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What is a charity?

A charity is an organisation with specific purposes, which are defined in law, to be charitable and exclusively for public benefit.

All charities with an annual income of £5,000 or more must register with The Charity Commission.  The majority of charities in the UK are small and set up by people who are passionate about a cause, a person or a community.

The following information is primarily for anyone wanting to set up a charity, where the turnover is initially expected to be less than £1million a year.

Before you get started

Remember to consider the following points, before you set up and register a charity:

  • You must have clear aims

  • You can't set up a charity which benefits only one person

  • You can't receive any personal benefit from being a trustee

  • Is another charity already doing the same as what you're planning to do?

  • You have to abide by the charity laws and rules when you register

  • You can't do anything unlawful

The Charity Commission also advise considering three questions, before starting a charity:

  1. Is a new charity the only way you can achieve your goal?

  2. Should it be a charity, rather than another kind of organisation?

  3. What are the advantages and disadvantages of charities?

To find out more, take a look at The Charity Commission website.

Getting started

Once you've decided you definitely want to set up a charity, there are six steps you need to take:

  1. Find trustees for your charity (you need at least three)

  2. Make sure your charity has charitable purposes for the public benefit

  3. Choose a name for your charity

  4. Choose a structure for your charity

  5. Create your governing document

  6. Register your charity (if your annual income will be over £5,000 or you're setting up as a charitable incorporated organisation)

To find out more about the different steps for setting up a charity, visit the Government's website.

There are a number of benefits of being a registered charity, including:

  • You do not pay tax on most types of income, as long as you're using the money for charitable purposes.  If you receive donations which have had tax deducted, you can claim this back through a Gift Aid declaration, but you must be recognised by HM Revenue and Customs.

  • You can receive a significant discount on property business rates via the Charitable Rate Relief.

  • Many funders are more inclined to give grants to registered charities.

  • A charitable status gives you validity in the eyes of the public.

To find out more about being a charity and the tax relief available, please visit the Government's website.



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