- Written by
- Kamran Chughtai, Solicitor
Starting a charity can be a rewarding endeavour, but it requires careful planning to ensure you meet your legal obligations. In this article, Kamran Chughtai, a solicitor in the Private Client team, shares some key considerations when starting a charity.
Charitable Purpose
Under UK law, a charity must serve a recognised charitable purpose, such as relief of poverty, or the advancement of education or human rights. The charity must also provide public benefit, meaning its activities should positively impact a section of the public without serving private interests.
Establishing and Registering a Charity
The process of setting up a charity begins with deciding on a legal structure. The most common forms include Charitable Incorporated Organisations (CIOs), charitable trusts, and charitable companies. The choice of structure affects how the charity is run, its liability, and its reporting obligations.
A governing document is also required to outline the charity’s purpose, decision-making processes, and trustee responsibilities. The trustees themselves play a crucial role in overseeing operations and ensuring compliance.
Once these foundations are in place, an application for registration can be submitted to the Charity Commission. Registered charities benefit from tax exemptions, including relief from income and capital gains tax. They can also claim Gift Aid on donations, boosting fundraising efforts.
Registration is mandatory for CIOs and other types of charities with an annual income over £5,000.
Legal Responsibilities and Compliance
Regardless of whether the charity is registered, trustees must adhere to the principles of charity law which includes always acting in the best interests of the charity, avoiding conflicts of interest, and managing funds responsibly.
Registered charities must adhere to strict regulatory requirements. This includes maintaining proper governance, submitting annual financial reports, and demonstrating that their activities continue to provide public benefit.
Overcoming Challenges
New charities often face governance and financial challenges. Poor management or failure to meet legal obligations can result in regulatory issues and trustee liability. Seeking legal advice early on helps ensure proper structuring and long-term success.
If you are considering setting up a charity and would like any advice on any points featured in this article, please contact Elliot Lewis or Kamran Chughtai in our Private Client Team at Thackray Williams on 020 8290 0440.
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