Mark Lyttleton is an angel investor, speaker and business mentor who supports a range
of charities on a regular basis. This article will provide an overview of the
steps required to set up a charity in the UK.
People decide to set up a charity for all kinds of
reasons. For example, perhaps they have experienced a traumatic event and want
to help others in a similar situation or are moved by a particular social and
environmental concern. Essentially, people set up charities because they see a
problem that needs solving or a way they can improve, and even save, people’s
lives.
Although establishing and running a charity can be
extremely fulfilling, it can also be quite challenging. Founders need to be in
it for the long haul and it is therefore essential that they are channelling
their energies into a cause they believe in and directing those energies in a
productive way.
The first step in launching a charity is ensuring
that it will not duplicate or undermine the efforts of other charities
operating in the same area. It is also necessary to consider whether setting up
a charity is really the right option. Although a registered charity benefits
from significant perks such as charitable status and tax advantages for donors,
other alternatives may be a better fit in some circumstances.
There are four types of charity structure in the UK:
·
Trusts
·
Unincorporated Associations
·
Charitable Companies
·
Charitable Incorporated Organisations
If the charity’s annual income exceeds £5,000 or the
founders choose to set up a Charitable Incorporated Organisation (CIO), the
charity will need to be registered. Founders will need to ensure that their
organisation has been created for charitable purposes for public benefit,
appointing trustees, naming their charity and creating a governing document.
The governing document will deal with aspects such as the organisation’s
charitable purposes, how it is run, how decisions are made, rules about
payments to trustees and expenses, and how to resolve internal disputes.
If establishing a charity is the right option, the trustees
need to agree on the structure for their new organisation, which will have a
significant impact on what it can do. The most appropriate choice of structure
will depend on a combination of factors, including the amount of money involved
and how activities will be funded; whether charitable services will be
delivered under contract; whether the charity will be open to a wide membership;
and whether its trustees are willing to accept personal liability for the
charity’s activities.
