How to start a charity

Setting up a charity

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 lead to legal issues and tax problems, so check off the following steps and get advice wherever you need it.

How to start a charity in the UK: six key steps

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 the government has a good hub page giving you all the tools you need to recruit your trustees properly.

What is a trustee?

Trustees will play a key role in managing your charity. They’ll contribute industry experience to help run your charity, manage communication with the public, and take the lead when it comes to recruiting senior staff.

When recruiting trustees, you’ll need to refer to your governing document (see below) to make sure there are no rules on the maximum number of trustees your charity can have, how long they can stay for, and whether there’s a specific way they need to be appointed.

2. Do you have ‘charitable purposes for the public benefit?’

‘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 and remember, you can’t set up a charity to support one specific person.

Writing charitable purposes

When writing your charitable purposes, you’ll need to outline your outcomes and how they’ll be achieved, as well as who you’re aiming to help.

Your written purposes will help the Charity Commission and HMRC decide if your organisation is a charity and qualifies for tax relief. They’ll also help the public to understand your charity’s mission, while giving trustees the information they need to run the organisation effectively.

The official guidance on how to write charitable purposes gives a range of examples and advice on the type of wording you should use.

3. Choose a name

There are lots of rules around naming your charity, some less obvious than others. For example, it’s likely you’ll need approval from the Charity Commission to use ‘charity’ in your name.

Use gov.uk’s pointers to pin down your name (there’s a link to the charities register to check what’s already taken).

If you’re looking for inspiration, our business name generator can give you some useful ideas.

4. Have a structure

When you’re thinking about how to start a charity organisation, the structure you choose will affect who runs your charity and how, and whether you can employ people or own property.

The government lists four common charity structures:

• charitable company – formed as a private company limited by guarantee, rather than shares
• charitable trust – a group of trustees that manages money, investments, or land
• charitable incorporated organisation (CIO) – registered with the Charity Commission, but not Companies House
• unincorporated charitable association – a group of volunteers running a charity, with no employees or premises

Find out more about charity structures on the government’s hub page, along with guidance on what you’ll need and how to apply.

5. Create a governing document

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.

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).

Did you know insurance is a legal requirement for some organisations? Get set now with our charity insurance guide.

How to start a charity and make money: 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 answers to some key questions, as well as official resources and guidance.

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 while 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 Fundraising Regulator – set your standards high and get to grips with the Code of Fundraising Practice

How much does it cost to set up a charity?

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).

The cost of setting up a charity in the UK will depend on your overheads, such as:

• where you’re based
• what resources you need
• how many members of staff you hire
• whether you’re working online or need a premises
• how much you spend on marketing

What’s more, many charities decide to take legal advice – this may cost more than your other resources but for lots of charities it’s absolutely crucial. It gives you peace of mind and allows you to focus on fundraising, rather than governing documents and administration.

Did you know that as a charity you can get certain tax reliefs? You’ll need to be recognised by HMRC, so check the UK government's page on charities and tax for full guidance.

Setting 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.

Do you have any unanswered questions on how to start up a charity? Let us know in the comments below

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