Key points to consider when setting up a charity

The government website sets out a step-by-step guide to setting up a charity; please see here. Below are some of the most important aspects of this process:

A charity must have a charitable purpose:

• The purpose of the charity (i.e., the reason for which it is set up) must be something which is for the benefit of the public. The charitable purpose must benefit the public in general or a sufficient section of the public (for example, people living in the same geographical area, a specific community or people having similar “protected characteristics” such as disability, sexual orientation, religion and belief). For more information on this aspect, please see the Charity Commission’s guidance on “Public benefit: the public benefit requirement (PB1).”
• The charity’s purpose is important because it helps the Charity Commission to decide if your organisation can be registered as a charity, and HMRC to decide if it qualifies for tax relief.
• The charity can have more than one purpose, but all of them must be charitable, and a charity can only do things that carry out its purpose(s).
• By way of example, the law recognises the following common purposes as “charitable purposes”:
  • the prevention or relief of poverty; the advancement of education; the advancement of health; the advancement of citizenship or community development; the advancement of the arts, culture, heritage or science; the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity; the advancement of environmental protection or improvement. Please see the full list here.

Charities can be set up using various structures: