How to Form a Charity

Gift Aid Flow Chart

Although 1,000’s of new charities are established each year in the UK, many are rejected by the Charity Commission due to improper structure or failure to meet charity standards. To help you overcome this, Raffingers Stuart has created a guide on the steps to be taken to form a charity.

  • Is it a charity? Recognise the need and benefit
  • Choosing a Name
  • Who are Your Trustees?
  • Writing a Governing Document
  • Deciding the Charity Structure
  • Funding you Charity

Is it a Charity? Recognising the Need and Benefit
Charities are organisations created with the aim of benefitting the community. Therefore, it is important, first and foremost, to identify what needs your charity is addressing and what benefits you are bringing to the community. To be considered a charity, your organisation must follow two legal requirements: Have only ‘Charitable Purposes’ and be of a ‘Public Benefit’. This means that all of the aims of the charity must be exclusively charitable and everything you do must have social, recreational, educational, or charitable benefits.

Choosing a Name
Choosing the name of your charity can be somewhat difficult. You cannot have the same name as another charity, which can be avoided by using the ‘Register of Charity’. It is also important to be aware that if you use the word ‘Charity’ or a variation of the word, E.G. ‘charitable’ or ‘charities’, you must request permission from the Charities Commission and you must be authorised to be acknowledged as a charity before you begin using the title.

Who are Your Trustees?
Trustees are responsible for ensuring that the charity meets the aims and objectives it was set up to do. Every charity registered in the UK must set out a minimum and maximum number of trustees at the charity. It is good practice for your charity to have minimum of 3 trustees, usually a director, treasurer and secretary, to help run the daily activities of the business. The trustees will usually embrace a combination of skills and/or expertise, which benefit and reflect the interests of the charity.

Writing a Governing Document
A Governing Document outlines the charity’s plans, activities and purposes and acknowledges any provisions required for the business. This legal document should include:

  • The charity’s purpose and what will be done to achieve the charity’s aims
  • Who runs the charity and who can be a member
  • How meetings will be held
  • Paying trustees, investments and holding land
  • Amendment provisions to the charity
  • Dissolution provisions for the charity
  • Number of trustees needed to make decisions and recruitment of trustees
  • Charity finances, land, property or investments and keep accounts
  • Resolving disputes within the charity

Deciding the Charity Structure
The structure of the charity determines how it will operate, run and practice. There are four main structures that a charity can adopt:

  • Trust
  • Charitable incorporated Organisation(CIO)
  • Charitable Company Limited by guarantee
  • Unincorporated Association

The structure that one chooses to adopt is defined by the Governing Document.

Funding your Charity
To be considered a charity, depending on the charity structure, you must have a minimum income of £5000, which can be achieved through fundraising. It is also essential to correctly account for the funds raised, through fundraising, by setting up a charity specific bank account and maintaining your charity’s accounts.

It is important to take individual advice in this area – if you want to discuss your particular circumstances please give us a call or email