Setting Up A Charity
Many clients who have lost a loved one consider setting up a charity in their memory, so that their name lives on in the wider community and is forever associated with the public good.
Those charities could be set up to help the less fortunate in society, to save lives, to relieve poverty and suffering, to promote education, animal welfare, protection of the environment or other good causes.
What Qualifies As A Charity?
A charity should be for the public good rather than for the benefit of a specific individual. (In that instance setting up a trust may a better option.)
The Charities Act sets out a list of defined purposes that are used to decide whether an organisation merits charitable status. To qualify, the prospective charity must meet one of these 13 criteria.
How Long Does It Take To Set Up A Charity?
Setting up a charity and gaining approval from the Charity Commission of England and Wales can take months, rather than weeks.
One charity that we set up recently took eight months to create because its remit was so wide, requiring extra clarification in the application to the commission.
But most applications will not be as complicated as this – particularly if they are for small local charities without a wider membership.
How Much Does It Cost?
Each case is unique. But setting up a small charity generally costs around £2,000 plus VAT in legal fees. The costs may well be considerably higher if there is significant complexity involved.
Also, it is important to note that the Charities Act 2006 states that a registered charity must have an annual income of at least £5,000.
All this begs the question: could £2,000+ in set-up costs be better spent simply by donating the money to an existing charity?
Types Of Charities
Charities fall into four types:
- charitable incorporated organisation (CIO)
- charitable company limited by guarantee
- unincorporated association
It is important to choose the right structure for your charity. We can advise you based on what you want your charity to achieve and how you want it to operate.
A key factor will be whether you want your charity to have a wider membership or whether it will be a smaller organisation with only the trustees as its members.
Few people start a charity with the ambition of employing dozens of staff and creating a huge organisation. Most people we speak with simply want to start a small charity to honour the memory of a loved one and to do good in their name.
For many of them, a trust would suffice. They don’t expect to employ staff or carry out major projects. They simply want to make grants to worthy causes.
Others may start a small charity but then discover that it grows beyond their initial expectations. In this case, it is possible to change the structure of your charity and opt for a different type later.
But this can be complex so it pays to take expert legal advice.
Every application to the Charity Commission – no matter which type of charity structure you select – starts with a governing document that sets out your reasons and what you hope to achieve.
The commission will need to know:
- the name of your proposed charity
- its charitable purposes (‘objectives’)
- what will it do (‘powers’) to carry out its purposes?
- who will run the charity (‘trustees’) – how many will there be and who will appoint them?
- can anyone else other than the trustees be a member?
- how will meetings be held?
- any rules about investments, payments to trustees and holding land
- whether the trustees can change the governing document, including its charitable objectives (‘amendment provisions’)
- how to close the charity if required (‘dissolution provisions’).
Get Expert Legal Advice
Setting up a charity is a specialised area of the law that requires careful consideration and a great deal of planning.
Our solicitors can help you to decide which structure would be best for your proposed charity. We can apply on your behalf to the Charity Commission of England and Wales.
Contact Coles Miller solicitors today for expert advice. Request a call back.
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