How to Set Up a Charity in The UK: Step-By-Step Guide

Ryan Patrick

• 15 min read
How to Set Up a Charity in The UK: Step-By-Step Guide

The UK has a large number of charities, around 200,000 in total, of which about 169,000 are based in England and Wales.

If you're considering following this path to become a philanthropist and make a positive impact on people's lives, this guide breaks down the process of starting a charity organization in the UK.

You will learn how to do this in just 9 simple steps. So whether your motivation to start a Charity is to foster social change, community development, or any specific cause, the goal of this guide is to provide you with the information needed to get your Charity brand fully set up. Let's get started.

What Does Charity Organization Mean?

A charity brand is an organization established primarily to contribute to the development of society, as opposed to a commercial brand set up to make a profit. In a more detailed specific context of the England and Wales Charities Act 2011, a legal framework for defining charity based on two principles is provided:

1. Specific charitable purpose: A charity should be established specifically for charitable purposes and should emphasize its commitment to making a positive impact on society. This standard emphasizes the charitable nature and primary purpose of non-profit organizations.

2. Jurisdiction of the High Court in charity law matters: The recognized body in England and Wales is subject to the jurisdiction of the High Court in matters relating to charity law. This judicial oversight ensures compliance and enhances accountability in achieving aid objectives.

Based on this act, it is right to deduce that, Charity organizations operate on a non-profit basis, i.e. All surplus income goes to support their special charitable purposes. This financial model differentiates them from profit-making companies and focuses on social impact rather than financial gain.

However, it is important to note that not every non-profit organization will automatically receive non-profit status.  The criteria set out in the Charities Act serve as a framework and require the organization's goals to align with the charity's objectives. A thorough understanding of these definitions is important for those considering setting up or registering a charity.  

Sorting out the basic aspects of non-profit status provides a solid foundation for navigating the regulatory environment. Additionally, researching ways to start a charity is a conscious step that allows for more informed decisions that further align with the specific goals and objectives of the organization.

Document Requirements for Setting Up A Charity In The UK

Completing the charity registration process requires careful gathering of the details necessary to complete the full online application form. To ensure successful registration, consider the following key elements your charity organization must provide:

1. Organization Details

  • State the name of the agency, including any alternative job titles under which it will operate.
  • Providing a physical address and contact information, creating a single point of contact for organizational and administrative purposes.

2. Trustee's Information

  • Provide details of administrators associated with the organization, including their names, positions and contact details. This step is important for transparency and accountability.
  • Submit a copy of the governing document in PDF format that provides a basic overview of the organization's structure, rules and policies.
  • For charities operating as a limited liability company, provide a copy of the company's certificate of incorporation and documents to clarify the legal status and structure.

4. Non-profit objectives

  • Explain the charitable goals that drive your organization and describe the specific social benefits you want to achieve through your activities. This section serves as an important foundation for understanding your charity's mission and impact.

5. Operational Activities

  • Provide insight into the organization's processes and explain in detail how it achieves its goals for better performance. This information will give trustees a clear view of the charity's day-to-day operations.

6. Financial documents

  • Indicate charity status by showing that the income exceeds £5,000 per annum (if not in the CIO category).
  • Sharing banking information or creating public account information, ensuring transparency of financial transactions and accounting.

In addition to the above requirements, a certificate of approval is part of the application process.  This form, signed by each employee, serves as evidence of their suitability and commitment to the organization's goals.

This form must be filled in correctly and attached as a PDF file to the online application. Also, due to the complexity and limitations of the application form, careful preparation is essential. Gathering all the important information beforehand will streamline the process and set your team up for success.

Exempt Charity Organizations and Direct Charity Commission

Due to the complex nature of charity regulation in the UK, some organizations fall into the category of exempt charities, a special status that distinguishes them from organizations that are directly monitored by the Commission.

Dedicated charities operate outside the direct scope of the Charity Commission. This exemption may arise from ordinary investments or deposits that are only available for charitable exemptions or designations under alternative legislation.

Most exempt charities are under the supervision or responsibility of other councils or agencies.  However, historical challenges in effective regulation led to changes in the laws in 2006 to strengthen oversight and accountability of exempt charities.

The 2006 ACT introduced reforms to the exempt charity system and required these organizations to have an "executive director" to oversee the charities' compliance. Some charities, including universities, student organizations and cultural institutions, have moved from exempt status to direct regulation by the Charity Commission.

This change is necessary when there is no suitable person to act as CEO. Additionally, and very importantly too, these charities must register with the Commission if their annual income exceeds £100,000.

The 9 Steps to Set Up a Charity in The UK

Setting up a charity in the UK involves several key steps. Here's a detailed guide in a step-by-step format to help you out.

Step 1: Evaluate Eligibility and Explore Alternatives

The initial step involves a thorough assessment to determine the suitability of setting up a charity. Consider the alignment of your organization's activities with charitable purposes and carefully evaluate the continued commitment you will need, while also recognizing the ongoing responsibilities associated with running a charity.

Explore alternative company structures like community interest companies (CICs) or social enterprises if a charity may not align optimally with your goals. With this, you will have a comprehensive understanding of available options that may better suit your organization's mission.

For those committed to establishing a charity, it is vital to verify eligibility based on legal criteria. Confirm that your organization's activities will exclusively serve the interest of the public and will align with the specific criteria outlined by the Charity Commission. This review will ensure that your organization's purposes resonate with the charitable objectives recognized by the commission.

This initial step which demands a thoughtful examination of your organization's mission, activities, and the long-term commitment involved, ensures alignment with the requirements for charitable status. This step of considering alternatives will add depth to your decision-making process, promoting a strategic approach to fulfilling your organization's objectives.

Step 2: Appoint Trustees for better Management of your Charity

The second phase focuses on the appointment of trustees who will be involved in the administration and management of charity projects. Ideally, target different groups of at least three independent representatives who bring different skills, experience and backgrounds to ensure a broad perspective in running the charity.

Emphasize the commitment required and recognize that trustees are often unpaid volunteers who are responsible for the success of the organization. It is important to find people who are passionate about a real charity and can make a significant contribution. When hiring, look for specific skills that are relevant to the organization's mission, such as Legal, financial, or industry-specific skills.

To foster a relationship with trust, take into account factors such as age, criminal record and legal disqualifications. Make sure the trustee you choose meets all legal requirements to avoid potential problems in the future. Learn about the circumstances under which people may be disqualified from serving as a trustee, and be aware that disqualifications can be waived in certain circumstances.

Importantly also, trustees do not need to be based in the UK and can be a citizens or residents of any country in the world.  The key is to select managers who are aligned with the organization's goals and who have the right skills and commitment to contribute effectively to the organization's success.

Step 3: Clearly define the purpose of the Charity Organization

The third step involves paying careful attention to the details of your organization's charitable goals. The purpose of the charity is to contribute to the "public good".

To ensure alignment, identify the specific outcomes your company wants to achieve and clearly define them. Your charity’s objectives to help must meet at least one of the 13 specifications of the 2011 Charities Act, which cover areas ranging from poverty alleviation to military influence.

Thus, it’s important to be specific about the results your company wants to achieve. Determine how these results will be achieved, who will benefit, and where these benefits will occur. These purposes of the charity are typically written down in the "Purposes" section of the governing document – the legal document that outlines the structure, purposes, and procedures of the charity.

If you need a valuable resource tool to create a vision for your organization, you can leverage the GOV.UK's comprehensive guide on writing a charity's policy. Furthermore, it is important to emphasize how your organization's activities contribute to the development of society. This focus is important to meet the legal requirements for non-profit status.

Step 4: Choose a Name for the Charity

The fourth step is to choose a name, which is an important part of a charity's branding strategy.  The name you choose serves as a central feature and will contribute greatly to awareness of your Charity event. Hence, take your time, and make sure the name you choose is not only unique and memorable but also appropriate for the charity.

In picking a good and official charity name, you must ensure the name is not similar to the name of any charity. Be careful not to include any words or phrases, offensive words or abbreviations, or offensive content without proper permission. Additionally, be aware of restrictions associated with words like "Royal" and ensure proper authorization before use.

Use online resources such as Charity Register to do a thorough search of charities with similar names. This useful method ensures the uniqueness of the name you choose and prevents any infringement of the intellectual property of others. Lastly, you can consider using work/business names or alternative names in addition to the main charity name.

This flexibility of strategy allows for variations, acronyms or abbreviations that can better suit your company's approach. By choosing a charity name wisely, you'll lay the foundation for effective branding, highlighting your Charity organization and raising valuable awareness.

The fifth step deals with choosing a legal form of existence, an important decision that has a significant impact on the charity's operations, governance and accountability.

There are four main forms of charities in the UK:

i. Charitable Company: This is a legal entity established as a limited liability company. It must be registered and registered with the Charity Commission. It is best suited for large charities involving large funds, assets or projects with financial risk.

ii. Charitable Incorporated Organisation (CIO): This is a new corporate structure designed specifically for non-profits. It exists as a separate legal entity without dual registration with Companies House. It is suitable for those looking for the benefits of a private limited company without the added burden of regulation.

iii. Charitable trust: An unincorporated structure whose trustees are a separate legal entity.  The trustees are personally responsible for all the obligations and duties of the charity. It is only suitable for small charities run by trustees who are not involved in specific activities such as renting accommodation or employing staff.

iv. Unincorporated Association: This is the simplest and easiest charitable system to set up and operate. It is simply a group of volunteer members with no separate legal personality and is best suited for small groups with low risk as there are no setup costs.

Consider the type and size of the donation and determine the most appropriate legal form.  Also consider factors such as liability, regulatory requirements and work flexibility. Each form of law has different registration requirements, from incorporation to registration with the Charity Commission.

Choosing the right legal form requires careful consideration of the size of the charity, its activities and the level of regulatory oversight required. Understanding the implications of each process will help you make decisions that align with your company's goals and operational needs.

Step 6: Prepare the necessary governing document for the operation

The sixth step focuses on preparing your operating documents, the ground rules that define how your charity operates. These documents serve as the legal framework behind the organization's structure, name, objectives, and operating objectives.

Types of Legal Documents:

  • For Limited Liability Company, prepare Articles of Association
  • For Coordinating Organization (CIO), establish a foundation or organization rules
  • For organizations not registered in the commercial register, prepare rules.
  • For a Non-profit Foundation, prepare a Trust Deed or Will.

The main points usually included in the document:

i. Charitable objects (“objects”)

ii. Management and Membership Information

iii. Governance and decision-making

iv. Financial management policies

v. Repeal of the provisions for discontinuing any donation

The Charity Commission provides sample documents to suit different types of charities. These templates serve as templates or references during the document creation process.

The charity must meet to approve and sign the governing document, with the option of requiring an independent witness to set up the charity trust.

The guidance document is legally binding and strict adherence to its guidelines is essential for effective humanitarian operations. Also structure in the demands of the constitution. It is important to ensure transparency and prevent misunderstandings or disputes between trustees and members.

Drafting a comprehensive governing document is an important step in establishing the legal structure for a charity. Whether you use a template provided by a charity or create your own, it is important to include all the relevant details and ensure you follow the protocol you choose.  The guidance document sets the foundation for how the charity works, informing decision-making and supporting the process for long-term success.

Step 7: Outline the Public Benefits of the Charity

The seventh stage focuses on the impact and benefits the organization will bring to the public or a part of the public. To qualify to be a charity in the UK, your organization must present convincing evidence that its activities benefit the public.

The Charity Commission mandates charities to show how the organization contributes to the public good. To draft and demonstrate how your organization's activities will have a positive impact on society, as hinted earlier, clarify; who benefits, how they benefit, and where those benefits arise.

You can also make sure the charity's purpose is formal, as defined in your charter. Additionally, activities should clearly demonstrate the commitment of the organization to meet the needs of the public. Crucial to note in this step is that, pursuing a charitable mission is not the end itself, instead, what matters most is your commitment to serve the public.

Lastly, to ensure your charity is on track, regularly review and document the positive impact of your organization's work on the public. An ongoing assessment will reinforce your organization's commitment to making a meaningful and lasting contribution to the public good.

Step 8: Register as a volunteer organization

It is then time to register your charity organization with the Charity Commission. This step is a mandatory process for charities in England, Wales, and all over the United Kingdom (those that have met the required criteria to qualify to be a Charity).

One of these crucial criteria is having an annual income of at least £5,000, a criterion if not met would lead your Charity to be set up as a Charitable Incorporated Organisation (CIO).

To begin registration, submit a complete application to the Charity Commission, which includes details of the charity. This includes name, address, trustee details, governing documents, charitable purposes and financial details.

Important registration information for Charity Commission:

  • Name of the group, including all active names.
  • Address and contact details.
  • Details of administrators.
  • PDF copy of the administrative document.
  • Reasons for charity.
  • Details of how the organization achieves its objectives for the benefit of the public.
  • If required, a copy of the certificate of incorporation and certification (for charities).
  • Attach a trustee declaration form signed by each trustee confirming their eligibility.

Please note that the application form is extensive and complex and requires great attention to detail.

Step 9: Register with HMRC

After registering your Charity as explained in step 8, the next step is getting registered with Her Majesty's Revenue and Customs. (HMRC). The move opens up tax benefits, particularly for Gift Aid donations. HMRC registration allows your charity to claim tax on eligible donations, increasing their value.

When registering with HMRC, include details like the charity's name and address, trustee details, and the charity's bank or public account details.  Compare this information with the data sent to the Charity Commission. Also, by registering with HMRC you can benefit from the free support they offer and increase your contribution by up to 25% through tax relief.

Please note that registering with HMRC is different to registering with the Charity Commission. While each process has its focus, together they strengthen the charity's financial sustainability. Even for smaller charities, HMRC registration opens up opportunities to increase the impact of donations and highlights their importance throughout the registration process.

Lastly, once you have your application submitted for registration as a Charity, the process returns to a later stage with specific steps and considerations:

Step 1; confirmation by email. After submission, you will immediately receive an e-mail with a copy of the application in PDF format. This important document acts as a filing record and contains important information for your future registration. It will also be forwarded to the team contact person and each administrator. The agency will respond within a few weeks, although the timeline may vary. While some applications can be processed quickly, others can take longer, with some complex cases requiring expert assessment, thus extending the time to several months.

Step 2; After the initial response, expect possible additional requirements from the board. They may ask for more information or details about your application. If their ideas are unclear, don't hesitate to ask them for clarification and ask them to specify the exact information or correction they need.

If you are taking a proactive approach, you should express your openness to professional advice if changes are necessary to the registration's success. In addition, it's important not to give up when more questions come up.

Instead, think of it as part of a comprehensive evaluation process. If you submit documents that may not meet the Company's requirements, you agree to make the necessary changes based on the Company's professional guidance. Persistence in achieving their goals is the key to obtaining a registration number.

Step 3; After completing the registration process, take a moment to send a thank you email from the charity to the agency. Showing gratitude acknowledges their role in facilitating registration and encourages good communication. Such signs are often appreciated and help develop a good relationship between your team and the agency

How Long Does It Take to Register a Charity in the UK

Charity registration in the UK is a process that has no fixed time and is similar to an actual lottery.  While there are exceptional cases that have quick registration even within one day, the normal period can stretch up to several months. On average, the registration process takes several weeks, but the complexity of individual cases and the specific issues the Commission may have with your Charity have a significant impact on the timeline.

A look at the Charity Commission's 2021/22 Annual Report provides insight into its efforts and achievements at a time of feedback and decision-making:

1. Initial response time: As part of its commitment, the Commission intends to evaluate applications and provide an initial response within 10 working days. In this regard, performance metrics particularly show excellent results: 96% of applications received a first response in this target range in 2021, and even more commendable is that 99% of requests received a first response within 10 working days in the following year and beyond.

2. Decision time: The main goal to decide on applications for registration, approval and consultation, happens within 30 working days. The organization highlights its achievements and shows that 80% of all requests received a response in terms of advice within the stipulated time in 2021. In addition, a satisfactory 86% of all inquiries resulted in a decision being made within 30 working days in 2022.

Despite these organizational guidelines, individual approaches to charity registration can vary widely. While the right circumstances can shorten the process to about a month, three months is often the standard. However, it is important to know that the waiting period can be significantly extended by the Commission in cases involving complex or special reviews.

Form your company with Incorpuk today

At Incorpuk, we will help you file accurate information when you register your company through us. We will help you with incorporation articles, a registered office address, and all you may need to register your company in the UK. Contact our team if you seek any information; we will gladly assist.

Frequently Asked Questions On How to Set Up a Charity in the UK

1. What is the cost of starting the registration process for a UK charity?

The Charity Commission does not charge any fees for setting up a UK charity. However, if you choose professional help, expect to spend around £1,000 or more.

2. What is the income limit required to register as a charity?

To register a charitable foundation or company an income of £5,000 or a grant proposal of this amount is required. Notably, there is no income requirement to register as a CIO (charitable incorporated organization).

3. How long does it usually take to register a UK charity?

On average, the budget is four months to see the completion of the charity registration process. The first month is to gather all necessary information and prepare your application, and another three months approval period. However, duration can vary, ranging from quick approval to potentially longer time frames.

Registered charities can take one of four legal forms: a charitable foundation, a charitable corporation, a foundation model CIO, or an association model CIO.

5. Which Charity structure is considered the best?

While most people support the basic CIO structure, there are situations where a CIO from a non-profit or association may be more appropriate. The choice depends on the specific circumstances and organizational goals.

Conclusion

If you are passionate about making a lasting impact in society, you should consider setting up a charity. For anyone in the UK who has chosen to follow this path, it is important to emphasize that starting a charity is not a simple task. It requires careful planning, hard work, and a strong commitment to making a positive difference. We understand this, and to help in successfully launching a charity organization, we have explored the key steps required for the charity set-up.

Through this comprehensive guide, you will discover the step-by-step process to follow. From defining what a charity organization is to the details required to complete the registration process we detailed everything. By following this guide, adhering to legal requirements, and keeping your mission at heart you can turn your charity set-up dream into a reality and build a successful and purposeful organization that contributes positively to society. If you have any questions about forming a charity in the UK, kindly contact one of our experts for help today.