Posted by Deanna Hurst, Partner
Setting up a charity
Many people either donate to, or volunteer at a charity which is close to their hearts but if there’s not an existing organisation which addresses your concerns, you may wish to take matters into your own hands and set up your own charity.
When setting up a charity it’s important to make sure that the difference between what are accepted as charitable objects and what do not qualify as charitable objects is well understood. On the face of it there is a fine line between the two.
For example – amateur sports clubs are not necessarily charitable but may enjoy similar tax reliefs to fully fledged sports related charities. There are subtle differences between the two organisations but also sports clubs that don’t fit within either group.
The differences come down to what extent the club satisfies the requirements of what it means to be charitable e.g, does it serve a public benefit? How is its income spent?
In this example, the impact of how an amateur sports club is defined is shown in its tax treatment and what regulations it must satisfy.
To be a charity, an organisation must have ‘aims’ all of which are exclusively charitable. It must also operate for the public benefit. There are a number of classes of objects that have been classified as charitable. Provided your charity’s aims fall within one of these classifications then you will be able to set up a charity.
Recognised classes of charitable objects are set out below:
- The prevention of 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 of 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 disadvantage
- 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 service
- Any other charitable purposes
Once the charitable objects have been defined and fit within one of the above classes then the most appropriate structure for your charity will need to be considered. There are three main types of charity:
- unincorporated charity
- incorporated charitable company limited by guarantee and
- charitable incorporated organisations.
Importantly a charity needs legal advice like many other organisations relating to its governance, ongoing compliance, land transactions, commercial issues and employment issues.
If you're thinking of setting up a charity, contact our specialist charities team to see how we can help
0800 923 2077 Email us
Invaluable insight into the charity sector