{"id":6981,"date":"2019-12-29T21:10:41","date_gmt":"2019-12-29T21:10:41","guid":{"rendered":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/?p=6981"},"modified":"2024-05-01T00:43:21","modified_gmt":"2024-04-30T23:43:21","slug":"setting-up-a-charity-what-you-need-to-know","status":"publish","type":"post","link":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/setting-up-a-charity-what-you-need-to-know\/","title":{"rendered":"Setting up a charity? Here’s what you need to know…"},"content":{"rendered":"

Before attempting to set up a charity, you must have a clear understanding of what it means to be a charity and if this is the right option for you. This article defines what a charity is, discusses the different legal structures that can be used to set up and run a charity, and provides guidance on setting up a charity.<\/p>\n Set up a limited by guarantee company with charity articles - for only \u00a389.99<\/span><\/a>\n \n

Starting a charity is not an easy matter. It requires a great deal of determination and commitment. However, seeing the impact of your work in running a charity can be an incredibly worthwhile experience.<\/p>\n

What is a charity?<\/h3>\n

In order to be officially classed as a charity in England and Wales, an organisation must meet the legal definition of a charity. The Charities Act 2011<\/a> defines a charity as an institution that is established for charitable purposes, namely one or more of the following:<\/p>\n

(a) the prevention or relief of poverty<\/p>\n

(b) the advancement of education<\/p>\n

(c) the advancement of religion<\/p>\n

(d) the advancement of health or the saving of lives<\/p>\n

(e) the advancement of citizenship or community development<\/p>\n

(f) the advancement of the arts, culture, heritage or science<\/p>\n

(g) the advancement of amateur sport<\/p>\n

(h) the advancement of human rights, conflict resolution or reconciliation, or the promotion of religious or racial harmony or equality and diversity<\/p>\n

(i) the advancement of environmental protection or improvement<\/p>\n

(j) the relief of those in need, by reason of youth, age, ill-health, disability, financial hardship or other disadvantage<\/p>\n

(k) the advancement of animal welfare<\/p>\n

(l) 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<\/p>\n

(m) any other purposes which could reasonably be regarded as charitable in line with the law on charities in England and Wales<\/p>\n

Note: These listed purposes are not themselves defined other than by Annex D in this government guidance<\/a>.<\/p>\n

As well as falling within the purposes listed above, a charitable purpose must also be for the public benefit (known as the public benefit requirement). According to the Charities Act, the trustees of a charity must have regard to the Charity Commission\u2019s public benefit guidance<\/a> \u201cwhen exercising any powers or duties to which the guidance is relevant.\u201d<\/p>\n

In addition to having a charitable purpose and fulfilling the \u2018public benefit\u2019 requirement, the organisation must also be subject to the control of the High Court\u2019s charity law jurisdiction (i.e. the court must have the power to make decisions about the administration and purposes of the organisation as a charity). In effect, this means that a charity registered in England and Wales cannot be subject to the jurisdiction of another country (e.g. Scotland, Northern Ireland, etc.). This should be made clear in the organisation\u2019s governing document (see below).<\/p>\n What is the right company structure for my business?<\/span><\/a>\n \n

The legal structures suitable for a charity<\/h3>\n

There are essentially four different types of legal structures which can be used to set up a charity, as follows:<\/p>\n

1. Charitable company limited by guarantee<\/h4>\n

A limited by guarantee company is generally a non-profit organisation that does not have a share capital and whose members are guarantors instead of shareholders. The liability of its members is limited to the (usually nominal) amount they agree to contribute to the company\u2019s assets if the company is wound up.<\/p>\n

Profits of companies limited by guarantee cannot be distributed to members if it is to be eligible for charitable status. In terms of registration and filing of accounts, it must deal with both Companies House and also (normally) the Charity Commission.<\/p>\n

As it is a corporate structure, a charitable company limited by guarantee has the legal capacity to carry out various business activities in its own name, such as:<\/p>\n