Setting up a charity - A brief guide

Charities and related third-sector organisations play a vital role in our society. Led by altruistic and passionate individuals, they understand and recognise the need where it is greatest and give a voice to those who previously had none.

Charitable purpose 

A charity is a non-profit organisation with a ‘charitable purpose’. It must be set up for one of the following reasons: 

• The prevention or relief of poverty 
• The advancement of education 
• The advancement of religion 
• The advancement of health or the saving of lives 
• The advancement of citizenship or community development 
• The advancement of the arts, culture, heritage or science 
• The advancement of amateur sport 
• The advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity 
• The advancement of environmental protection or improvement 
• The relief of those in need, by reason of youth, age, ill-health, disability, financial hardship or other disadvantages 
• The advancement of animal welfare 
• The promotion of the efficiency of the armed forces of the Crown, or of the efficiency of the police, fire and rescue services or ambulance services 
• Any other charitable purposes 

Legal structure 

There are four main types of structure: 

• Charitable incorporated organisation 
• Charitable company (limited by guarantee) 
• Unincorporated association 
• A trust 

Registering 

When the income of your organisation exceeds £5000 per year, you are required to register with the Charity Commission. If you are under this £5000 you can refer to yourself as a ‘charity’ but not a ‘registered charity’. Registering with HMRC via the charities webpage is still required and means that you can claim tax back on gift aid donations. The charity will need to produce a ‘governing document’ which covers how the charity will be run and include information about the trustees.  

Trustees 

A minimum of three trustees are required for any charity. Trustees have legal responsibility for a charity’s management and administration. They are usually unpaid and play a very important role in the charity.