Strategic consultancy

HOW TO START A CHARITY

You’ve just had one of those moments – which could be sparked by anything from passion in life or concern about a social or environmental issue – where you think “there ought to be a charity to help here”. So how do you set up a charity?

HOW TO SET UP A CHARITY

You may have spotted a problem you think needs solving, or a way that you can make other people’s lives better, and in a moment of selflessness decide to set up a charity.

This is an exciting time and could be the start of something great!

Setting up and running a charity can be extremely fulfilling and sometimes challenging. You need to be in it for the long haul. So before you channel your passion into a cause you believe in, make sure your energy is being directed in the best way. You need to ask yourself some questions first:

IS SETTING UP A NEW CHARITY THE RIGHT WAY TO SUPPORT MY CAUSE?

If you have a specific cause in mind check you are not duplicating the efforts of charities already working in this area. Could you make more of an impact using your resources to fundraise for them – rather than setting up a new charity? Or will your proposed charity provide the perfect solution to a problem not yet being tackled.

IS SETTING UP A CHARITY THE RIGHT OPTION?

Using a charity framework gives you real benefits, such as tax advantages for donors, so charitable status is very valuable. But there are alternatives that may be a better fit in some situations. Options include a wide range of not-for-profit and social enterprises, including Community Amateur Sports Clubs.

If you’re motivated to change things for the better, it’s worth remembering there are stringent regulations around when and how charities can campaign.

See the guidance from the Charity Commission about whether setting up a charity is the right option.

WHAT TYPE OF CHARITY STRUCTURE SHOULD I USE?

Once you've decided that a new charity is the answer, you need to decide on the right structure for your new organisation. This will have a significant impact on what you can do. What makes sense for your charity is likely to depend on factors like:

  • how much money is involved and how your charitable activities will be funded
  • whether you’re open to a wide membership
  • if you’re going to deliver your charitable services under contract
  • if trustees are willing to accept personal liability for what the charity does

There are four main types of charity structure:

  • charitable incorporated organisation (CIO)
  • charitable company (limited by guarantee)
  • unincorporated association
  • trust
Each has their particular advantages. To help you know which is right for you, see more detail on how these different structures work in the Charity Commission guide to charity types

WHAT ARE THE OBJECTIVES AND PURPOSE OF MY CHARITY?

You’ll need to have clear objectives and a plan of what you want to do, and how you’re going to go about it. Creating a mission statement for your charity’s purpose is a good way to start. It can help crystallise your thinking about what you want to achieve. It needs to make clear:

  • what outcomes your charity is set up to achieve
  • how it will achieve these outcomes
  • who will benefit from these outcomes
  • where the benefits extend to
If you can succinctly explain what you do, it will help explain it to potential supporters and donors too.

Your new organisation can be only considered a charity if your objectives fit one of the Charity Commission’s list of 13 charitable purposes

WHAT DO I NEED TO GET THIS CHARITY UP AND RUNNING?

As well as offering fulfilment and satisfaction, running a charity can be a big commitment, so create realistic plans asking yourself:

  • How much time and effort will be needed?
  • Will I be able to spend the time I need on the project?
  • Can I keep up with my other commitments while I’m getting this project off the ground?
  • Do I have the time, skills and experience to see the project through?
  • If I need help and expertise, where will I be able to find it?
  • Can I happily work with others who may not be as personally attached to the project as I am?
  • What is likely to happen to the charity when I’m not around to guide and push it? Does it have a long-term future?

Then consider all the practical elements of the project too:

  • What facilities and equipment do I need to get this going – work space, computers, a website, a bank account?
  • How will you raise the funds you need to allow your charity to operate in the way you want it to? Remember charities don’t solely rely on donations – many earn income from selling their services or other trading activities.
  • How will this charity be governed and managed?

WHAT DO I NEED TO DO FIRST TO SET THINGS UP?

You’ll need to:

  • find suitable trustees for your charity to oversee its running -- usually a minimum of three
  • give your charity a unique name
  • choose and formalise your charity structure
  • write up your governing document setting out your purpose and how you are going to operate
The Charity Commission has helpful guidance and templates to help you write your charity’s governing document

HOW CAN I ENSURE A LONG-TERM FUTURE FOR MY CHARITY?

Once your foundations are in place you'll need to start planning. Think about your charity’s profile. How are you going to get noticed – whether this is to attract donors, to earn income or by potential service users and beneficiaries?

PUT TOGETHER A CLEAR PLAN OVER DIFFERENT TIMESCALES

– short term, medium term and long term – about what your goals are and how you are going to achieve them in that time frame. From this, create the equivalent of a business plan with realistic assumptions about where the funding for your activities will be coming from. Think about all the options including:

  • donations
  • income generation – including trading activities, social investment, bidding for contracts, selling services 
  • grants
You’ll also need to plan carefully how the money is spent on your cause and the financial accountability for all your income and expenditure.

If your annual income is over £5,000 a year you’ll need to register with the Charity Commission unless you are CIO. In which case you’ll need to register whatever income you make.

You can then apply for recognition as a charity with HMRC for tax purposes.

It’s also sensible to set policies right from the start so everyone involved knows what is expected of them. Managers, employees, trustees and volunteers all need to be fully aware of their responsibilities to make sure your charity's activities stay within the law for things like:

  • data protection
  • investments
  • fundraising methods

REVIEW YOUR PLANS REGULARLY

Once things are up and running you should review and adjust your plans regularly. Look at your achievements and setbacks and learn what works for you and what doesn’t.

SEEK ADVICE WHEN YOU NEED IT

From initial idea to daily running, good advice is always useful. You could talk to other organisations in your sector and get insights from them about what works and what doesn’t. If yours is a local organisation talking to other charities in your neighbourhood, but in a different sector, could offer you valuable learnings about how to approach the local community.

If you're looking for help on anything from accounts to safeguarding vulnerable people, the Charity Commission can help with services and information.

CAN WE HELP?

We provide bespoke advice to charities of all sizes and at all stages of development through our strategic consultancy service

We’re experts in charity strategy, income diversification and governance, so you can be sure you’re on track for a resilient future.