HOW TO…. SET UP A CHARITY

As part of our advice series, our charity law expert, Nick Dent, has compiled his tips on setting up a charity – or whether a charity really is the best course of action.

Endeavour Partnership provides specialist legal assistance. Nick is an active member of the Charity Law Association, advising voluntary and community sector organisations on aspects such as legal structures, governance, trustees and fundraising.

Nick regularly delivers training seminars regionally and nationally at a range of events.

Nick said: “There are many challenges and matters to consider when registering a charitable organisation. The first thing to consider is whether a charity is, in fact, the right option.”

Sarah Brook is the founder of Sparkle Malawi, a charity formed to advance education and health for the benefit of vulnerable children and young adults in the Republic of Malawi. Sarah said: “Nick was vital in ensuring the process of registering my charity ‘Sparkle Malawi’ in the UK was completed as effectively and efficiently as possible. He was always on hand to offer advice and with a lot of information having to be sent back and forth and changed, he was always happy to go that extra mile to ensure the job was done correctly without any additional fees.”

Here’s Nick advice on setting up a charity: –

1. DECIDE IF A CHARITY IS THE RIGHT OPTION

Charities exist to benefit the public. Because of this, charities

• pay reduced business rates;
• receive tax relief; and
• can get certain types of grants and funding.

But charities are restricted in what they can do and how they work. For example, charities need to follow charity law, which includes telling the Charity Commission and the public about their work, do only things that are charitable in law, be run by trustees who do not usually personally benefit from the charity, and be independent.

For further options, read our blog: 

What if a charity isn’t the right option? 

2. WHAT IS THE CHARITY SEEKING TO ACHIEVE?

Sarah Brook knew what the purpose of her charity would be, but it’s important to translate the purpose into words so that the Charity Commission and HMRC can decide if it qualifies for tax relief, and to explain to supporters, volunteers, fundraisers, and beneficiaries what the charity does and who it helps.

3. SELECT A STRUCTURE THAT IS RIGHT FOR YOU

Choosing a charity structure depends on a number of factors, but after discussing how Sparkle Malawi operates then Nick and Sarah decided that a charitable incorporated organisation might be the most appropriate vehicle to achieve the desired outcomes.

4. ADOPT A GOVERNING DOCUMENT

The drafting of the governing document is an important process – these will be the rules by which your charity will operate. Because of the geographical constraints involved with Sparkle Malawi, it was decided that the ability to conduct meetings electronically was an important feature.

5. CHOOSE A NAME

Sarah had already chosen a name for her charity. The name is important. It is Sarah’s brand- it’s what people will remember when they are deciding to make a donation or looking to volunteer and I think that Sarah has a strong brand. She also has some great branded t-shirts that have been modelled by some famous people – this always helps!

6. FIND TRUSTEES

Finding trustees can be difficult. Trustees are the people who will make decisions about how to run the charity once it is set up. They are responsible for the general control and management of the administration of a charity. The Charity Commission recommends a minimum of three unconnected, unrelated trustees with a good range of skills. Fortunately Sarah had recruited enough personnel from family and friends but, remember, personnel will change over time. It is an evolving process to discover what works best for your charity. Another charity wanted to register with three trustees, one of whom is in Australia and another in Hong Kong. This was going to make meetings and therefore management somewhat difficult.

7. FUNDRAISING

Once Sparkle Malawi was registered then this helped funding. Sarah had already been able to collect some funding. Charities only need to register once their income exceeds £5000 per annum or when it wants to become a charitable incorporated organisation. Registration of an organisation inspires public confidence and generates more funding.

So, what next? Do you want to register a charity or does your existing charity need a review as to structure and governance?

If you need help setting up a charity or any matter of governance or structure then contact our charity law expert Nick Dent on 01642 610350 or by email at n.dent@endeavour.law

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