How To Start a Charity
People set up a charity for many reasons. In fact there are already over 179,000 charities established within the UK. Whatever their reasons for starting a charity, people looking to start a charity must be able to show the Charity Commission that their reasons are wholly charitable and that they are set up for the public benefit, as opposed to profit.
If you are wondering how to start a charity, you must first be aware that charities are governed by the Charities Act 2006. Section 2(2) of the act, sets out a list of reasons why a charity would be deemed as having a “charitable purpose”. These include things like the relief of poverty, advancement of education or religion, human rights, animal welfare and the like. These are talked about in more detail on the charity commission commentary page.
In most instances, people wondering about how to start a charity will already have thought about their intention to raise money to fund charitable causes. In order to do that they will need to set up a limited company or more specifically, a Company Limited by Guarantee. Where a company limited by shares is set up with the intention of making a profit and distributing its profit to its members, a company limited by guarantee is instead established by people who offer an undertaking that, if and when the company is wound up they will contribute something toward the cost.
How To Start a Charity – The Charitable Objects
In order to meet the Charity Commissions requirements a Company Limited By Guarantee must have drafted into its Memorandum of Association several clauses to ensure that they are set up and carry out their activities for the right reasons. These include a ‘charitable objects clause’, ‘non-profit distribution clause’ and a ‘dissolution clause’. These are all things that we can give you guidance and help with.
If the charity company will have an income in excess of £5,000 then they will need to properly register with the Charity Commission and be fully assessed by them. It can take time to register, but we can help you with guidance where necessary.
Part of the assessment includes looking at the ‘objects’ of the charity. This is a clause in the memorandum of association which is clearly worded to set out that the fact that the objectives of the charity are exclusively charitable and nothing more. If objects are worded in an obscure or confusing manner, or in a way which mean that the objectives of the company are not exclusively charitable, then the charity commission can refuse registration and the company will not be legally deemed to be a charity.
How To Start a Charity – ‘For The Public Benefit’
Another requirement of starting charity is the need for the charity to be set up for the ‘public benefit’. Once again, the aims of the charity must be exclusively for the public benefit, in the same way as being exclusively charitable. Aims will not be seen as for the public benefit if they are for a specific person or persons. The test is broken down into two parts:
1) The charity’s aim must have an identifiable benefit,
2) The benefit must be to the public or a section of the public.
This is an open and flexible test, because what is judged as for the public benefit is subject to change over time, depending on society and changes in the economy. More guidance can be found on the charities commissions website.
Charity Registration is a 2 stage process:
There are two distinct steps to starting a charity:
1) Registering a Charitable Limited Company by Guarantee with the registrar of companies, receiving a company number for your company.
2) Applying to the Charities Commission to have your company added as a ‘registered charity’ and provided with a separate charity number.
Part of this will involve choosing a charity name. Search the charity register and ensure that one doesn’t already exist with a similar name, then use our free company name search facility to search over 2 million names before you settle on the right one for you.
For more information on how to start a charity, see our How To Start a Charity FAQ page.
How To Start a Charity - The Costs:
Because of everything involved in starting a charity, people believe that it is a costly undertaking. Our charity registration service (see charity company limited by guarantee) provides everything you need for a low cost. The price includes many things, as well as the Companies House registration fee, FREE legal and tax advice and everything else that you will need to get your charity registered correctly as a company.
How To Start a Charity - What you Get:
Using our charity registration service, you benefit from a number of things:
Use of our experienced, professional charity registration team;
Low cost company registration service;
Professional advice and guidance on how to start a charity.