There are six important steps for setting up a charitable organization. And the fact that a foundation, just like a business, carries a risk for those involved, it is vital to put time and effort in with the setup.
Cutting corners can result in legal problems, tax issues as well as underserved stress, and headaches. After all, you have set up your Foundation with good purposes. The last thing you want is an argument with HMRC, therefore check off the following and get tips and recommendations each time you want it.
Steps in Setting Up a Charity
This is the first step in setting up a charity. You need to know your intentions. Your Foundation should have charitable purposes, which assist the public or deemed as being for public benefit. This takes account of the following:
- Relieving poverty
- Saving lives
- Wellbeing or health
- Citizenship or community development
- Human right
- Amateur sport
- Protection of the environment
- Religious or racial harmony
- Animal welfare
- Police, armed forces, fire ambulance services’ efficiency
Name Your Charity
Your next step in putting up a foundation is naming your charity. Keep in mind that in these steps, the name of your charity should not:
- Be the same to the name of a current charity unless you are able to prove you need to utilize it.
- Use words you do not have consent to use, like, for instance, a trademark
- Use offensive acronyms or words.
Be misleading, like, for instance, suggest your Foundation does something it does not.
Look for the charities register to know the names of registered foundations. Unregistered foundations will not be included in the register.
When searching for a name, you can make use of abbreviations. You can also use alternate names like, for instance, Comic Relief is a working name for Charity Projects.
You should list any alternative names your Foundation uses when applying to register.
1. Non-English Names
You should include a translation of Non-English words in the name of your Foundation when you register.
2. Using the Word “Charity” in a Name
You can utilize the word charity, charitable, and charities in your Foundation’s name; however, you require approval from the Charity Commission when you utilize them if you register a company name with Company House.
3. Structures of the Charity
This is the third step in putting up a charity. You should pick a structure for the charity that will affect things such as:
Who manages the Foundation?
- How it is operated
- What the Foundation can do, like, for instance, use people or own property.
There are common charity structures such as:
Charitable Company: Your charitable company will need to be restricted by guarantees instead of shared if you register. Select those private companies restricted by guarantee found on form.
Trustees have no liability or are limited to a charitable company’s liabilities or debts.
4. Recruit Trustees
When you say trustees, it refers to volunteers who are officially accountable for the Foundation and making sure it is doing its intention. They should:
- Act in the best interests of the charity
- Manage the resources of the charity responsibly.
- Ensure the Foundation is acting within the rules and regulation
- Make sure the Foundation is doing its purpose.
For a charitable Incorporated Organization, a trustee must be at least sixteen years old and above. For any other kind of Foundation, a trustee must be at least 18 years old. Providing they’re not disqualified for some reason; almost anyone can be a trustee.
One reason that charity registration request is disqualified is due to the fact that trustees are not fit to work with kids or vulnerable individuals. Ensure that none of the trustees have been:
- Charged with money laundering
- Charged with bankruptcy
- Placed on a sex offender registry
- Eliminated as a trustee from other charities
- Arrested on the basis of alleged terrorist acts
5. Governing Document
You should make a governing document or also known as a rulebook for the Foundation, which gives details on how your Foundation is run or operate.
Your rulebook allows trustees and other parties find out:
- The purpose of your Foundation
- Who operates it and how they operate it
- How trustees will be assigned or appointed
- Rules concerning trustee’s expense
- Rules about payments to trustees
- How to close the Foundation
What kind of rule book or governing document you want depends on the structure of the charity.
6. Register the Charity
You should apply to register the charity when:
Its profit is at £5,000 per year, or it is a charitable incorporated organization or CIO. If you’re using a CIO format, it’s just available in a PDF document. You will need to convert the PDF document to a document you can fill in: kind of information into the gaps, and then print it and delete the option you don’t want by hand. Scan the document back to your PC and upload it.
When done uploading the needed documents, you can submit it to the Charity Commission. You should get a response in up to forty-five days. When done submitting the application, it will take the CC sometime to process it and review it.
7. Supporting Papers
If you apply, you will be requested about:
- Your charitable intentions
- How you operate the Foundation for public benefit
- Proof which your annual foundation income is more than £5,000 unless you are a Charitable Incorporated Organization
Furthermore, you likewise need to supply your Foundation’s:
- Building or bank details
- Recent accounts
- Contact information, including a postal address
- Name of Trustees, birthday and contact information
- Copy of the charity’s governing document
- Proof of Income
If required, proof of income can be any of the following:
The latest published annual accounts of the charity must be in a PDF format. They should have been approved by an auditor or independent examiner as proof of income.
Recent bank details (scanned image)
A formal offer of financial support from a known funding body
Setting up a charity is not an easy task due to the challenges that you need to experience. But, if you are dedicated to helping others, and you want to make it legal, everything is possible. All there is to do now is to follow the abovementioned steps.