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Setting up a Charity

6 steps to set up a charity

There are lots of reasons why you might be considering setting up a charity; trust and recognition, gift aid, reduced tax or specialist VAT treatments (to list just a few). And setting up a charity needn’t be as complicated as you might think.

Which is why we’ve compiled this step-by-step list to help you on your journey. Please note, the information included in this blog relates to charities in England and Wales. Different rules and processes apply if you want to set up a charity in Scotland or Northern Ireland. If you’re unsure that setting up a charity is the right option for your ‘charitable organisation’, please read our blog article Alternatives to Setting Up a Charity.

How do I setup a charity?

Step 1 – Choose your trustees

Usually, a charity will need three trustees. Trustees are responsible for leading the charity and deciding how it is managed and run.

Almost anyone can set up and run a charity, although there are a few restrictions;

• Trustees must be at least 16 years old if the charity is registered as a limited company or charitable incorporated organisation (CIO), or 18 years old if the charity is a trust or unincorporated association.

You cannot become a trustee of a charity if;

• you have unspent convictions for certain offences
• you are disqualified from acting as a company director
• you have previously been removed as a trustee, officer, agent or employee of a charity by the Charity Commission or High Court due to mismanagement or misconduct
• you are an undischarged bankrupt or you are subject to bankruptcy restrictions or an interim order (including an IVA) 
• you are subject to a debt relief order, debt relief restriction order, or an interim order under the Insolvency Act 1986
• you have been found to be in contempt of court for making a false statement
• you are on the sex offenders’ register
• you are a designated person under particular anti-terrorist legislation

Step 2 – Define your charitable purpose

‘Charitable purpose’ refers to the aims and objectives of your charity. Your charity must have ‘charitable purposes’ that help the public. These include things that contribute to;

• relieving poverty
• education
• religion
• health
• saving lives
• citizenship or community development
• the arts
• amateur sport
• human rights
• religious or racial harmony
• the protection of the environment
• animal welfare
• the efficiency of the armed forces, police, fire or ambulance services

You cannot set up a charity to help one individual person. Gov.uk provides detailed guidance on writing your charitable purposes.

Step 3 – Choose a name for your charity

Choosing the right name for your charity is crucial as it is the way that people will become aware of your organisation and your cause. It should be unique, memorable and clearly convey your charity’s purpose.

Your charity name cannot;

• be the same as or similar to the name of another charity
• include words that you don’t have permission to use, such as a trade mark or copyrighted work
• use offensive words or acronyms
• be misleading
• breach intellectual property rules

You can check the names of other registered charities by searching the Charities Register.

Step 4 – Select a legal structure

The legal structure of your charity will affect things like how your charity is run, who runs it and what it can do.

There are four common charity structures;

• Charitable company
• Charitable incorporated organisation (CIO)
• Charitable trust
• Unincorporated charitable association

Step 5 – Create a Governing Document

All charities must have a ‘governing document’. This document acts as a rulebook for your charity and should explain;

• your charity’s purpose
• who runs your charity and how they run it
• how trustees will be appointed
• rules about trustees’ expenses
• rules about payments to trustees
• how to close the charity

What type of governing document you need depends on your charity structure;

• limited company – articles of association
• charitable incorporated organisation – foundation or association constitution
• unincorporated association – constitution
• charitable trusts – trust deed or will

Guidance and example templates are available on Gov.uk

Step 6 – Register your charity

You are legally required to register your charity with the Charity Commission if;

• it has an annual income of at least £5,000, or
• it is set up as a charitable incorporated organisation

To complete the online application form, you will need to provide the following information about your charity;

• name
• bank or building society details
• most recent accounts
• contact details (including postal address)
• trustees’ names, dates of birth and contact details
• a copy of your charity’s governing document
• proof of income (your charity’s latest ‘published’ annual accounts, a recent bank statement or a formal offer of funding from a recognised funding body)

So, there you have it, how to set up a charity in 6 steps!

We hope that you have found this article useful. For further advice regarding setting up a charity please contact our expert team of certified accountants.

Find out more about our specialist accountancy services for charities.