Starting a Charity – What you need to think about

Setting up a charity can be a complicated business and there are many things that need to be taken into consideration. Below are some of the things that need to be thought about.

LEGAL ISSUES

For of all you must establish the legalities of your charity. Not just anyone can claim to be a charity; there are certain requirements that must be filled. The most important thing is that a charity must be working for the public benefit. It must be fulfilling a specific purpose. There are three different types of charity, and a charity organisation must come under one of these three umbrellas. These are a Charitable Trust, a Charitable Company, and an Unincorporated Charitable Association. An Unincorporated Charitable Association is the easiest to set up, and the majority of charities fall under this category.

There are many other laws that dictate how organisations which claim to be charities must operate, and organisations are breaking the law if the fail to follow these rules.

TAX

The good news for those starting a charity is that charities get certain tax breaks. They will not be paying the corporate tax that businesses do. These tax breaks exist to encourage people to set up charities. New charities must therefore contact the HMRC to register as a charity for tax purposes. There are rules that need to be followed to receive these tax benefits.

BANK ACCOUNTS

Who to bank with can be an important decision for a charity. Similarly to businesses banking, different banks will offer different rates, so it is beneficial to shop around. Many banks offer favourable interest rates to charities.

REGISTRATION

As already mention you can’t just claim to be a charity, even if you are working in the public benefit. To be able to legally claim to be a charity you must first register as such. Organisations who successfully register as a charity will then be given a charity number, will get certain tax benefits, and be legally allowed to call themselves a charity.

WHY ARE YOU STARTING A CHARITY?

A charity is an organisation working for a particular cause or causes. You need to decide the reasons why you are starting a charity and the particular aims of your charity. You must decide which specific groups you are looking to help and you need long term goals. Fundraising for a particular purpose is not a charity; a charity is a long-term organisation working in the public interest with particular aims.

WHAT IS THE BEST WAY OF HELPING?

The particular operations of your organisation also need to be thought about. For example, how can you help those who you aim to assist? You may aim to raise money simply through donations, or you may want to run events that make money, which you then put towards the relevant causes. It may be that you decide supplying volunteers is better, and that time is better than money. This partly comes down to which causes you are trying to help.

Andrew Marshall (c)