small charity faq's
This is the beginnings of a list of questions we get frequently asked by small charities and people wanting to start their own charity. Over time we will add more to the list, and if your question isn't answered here please email your query to us at help@smallcharities.org.uk and we will get back to you.
1. When do I need to register my charity?
2. How do we define our charity if we are not a registered charity?
3. How do I prove to funders and donors that I am a charity without a charity registration number?
4. How do I open a bank account if I’m an unregistered charity?
5. How do I register with HMRC for tax purposes?
1. When do I need to register my charity?
As long as your organisation / project is charitable you may register at any time with the Charity Commission. If your income is less than £5000 you are not obliged to register with the Charity Commission. If or when your income exceeds £5000 you are required by law to register with the Charity Commission.
Remember, small charities do not need to register to prove that they are charities or benefit from charitable status.
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2. How do we define our charity if we are not a registered charity?
As long as you adhere to charity law (e.g. have charitable purposes, can prove public benefit) you may refer to your organisation as a charity. DO NOT use the word/s ‘registered’ or ‘charity status’ or anything else that may mislead funders, donors, the public etc. If your charity has a HMRC number you may wish to state this fact e.g. ‘Our charity is a not-for-profit organisation recognised as charitable by HMRC for tax purposes’ but DO NOT quote your actual tax number.
3. How do I prove to funders and donors that I am a charity without a charity registration number?
Be as open and transparent as possible when you market or fundraise on behalf of your charity and be very careful not to mislead potential funders and donors with confusing language regarding your unregistered status. The key is to build trust and confidence within your funders/donors and there are a number of ways you can do this:
Have an online presence so that potential funders and donors can read up about the work you do.
Make your Governing Document (or parts of it) available on your website or in printed form to further prove you are who you say you are and to demonstrate the good work you are fundraising for.
Any charity, no matter how small can register with HMRC for tax purposes. This is particularly useful when claiming Gift Aid. By registering with HMRC you are receiving recognition for your charitable purposes and so giving your charity further legitimacy.
4. How do I open a bank account if I’m an unregistered charity?
Unfortunately there’s not a lot of consistency when it comes to registering charity bank accounts. Some insist on a registration number. Others might just request a governing document. The problem is, these rules change, so spend a bit of time investigating your options. Remember there are specialist charity banks (e.g. CAF Bank, Unity Trust Bank) as well as high street banks out there.
If for whatever reason it is not possible to register a bank account in the charity name, your Treasurer may consider opening a personal one, but do so separately from any other he or she may have. If possible, facilitate two signatures to sign cheques. Additionally (but certainly if the latter cannot be done) make a statement to the other Trustees to the effect that the Treasurer holds money in Account X on behalf of the charity, and to leave that statement with them.
(Thanks to Alan Clements and Allan Hargreaves from ACIE for their contribution)
5. How do I register with HMRC for tax purposes?
Visit the HMRC Charities webpage (or more specifically the part about charitable recognition). You will need to complete a specific form. Please be aware that as part of your application, you will need to provide supporting evidence of your charitable purposes and normally a Small Charity Constitution will not suffice. You will probably have to consider developing one of the longer model Governing Documents provided by the Charity Commission. HMRC also expect your charity to already have a bank account set up.
If you have any questions, call the HMRC Charities Helpline (0845 302 0203). They are usually very good.
