Setting up a charity can be daunting if it’s your first time.

Here, we’ve broken down the key stages you need to follow when setting up a charity.

We’ve drafted in experts to assure you what you need to do to get started on your charitable journey. Throughout, Paul Sayer and Carla Cressy will be here to give you the facts and their personal experience.

Paul Sayer, the founder of Prost8, has over 12 years of experience in setting up charities. If there’s anything he doesn’t know about this subject, it’s probably not worth knowing!

Carla Cressy, the founder of The Endometriosis Foundation, is relatively new to this sphere, having her official charity launch in March 2023. She’s been through this journey recently as a novice and can provide a fresh take on the process.

Here are the key stages of setting up a charity:

• How to set up a charity
• Dealing with the Charity Commission
• Charitable purposes
• Naming a charity
• Writing a governing document
• Applying for tax relief

 

How to set up a charity

There are four different ways you can set up a charity:

• Charitable trust.
• Charitable company.
• Charitable incorporated organisation.
• Unincorporated association.

Charitable trust

A charitable trust is managed by trustees who may be personally liable for any debt the trust may build. Make sure you get trustees who you trust!

Charitable company

A charitable company is a non-profit organisation that’s registered as a limited company. They must have charitable objectives and a separate legal identity from their members, so the company is responsible for its own debts.

Charitable incorporated organisation

A charitable incorporated organisation offers limited liability for members and trustees. They can only be registered and regulated by the Charity Commission.

Unincorporated association

This is a simple and informal structure often used by smaller charities, clubs and community groups. They can only register as a charity if they have charitable objectives. Members may be personally liable for the association’s debt.

 

Paul’s experience:

There are several things you need to think about when setting up a charity:

• Who are your trustees?
• What are your charitable purposes?
• Can you merge with an existing charity rather than setting up a new one?

If your charity is too similar to an existing charity, the Charity Commission will recommend you form an alliance with them. To set up your own charity you must have a pretty unique structure.

The process is so, so demanding now.

I’ve been setting up charities for 12 or more years. Now it’s become so strict because they’re trying to make sure new charities don’t cross over with the already existing 160,000 registered charities.

 

Carla’s experience:

Setting up a charity requires a lot of time and planning. Therefore, being clear about your mission and goals is super important. Establishing who it is you’re looking to reach and the message you want to share is a good place to start.

It may also be useful to reach out to other charities and people in positions to share insight into how they set theirs up as this can be helpful to decide which type of charity you wish to start.

For example, I chose to set up a Charitable Incorporated Organisation (CIO) which meant I’d need a minimum of 3 trustees to start the charity. Be careful about who you choose and pick only those who are able to add real value to your charity!

 

Dealing with the Charity Commission

The Charity Commission are the national regulator board in England and Wales that maintain the charity register. They’re an independent and non-ministerial government department who are accountable to Parliament.

Their responsibilities include:

• Maintaining an accurate and up-to-date register of charities.
• Deciding whether organisations are charitable and should be registered.
• Removing or denying those who are not charitable, no longer exist or don’t operate.

Their purpose is to:

• Hold charities to account.
• Deal with any wrongdoings or harm.
• Inform public choice.
• Giving charities the tools and knowledge they need to thrive.
• Keeping charities relevant in today’s modern world.

 

Paul’s experience:

Setting up a charity has become exceptionally difficult because the Charity Commission are trying to weed out duplication and charities being set up for the wrong reasons, which is not uncommon.

A lot of people get their applications rejected and stop there. However, the Charity Commission are actually really receptive to being spoken to. They’re prepared to help you!

When you’ve submitted your application, you can phone them. Someone will talk to you and just suggest: ‘If you can change this, this and this, you’ll get through’.

Even with my 12+ years of experience with setting up charities, it was a backward and forward process. We’re so unique in the area of prostate cancer with your basic treatments, there wasn’t anybody else doing what we do, so we got through.

 

Carla’s experience:

Registering with the Charity Commissions, producing governing documents and applying for tax relief can be a little time-consuming and very daunting for someone doing this for the first time.

If you’re like I was and are shy of typing 100-page documents, you’ve got so many options now where you can get support and guidance.

One organisation in particular that helped me were SAVS. They’re an experienced team who can be a great help in places you’re unsure.

 

Charitable purposes

Charitable purposes must be beneficial to the public. In total, according to The Charities Act 2011, there are 13 charitable purposes, of which yours must fall into at least one.

They are:

1. The prevention or relief of poverty.
2. The advancement of education.
3. The advancement of religion.
4. The advancement of health or the saving of lives.
5. The advancement of citizenship or community development.
6. The advancement of the arts, culture, heritage or science.
7. The advancement of amateur sport.
8. The advancement of human rights, conflict resolution or reconciliation, or the promotion of religious or racial harmony or equality and diversity.
9. The advancement of environmental protection or improvement.
10. The relief of those in need because of youth, age, ill-health, disability, financial hardship or other disadvantages.
11. The advancement of animal welfare.
12. The promotion of the efficiency of the armed forces of the Crown or of the efficiency of the police, fire and rescue services or ambulance services.
13. Other purposes.

Paul’s experience:

Charitable purposes are important. The aims of your charity must directly benefit the public. That’s one of the things that the Charity Commission looks at strongly.

They want to know that what you’re doing has a genuine outcome that’s going to be beneficial to people, animals or whatever else your charity is for.

They dig to make sure your purpose is legitimate.

When setting up Prost8, they really challenged our charitable purposes. The Charity Commission wanted to know:

• What makes us so unique?
• What would make us not want to go on Prostate Cancer UK?
• How do you know that your new treatments are actually good for the public?
• What evidence do you have that your treatments can be beneficial to people in comparison to standard treatments?

In our case, they were digging to make sure that we were genuinely working with NHS, with NHS-approved products, and referring people to NHS rather than the private sector.

Ultimately, they wanted to be clear that we weren’t a commercial organisation offering our treatments alongside or instead of NHS treatments.

Don’t let this deter you. The Charity Commission is only doing this to weed out people who are trying to become a charity for the wrong reasons.

 

Carla’s experience:

Setting distinct goals and being really clear on your charity’s purpose is important.

Here are some things you should think about:

• Who are you looking to reach?
• What are you trying to do?
• Do you have competition? If so, who?
• How will your charity stand out and do better than the rest?

Ask yourself these questions and write down your pros and cons and ways to overcome them.

 

Naming a charity

Official government guidance suggests that when naming your charity, you must stay clear of any similar names or existing trademarks.

Your name must not include any offensive words or acronyms and cannot be misleading. Your name cannot suggest you do something that you don’t.

You can have abbreviations or alternate names but you must include these variations when you apply to register your charity.

Specifically for UK charities, any words that aren’t English require translating when you register, and you can only include ‘charity’, charities’ or ‘charitable’ in your name with approval from the Charities Commission.

 

Paul’s experience:

The only thing you need to look out for is nobody else is your name. It’s free rein apart from that.

Be aware that, if your name is obscure, you’re going to have to work hard to get people to know what that stands for.

Choosing a name that’s descriptive is a good start and could be the best way to go. If you’re called the RSPCA, (Royal Society for the Protection from Cruelty to Animals), it’s obvious what you do.

Whereas, Macmillan isn’t so obvious so getting people to understand what you do can potentially take more time.

I came up with Prost8 after about four or five days of scribbling down ideas. Prost8 was an early idea because of the one in eight men and eight being an alternative version of the ate on prostate.

I then looked through the Charity Commission, Companies House and the Trademark Register to check we didn’t clash with anyone.

One problem with our name is that the name didn’t say what we do. It doesn’t say we’re part of minimally invasive treatments. Unlike Prostate Cancer UK, whose name is obvious, Prost8 could be anything to do with prostate, not just cancer.

Once your branding is recognised, people know what you’re going to do.

With a lot of hard work on the marketing side, people now know Prost8 to be part of this minimum basic treatment pathway.

 

Carla’s experience:

Your charity’s name is important so be sure to choose wisely. Your name will be the first thing someone sees about your charity.

Make sure it’s clear for people to tell what you do, what you talk about and what you want to raise awareness on.

Initially, I chose Women with Endometriosis, but then I realised I wasn’t being entirely inclusive, which is why around 1 year into my journey as a charity founder I decided to change the name to The Endometriosis Foundation.

 

Writing a governing document

Your governing document is a rulebook which describes how your charity will be run.

This document informs trustees and other interested parties:

• Your charities purpose
• Who runs it and how they run it
• How trustees are appointed
• Rules about trustee’s expenses
• Rules about payments to trustees
• How to close the charity

Depending on the structure of your charity can change what type of document you need to create. If you have trustees, they must all sign this document. You’re allowed to create your own document, but there is a warning that this might make the registration a little longer.

For further information, read the official governing document guidance.

 

Paul’s experience:

This document is what will be scrutinised the most by the Charity Commission. They know it’s a standard document, but the wording is crucial.

At this stage, it might be a good place to get some professional advice. If you can spend any money setting up a charity, it’s worth a couple of hundred quid to talk to charity registration companies.

They can help you do the whole process if you want, or they can provide guidance for a consultancy fee.

When writing your governing document, there are plenty of templates already out there. If you look online, there are guidance templates on the Charity Commission website.

Simply take one of the standard governing document formats, then adapt it to your needs and aims. Other charities have examples and you can tap into one of those. I used that for mine and it’s what most people do.

You can even write one from scratch if you want but there’s no need to.

Again, even though the Charity Commission will be critical, they’re quite interactive and helpful. Send it to them, question them, and they will actually tell you what part of your wording and format needs to be changed.

When we did Prost8’s, someone said, “I’ve got a suggestion to reword a paragraph for you, if you change this to that, I think you’re going to meet all the criteria.” So I did that, put it in and it went through the first time.

It’s knowing that you can actually use them as a source of reference. They’re not the headmaster marking work.

 

Carla’s experience:

Personally, I was got lucky because a very good friend of mine was a policy writer so thankfully, she agreed to help out by offering pro-bono work to ensure that our charitable policies were in place and kept up to date.

If you’re completely new and don’t have a connection that can help with your governing document, thankfully there are lots of templates and examples available online that can help guide you to produce your own.

 

Applying for tax relief

UK charities can get certain tax reliefs and don’t have to pay tax on most types of income. As long as your income is for charitable purposes, the money remains tax-free.

Your charity can claim tax relief if:

• Its income is solely for charitable purposes
• It’s registered with a regulator
• It’s run by ‘fit and proper persons’
• It’s registered with HMRC

For further information about applying for tax relief when setting up a charity, read the official tax relief guidance.

 

Paul’s experience: 

When setting up a charity, it’s a good idea to have a chat with an accountant first. For the professional advice given, it’s money well spent.

If you choose a charity, then you get the full HMRC tax relief as a proper charitable cause. If you form one of the other structures, then there are different rules and regulations.

Once the charity’s set up, you then have to register with HMRC itself.

All the forms you need are on the government website. It’s a box-ticking exercise so simply fill them in.

After sending it to them, they’ll give you your HMRC charity reference number. Once you’ve got your number, you’re sorted.

As a charity, we don’t submit tax returns. So we must have the charity accounts checked and audited. Don’t submit corporation tax or any other documentation as tax returns.

This only changes if a charity starts to sell products. If this happens, everything sold needs to be VAT registered. They have tax laws and regulations applied because it then becomes retail, not just shows, donations, events or fundraising.

 

Spreading your message

Have you found this content useful?

Once you’ve followed these steps, you’re charity should be ready to help the cause closest to your heart.

So you’ve set up and are ready to start branding. When you’re prepared to begin promoting your charity, Solopress are the one-stop shop for all your printing and branding needs.