Help & Advice > Starting New Charity FAQs

Starting a new charity FAQs...

Based on the few years experience we’ve had answering people's questions around starting up a charity, here is our attempt at making the information that is available to you, more accessible. Starting your own charity is no quick and easy process so be prepared to do a lot of reading, thinking and decision-making. Most of your questions will be answered if you read the Charity Commission’s guidance thoroughly but where possible we have added additional links to information to help you further.

If your question is specific check our FAQs.

1. Is setting up a charity the best way forward?


Setting up and running a charity is a significant responsibility and does involve a lot of work. For this reason it is important to consider if there are other ways you could achieve your charitable aims aside from setting up a new organisation. The following guidance from the Charity Commission explains some of the alternatives available to you

Is setting up a charity the right thing to do? - Charity Commission

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2. Which legal form should our charity take?


If you do decide to proceed with setting up a charity, you will need to decide what type of legal form your organisation will require. Law Works have very useful factsheets around Corporate Structure and Charity Law to offer a comparison of different charitable entities. Get Legal also provide guidance on their website to explain the differences between incorporated and unincorporated associations and and their 'Decision Tool' can be used to help you decide what form would suit your organisation best.

Corporate Structure and Charity Law - Law Works

Working out your legal form - Get Legal

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3. What are charitable purposes and what is the public benefit?


Regardless of whether your charity will be registered with the Charity Commission or not, it still needs to have charitable purposes for the public benefit. The following regulatory guidance explains what both of these terms mean and how you can ensure you meet the requirements.

Charitable Purposes - Charity Commission

Charities and Public Benefit - Charity Commission

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4. How do we write our governing document or constitution?


A governing document is a legal document containing information about what your charity is set up to do, how it is structured, how it will run and how it will change with time. The Charity Commission provides extensive guidance on how to choose and prepare your governing document and also provides model documents for you to use, including a small charity constitution.

Choosing and preparing a governing document - Charity Commission


Model Governing Documents - Charity Commission

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5. When can we register our charity?


If your annual income is likely to be less than £5000 you are not required or able to register with the Charity Commission. Once your income exceeds this, provided that your organisation / project is charitable, you are obliged register with the Charity Commission.

The Charity Commission has resources to support charities of this size.

Staring up a charity: Staying Small - Charity Commission 

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6. How do we define our charity if we are too small to register?


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 - this could make your charity vulnerable to fraud.

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7. How do we prove our legitimacy to funders and donors without a 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 non-registered status. The key is to build trust and confidence with 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.

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8. How do we open a bank account if our charity is not registered?

 


Unfortunately there’s not a lot of consistency when it comes to opening a bank account. Some banks insist on an HMRC number, and others will only recognise registered charities. However, it is possible to open a charity bank account or similar specialist account without having already registered with HMRC or the Charity Commission.

As well as Charity bank accounts, some banks offer other specialist accounts such as "Community", "Not for profit" or "Clubs and Charities" accounts (e.g. NatWest). There are also specialist charity banks (e.g. CAF Bank, Unity Trust Bank) as well as high street banks out there.

Finding the right bank for your organisation can be a difficult process, so it is worth spending some time researching and speaking personally to a number of banks to find out if they can meet your needs and what they require from you.

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 the charity's records.

(Thanks to Allan Hargreaves of OMNIS Tax Consultancy for his contribution)

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9. How do we register with HMRC for tax purposes?


Visit the HMRC Charities webpage (or more specifically the part about charitable recognition). You will need to complete the ChA1 form, read all the guidance provided to do this. 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.

Applying for recognition as a charity for tax purposes - HM Revenue & Customs

If you have any questions, call the HMRC Charities Helpline (0845 302 0203). They are usually very good.

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10. How do we register with the charity commission?


If your charity is eligible for registration with the Charity Commission (if you are unsure then read FAQ’s 1-5) then you may do so online through the Charity Commission's website. Please note: Read all their guidance carefully before completing an application (it’ll save you time in the long run, we promise).

Guidance on registering a new charity - Charity Commission

Online registration - Charity Commission

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11. How many trustees do we need on our board?


As a minimum your charity should have at least 3 trustees. There is no upper limit to the number of trustees you can have but too many and it becomes difficult to make decisions. Ultimately the number should reflect the skills and diversity required to lead your organisation effectively.

The Essential Trustee - Charity Commission

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12. How do we build our trustee board?


Our online trustee recruitment service Trustee Finder allows charities to post trustee vacancies for free. See our trustee resources and trustee recruitment pages for more information about the role of trustees as well as how to recruit and induct a board.

Trustee Resources

Trustee Recruitment

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