The Regulator for Charities in England and Wales
(Version October 2006)
You’re thinking about setting up a new charity. That’s great. We are delighted that you want to play an active part in a charity. When your organisation has an income of £5000 or more you are required by law to register with us. It is not our policy to register charities that do not meet this minimum requirement.
Before you go ahead, there are a few things it might be helpful for you to think about.
There are a lot of very good reasons why people decide to set up a new charity. However, setting up a charity is not always the best way to proceed and, in some cases, it may not be legally possible.
Depending upon your reason for wanting to set up a new charity and what you want to achieve, there may be other, and better, ways of achieving your aims that we would like you to think about.
The following particular situations are among those where setting up a new charity may not be the best way to proceed. In these situations care is most needed and advice should be sought before going ahead:
Instead of setting up a new charity, think about creating a separate, named fund within an existing charity; this may be just as effective as creating a new charity.
You can look for existing charities via the register of charities or you can telephone Charity Commission Direct on 0845 300 0218.
Before setting up a new charitable appeal fund, we advise you to read our guidance Disaster Appeals . Instead of setting up a new charity, consider offering money or services to an existing charity, such as the Disasters Emergency Committee for example.
Organisations do not have to be registered charities to be accepted for a lottery grant. There are many different lottery grants distributors and each have their own grant eligibility requirements. For more information visit www.biglotteryfund.org.uk for lottery grants specifically for charities, voluntary and community groups - or try www.lotterygoodcauses.org.uk for information on all lottery distributors, or phone: 0845 2750000.
In general, it is not charitable to set up a charity for the benefit of a specific named individual or individuals. To be charitable, you would therefore need to define the people who can benefit from your organisation much more widely.
Alternatively, you can set up a non-charitable trust fund to benefit the named individual(s) or join forces with an existing charity that is already set up to benefit sufferers of, and/or carrying out research into, the particular [rare] disease/disorder.
Instead of setting up a new charity, consider offering your services to, or merging or working collaboratively with, an existing charity.
You can look for existing charities doing similar charitable work in your area via our register of charities or call Charity Commission Direct on 0845 300 0218 for assistance.
Alternatively, instead of setting up a new charity, think about setting up a Managed Trust Account through an organisation such as the Charities Aid Foundation (CAF). A CAF Trust Account is a simple system that is a bit like having your own charitable trust, except it operates as a subsidiary fund of CAF. You can put money into the Trust Account, call it what you like and specify what charitable purposes the money can be used for. As CAF is a charity, the same charitable tax benefits apply to the Trust Account. It is like having your own independent trust, but the trustees of CAF take responsibility for carrying out your charitable wishes.
We want to encourage innovation. We therefore take a constructive and imaginative approach to our consideration of novel charitable purposes and new ways of achieving existing charitable aims. Our policy on this is explained in Recognising New Charitable Purposes .
Before setting up a new charity, think about whether what you wish to do will operate effectively within the constraints of charity law. If not, you may need to find an alternative to setting up a charity, such as setting up a non-charitable not-for-profit organisation (perhaps using the new Charitable Incorporated Company format).
Charities can carry out political or campaigning activities to help achieve a charitable purpose, but a charity cannot have political aims. We advise anyone who is thinking about setting up a new charity to carry out work that is likely to be of a political nature to read our guidance Campaigning and Political Activities by Charities .
You cannot set up a charity with a political purpose. If you wish to pursue a political aim you will need to find an alternative to setting up a charity, such as setting up a non-charitable campaigning body or pressure group.
There are around 190,000 registered charities, and perhaps as many again smaller unregistered ones. One or more of these may very well be doing the kind of charitable work your new charity would do, and in the same area.
Many charities often find it difficult to get access to the limited funding that is available to the charitable sector and this can be a particular problem for new charities. This is because local authorities, the public and organisations who give money to charities often prefer to give to charities that they are already familiar with and which have a proven track record.
Many people, including potential funders and donors, think that there are already too many charities competing for too few funds and that a significant amount of charitable resource could be saved if charities pooled their resources and worked together.
There are clear advantages to be had from a healthy mix of charities, which are constantly refreshed by new charities pursuing new activities. But, there are also big benefits of public confidence and support for charities that collaborate, rather than compete, with each other.
Most charities are small local organisations that rely on the unpaid help of their trustees and other volunteers. They may have similar purposes but they are all serving different communities. It is less likely that there will be areas of overlap and duplication or scope for cost-cutting for these charities. However, for many charities, particularly medium and larger-sized ones, joint working or merger can make for more effective use of resources in meeting the needs of their beneficiaries.
It is not our role to push particular charities towards this way of working – they themselves must decide what is in the best interests of their users. Nor can we refuse to register an organisation with clearly charitable objects which meets the minimum requirements for registration simply on the basis that another similar charity already exists. However, we want charities to be alive to the possibilities of working better by working together.
Our guidance Collaborative Working and Mergers highlights some key issues for charity trustees and, where applicable, their staff on the subject of collaborative working and mergers. It describes ways of working in partnership as well as the different types of structures and processes involved. It is intended to help charity trustees decide whether they want to proceed and, if they do, what the different stages and issues are. The guidance concentrates on the role of the Charity Commission in both partnership working and mergers and outlines the support we are able to offer.
The guidance includes some case study examples of collaborative working and mergers.
Our Regulatory Report on Collaborative Working and Mergers signposts trustees to additional sources of information.
We are also working closely with the National Council for Voluntary Organisations’ newly established Collaborative Working Unit, to ensure our respective work is complementary.
So, before setting up a new charity we would like you to think about offering your services to, or combining with, an existing charity if there is a possibility of duplicating existing charitable work.
You can look for existing charities doing similar charitable work in your area via our register of charities or call Charity Commission Direct on 0845 300 0218 for assistance.
Before deciding to set up a new charity, it is important that you understand some basic requirements about how a charity must operate.
All charities must operate within the constraints of charity law.
Charities must have, and carry out, wholly charitable purposes and activities. Not all purposes, even those that may be beneficial or philanthropic, are necessarily charitable. If there is any doubt, we therefore advise anyone who is thinking of setting up a new charity to read our Commentary on the charitable purposes in the Charities Bill for guidance on the sort of purposes that are charitable.
All charities must also be set up for the public benefit. Please read Charities and Public Benefit for guidance on this legal requirement.
People who run charities are called charity trustees (even if their group is called the management committee, or something else). You need to be confident that the people who will run your charity (the proposed trustee body) understand what is expected of them. We therefore advise anyone who is thinking of setting up a new charity to read our publication The Essential Trustee: what you need to know .
We produce an extensive further range of guidance for charity trustees. For further details see the Publications page of our website.
If, having considered all the alternatives, you think that setting up a new charity is the best way to do what you want to achieve, or if you have already set up a charity and want to register it, please proceed to Registering a charity where you will find guidance on setting up and registering a new charity.
We will do everything we can to offer support and guidance throughout the process.