Charities

Charity start-ups

Not all charities need to be registered with the Charity Commission but all should have a constitution (usually called a governing document) to regulate their activities. In addition, all charities must meet the public benefit test.

There are currently four different types of governing document that a charity might currently use but a fifth is expected soon. These are:

• A constitution or rules for an unincorporated association. This may be appropriate if the organisation does not own valuable assets; it has a membership; and the views of local residents, or other bodies need to be represented through membership, or as users of the facilities.

• A trust deed. This may be most appropriate for grant giving charities. This often happens when a benefactor wishes to create a simple charity to make gifts of money to worthy causes.

• Articles of association for a company limited by guarantee. A company, like an individual, can own land and enter into contracts in its own name. This passes risk away from the individual charity trustees and therefore it may be appropriate to establish a company where the organisation is to be quite large; or it will have employees; or it will deliver charitable services under contractual agreements; or it will regularly enter into commercial contracts; or it will be a substantial owner of property.

• A small charity constitution. This may be appropriate where the organisation’s annual gross income will remain under £5,000.

• A constitution for a Charitable Incorporated Organisation (CIO) when this form of organisation comes into existence, hopefully sometime in 2011. It will be appropriate in the same circumstances as for a limited company but will not require registration at Companies House and compliance with company law.

We can help you determine whether a charity is the right vehicle for your needs; whether it meets the public benefit test; we can help you determine how to constitute the charity, and we can help you create the charity’s governing document and register it with the Charity Commission, Companies House and HM Revenue & Customs as appropriate.