From trustees and registration to your first fundraiser, how do you start a charity? Create your action plan with our complete guide.
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The tips below apply to startup charities in England and Wales. There are different rules for charities and Scotland and Northern Ireland, so be sure to check the Scottish Charity Regulator (OSCR) and the Charity Commission for Northern Ireland, depending on where you’re based.
Setting up a charity: the official guidance
Gov.uk sets out six key steps for setting up your charity. And because a charity, just like a business, carries risk for everyone involved, it’s important to put the effort in with your set-up.
Cutting corners can easily lead to legal issues, tax problems and undeserved headaches. After all, you’ve set up your charity with good intentions. The last thing you need is an argument with HMRC, so check off the following and get advice wherever you need it.
How to start your own charity: steps 1-6
1. Find trustees
Charity trustees share ultimate responsibility for governing the charity, directing how it’s managed and run.
You’ll usually need at least three, and gov.uk have a good hub page giving you all the tools you need to recruit your trustees properly.
2. Check: do you have ‘charitable purposes for the public benefit?’
It might sound like a mouthfull, but this is essential. ‘Charitable purposes’ can relate to many things, from relieving poverty and saving lives to animal welfare or the arts. Check gov.uk’s guidance for where your charitable purposes might fit in.
Remember! You can’t set up a charity to support one specific person.
3. Choose a name …
There are lots of stipulations around naming your charity, some less obvious than others. It makes sense not to use offensive words or acronyms, of course, but did you know that, to use ‘charity’ in the name, you’ll probably need approval from the Charity Commission?
Use gov.uk’s pointers to pin down your name (there’s a link to the charities register to check what’s already taken).
4. … and a structure
This will affect who runs your charity and how, and whether you can employ people or own property.
Gov.uk lists four common charity structures on its hub page, along with lots of guidance for what you’ll need and how to apply.
5. Create a governing document
Gov.uk also calls this a ‘rulebook’, which is really what it says on the tin. Your governing document sets out how your charity runs and all the rules that go with it. Check the official information to get your document set up correctly.
Remember! Your trustees will need to sign the governing document, and if you’re setting up a charitable trust you’ll need an independent witness.
6. Register as a charity
You’ll need to apply for registration if your charity’s annual income is over £5,000 or if you set up a charitable incorporated organisation (CIO).
How to start a charity: the top FAQs
Along with the basic structure and set-up, you’ll probably have a list of key activities you’re keen to get started on. Here are the top few with our pointers, and official guidance resources.
Charity fundraising (and how to set up a charity event)
From a cake sale in your kids’ school hall to a full-blown Arctic trek, you can get as creative as you like with your fundraising ideas.
The hard work comes with decision-making, and breaking down your aims into an effective but ambitious plan. We recommend these expert resources for making sure your fundraising smashes its targets whilst staying compliant:
- The Institute of Fundraising: Essentials (from your first ever fundraiser to a complex campaign, the IoF gives you all the basics)
- Gov.uk (head here for a guide to your trustees’ fundraising duties)
- Charity Digital (great anyway for all things charity and digital, check out their free guide to boosting digital donations)
- The Fundrasing Regulator (set your standards high and get to grips with the Code of Fundraising Practice)
Cost of setting up a charity (plus tax relief)
There’s no fee for registering, unless you’re starting an incorporated charity, in which case Companies House will charge a small payment (usually around £13).
Overheads will dictate your startup costs, so how much you’ll end up spending will depend on where you’re based, what resources you need, whether you’re doing things mainly online or need to hire a premises, etc.
Many charities decide to take legal advice – this may cost more than your other resources but for lots of charities is absolutely crucial, giving you peace of mind and allowing you to focus on fundraising, rather than governing documents and administration.
Top tip: As a charity you can get certain tax reliefs. You’ll need to be recognised by HMRC, so check gov.uk’s Charities and tax page for full guidance.
How to set up a charity bank account
You’ll need somewhere to keep all your donations safe, and it should be an easy-to-manage bank account, allowing you to pay bills and transfer funds too.
Lots of the biggest banks offer charity bank accounts, and they work a lot like normal business bank accounts, but with a few different limitations. You can usually open one for a registered charity, community group or an amateur sports club, but there may be limits on how many employees you can have and your maximum turnover.
Use a comparison site or check with a few different banking brands for what’s on offer.