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How to set up and run your own charity

There are an estimated 164,000 charities in the UK. Of these, the vastmajority are relatively small scale, with an annual income of £100,000 or less.This helps to illustrate that for every huge charitable organisation out there,there are many more grassroots charities focusing on specific aims and making adifference. So starting your own charity is an achievable goal - and here’s asummary of what’s involved.

Be clear on whether a new charity is the best way to achieve your goals

What will be your charity’s cause? What are you trying to achieve? Bearin mind that the charitable sector is a highly competitive one, with lots oforganisations trying to capture the attention of the public. Clarity on this isnecessary to avoid launching an organisation that merely replicates the workbeing done by someone else already. Otherwise, you could end up competing forthe same public support without necessarily furthering your aims.

Think about shaping your objectives to complement what’s out therealready. For instance, rather a charity with a very widely-drawn fundraisingaim, consider narrowing it down, perhaps to meet a specific local need. Liaiseclosely with the people you are aiming to help to identify where the need existsand where there are gaps you may be able to fill through your new venture.

Ensure your charity meets the official criteria

Your charity must have what the law defines as a “charitable purpose”.This means it must fall into one of 13 “descriptions of purposes” set out inThe Charities Act. These purposes cover a wide range of areas from relief ofpoverty and advancement of education through to the advancement of animalwelfare or amateur sport. Read the GovernmentGuide on ‘whatmakes a charity’ to ensure your proposed aims meet the criteria.

You must also demonstrate that your charity exists for ‘public benefit’,which may include the public as a whole or certain sections of it. You could beasked by The Charity Commission to prove how your work is going to benefit thepublic; for instance if you want to raise money to fund the preservation of abuilding, you may be asked to show the positive impact this will have on thewider community.

Choose a structure for your charity

Your charity could take one of several forms and The CharityCommission’s officialguidance can be usefulfor identifying the most appropriate form for your circumstances. As you grow,you may decide to change your structure.

In the early days, for instance, an unincorporated association might bethe simplest and most effective way forward; a group of individuals who decideon a constitution to set out how the organisation is going to operate and howfunds are going to be held. But as you pick up support and your range ofactivities widens, restructuring as a Charitable Incorporated Organisationmight make sense. CIOs are distinct legal bodies in the same way as commercialcompanies. Setting one up means the charity itself can employ people, enterinto contracts and buy and hold property and possessions in its own right.

Draw up a governing document and appoint trustees

Transparency is essential for a charity, both in terms of staying on theright side of the law and maintaining the trust of the public. Linked to this,you require a governing document, which is essentially a rulebook for yourorganisation. In it, you set out your charity’s name and objectives and set outthe charity’s decision-making process.

Your charity also requires trustees; those designated individuals whocollectively decide how the charity will be run. It is good practice for acharity to have at least three trustees: a chair, secretary and treasurer.

Register with The Charity Commission

Charities with an annual income in excess of £5,000 must register withthe Charity Commission. The Commission’s guide toregistration explainsthe application process.

Managing your charity: the duty of prudence

When it comes to managing resources and making decisions, trustees arerequired to act responsibly, reasonably and honestly: collectivelyreferred to as the duty of prudence.

This includes taking care with the charity’s assets, ensuring that thoseassets are only used to fulfil the charity’s objectives. It also includesinvolves avoiding the type of action that could damage the reputation of yourcharity.

Moregenerally, running a charity requires you to consider risk management and theprotection of your organisation, its staff, supporters and the wider public.Speak to a specialist provider of charity insurance such as BluefinProfessions before you open your doors to ensure you have the level ofprotection you need.  

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