AAW HOW TO: Set Up a Charity
If you want to set up your own charitable organisation, then there are some steps you have to follow. This includes picking a name, registering it, and hiring employees like a Director of Fundraising or a CEO.
Here are the steps on how to set up your charity in the UK.
Choose Trustees
One of the first steps when organising a charity is to pick independent trustees. At the very least, you should have at least three trustees. Ideally, they will care about whatever cause your charity promotes and can help you to get your not-for-profit off the ground. Ideally these trustees will also be able to introduce you to helpful connections and possible donors. Your trustees may also include yourself or even a spouse.
Whoever starts up the charity doesn't need to live or work in the UK. They can reside anywhere in the world, but they must be at least 16 years old if the charity is registered as a limited company.
A person cannot be a trustee or manager if they have unspent convictions, or has previously been removed from a similar position. They also cannot have been found in contempt of court in the past or a designated person under anti-terrorist legislation.
Define Your Charitable Purpose
Next, you'll need to outline your charity's purpose. This purpose must exist for the public benefit and fall into some of the descriptions listed in the Charities Act 2011.
Furthermore, your charitable purpose should outline your organisation's goal, its methodology, who will benefit and where the benefits will happen.
For example, a soup kitchen's goal is to feed hungry people inside their building using donated foods that are prepared as meals. The people who benefit the most are those unable to feed themselves.
Pick a Charity Name
Another important area is your charity name. It's key to your branding strategy and can help you stand out from other charities.
Your official charity name should not match another charity or be similar to it. It must not include words you can't legally use, such as something offensive or that breaches intellectual property rules. Your name also can't be misleading.
Before deciding on a name, make sure you check on the Charity Commission website to see if it’s already been taken.
In addition to an official name, your charity can also have a working or alternative name. Most charities with longer names use abbreviations or acronyms.
Select a Legal Structure
Charities in the UK must abide by a specific legal structure. The four main types include:
Charitable company
Charitable incorporated organisation (CIO)
Charitable trust
Unincorporated association
A charitable company is limited by guarantee instead of shares. It can enter into contracts and hold property but is responsible for its debts.
CIOs are not companies and do not follow company regulations. These can employ staff and enter into commercial contracts. Trustees are protected from personal liability by the CIO's actions.
A charitable trust has an unincorporated structure where all trustees are personally responsible for what happens with the charity. This is best used by smaller groups that will not operate out of a commercial property.
An unincorporated association is something even smaller and less organised, such as a community group that picks up rubbish in a park. These must register only if they have an annual income of over £5,000.
Create a Governing Document
All charities must have a governing document for them to operate legally. This document should outline the organisation's purpose, how it is run, how to arrange meetings, and other similar information.
The document is further influenced by your charity's legal structure. For example, a limited company's document is called the "Articles of Association". In contrast, a charitable trust creates a trust deed or will.
Register Your Charity
The last step is to register your charity with the Charity Commission. This is required if your annual income exceeds £5,000 or you've set it up as a charitable incorporated organisation.
Some of the information you'll need includes the name of your organisation, details of your trustees, proof of income, and bank account details. It takes 10 working days to assess your application. They should be able to approve your application within 30 working days.
Put Together a Long-Term Plan
While this isn't a necessary step for creating a charity, it is essential if you want it to last long enough to make a difference.
Create short, medium, and long-term goals and detail how you plan to achieve them. This should include how you plan to generate income and allocate donations.
Recruit reliable employees that you can trust and who believe in your mission. Some of the initial roles you need to fill will include a Director of Fundraising, Chief Financial Officer and a Chief Executive.
While these roles seem very business-related, you'll need them if you hope to attract funding.
Finally, seek external help whenever you need it. This could mean finding a lawyer or accountant who isn’t an employee, but can help advise.
Find Your Director of Fundraising and More
There are a lot of moving parts that go into creating your first charity. One of the most important is finding a Director of Fundraising who can generate an audience as well as a flow of donations. However, don't feel like you need to handle the search all by yourself.
AAW Group provides bespoke recruitment tailored just for your needs. We offer an executive search, shortlisting, and interim management for charities of all sizes, including brand new ones.
Read more about our consultancy services online and contact us with any questions.
