity
How do You Register a Charity?
In order for a charity to be registered, it should be:
- Based within England or Wales, there are different rules for Scotland and Northern Ireland.
- The income of the charity should be at least £5,000 per annum or be a charitable incorporated organisation (CIO).
- Proof of income is necessary.
- Charities latest published documents.
- These documents must be approved as proof of income by an auditor or an independent examiner.
- A bank statement.
- An offer of funding from a funding body.
- Submit your appliccation to the Charity Commission.