Starting a charity currently involves two steps. Registering with Companies House and also registering with the Charities Commission. More guidance on this matter can be found on our 'How To Start a Charity' page and 'Charity Company Limited By Guarantee' page.
Most people find that a company limited by guarantee is the best legal entity to use to start a new charity. Because of the way this sort of company is designed it can easily be set up to operate in the correct way â€“ that is with non-profit objectives. Whatever vessel is chosen, a charity must have charitable objects, a non-profit distribution clause, dissolution clause and satisfy the public benefit test in order to comply with the law.
If you wish to start a new charity, then using a charity company limited by guarantee may well prove to be the best option. Our service helps with the registration of your company with Companies House and provides you with the tools to properly register your charity with the Charity Commission.
One of the requirements of starting a charity is the inclusion of a 'charitable objects' clause in the companies memorandum of association. This legally required to state definitively that the objectives of the charity company are 'exclusively charitable'. They do not state how the company will be run on a day-to-day basis, but must be word in such a way to show that the charity will be operated in a way which the law will recognise as charitable. Example charitable objects can be seen on the Charity Commissions Website.
Going hand in hand with the other clauses and requirements of starting a charity, there is a requirement for the inclusion of a 'non-profit distribution' clause. This demonstrates that the company is not establish to make a profit but is intended to be purely for the public benefit.
Where an organisation is started as a charity, with charitable aims, they must be able to demonstrate that those aims are for the 'public benefit.' If looking to start a charity, you must bear in mind that your aims must be for the benefit of the public and you cannot have some aims that are and some that aren't. This test is based on 2 principles:
Principle 1 â€” The benefits must be identifiable
Principle 2 â€” Those benefits must be for the public or section of the public
For those people looking into 'how to start a charity' the government have eased the process by including a list of benefits/purposes that are deemed as being for the public benefit, in The Charities Act 2006, these include:
the prevention or 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 or 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 disadvantages;
the advancement of animal welfare;
the promotion of the efficiency of the armed forces of the Crown or of the police, fire and rescue services or ambulance services;
other purposes recognised as charitable under the existing law and any new purposes which are similar to another prescribed purpose.
Section 63 and 64 of The Charities Act 2006 govern how a charity must be started in regards to preparation for the winding up or dissolution of the company. To that end, there must be a dissolution clause included which makes it clear that the assets of the charity will not be kept or sold for any profit orientated reasons but passed instead to another charity with the same or similar charitable objects. The changing and amendment of such clauses is strictly governed and regulated by the Charities Commission.
Because of the current need to start a charity by the registration of a 'company limited by guarantee' a charity must register with both Companies House and the Charity Commission. The Company Warehouse have helped many people start a charity in this manner, so if you are looking to get a company started for this reason, we are the people to talk to. Contact us on 0800 0828727 and ask to speak to the charity registration team. In the near future, there are plans to change the systems around creating a charity by the introduction of new bodies known as 'Charitable Incorporated Organisations' which will reduce the pressure on starting a new charity by only requiring registration with the Charity Commission. The Company Warehouse is aware of the changes and will be offering a service to help people start a CIO in the future.
The Charity Commission are the main governing body with regard to charity formation and running, ensuring that newly started charities are set up and maintained for the public benefit and with charitable objects in mind. If you are looking to start a charity, you will need to register with them. Charities with yearly incomes over Â£10,000 must by law send their accounts and reports every year to the Charity Commission. This allows proper regulation and helps maintain public trust in the charitable bodies within the United Kingdom.
Starting a charity can take quite a long time. Due to the fact that the charity will have to be registered with both Companies House and the Charity Commission, this double registration can lengthen the process. Our Company Formation service means that you can have the company element of the new organisation formed within a matter of hours, but the registration with the Charity Commission takes an average of 40 days, according to their calculations.
No. Although a company limited by guarantee can be formed with one director, the Charity Commission requires at least 2 trustee's for the correct formation of a charity. So it is not possible to run a charity on your own.