The decision to set up of a new charity is a significant one and the responsibilities involved in running it will be far-reaching.
So very careful consideration and planning are essential before the first step is taken, particularly in view of comments from the Charity Commission that “too many people set up a new charity without making sure they have identified an unaddressed need…without making an honest effort to establish whether another charity is already doing similar work. The result is duplication…and too many charities that are not managed well enough.”
At Haslers, working alongside other professional advisors, such as solicitors, we will use our charity and not-for-profit experience to examine your plans and advise on whether setting up a charity is the best way forward or whether there are other options for achieving your goals.
If you do decide that you want to establish a new charity, you will need to decide on the best structure for your organisation. There are four main types of structure:
- charitable incorporated organisation (CIO), either an association CIO or foundation CIO
- charitable company, limited by guarantee.
- unincorporated association
If a charity has an incorporated structure (CIO or charitable company), it is considered in law to be a “person” in its own right. This means that it can:
- employ paid staff
- deliver charitable services under contractual agreements
- enter into commercial contracts in its own name
- own freehold or leasehold land or other property.
If a charity structure is a corporate body, generally its trustees enjoy greater protection than if the organisation is unincorporated. However this structure does involve greater financial compliance considerations.
If charity is not a corporate body (unincorporated association or trust):
- the trustees are personally liable for what it does
- the charity will not be able to enter into contracts or control some investments in its own name
- two or more trustees, a corporate custodian trustee or the charities’ land holding service will have to “hold” any land on the charity’s behalf.
Alongside these issues, there will be a range of other factors unique to each charity that will financial, operational and strategic point of view.
Haslers’ charity team can provide expert advice to assist charity leaders and trustees in making informed decisions about the most appropriate structure for their new organisation, as well as advising existing charities that may be considering a change of structure as their organisation evolves.
To find out more about Haslers’ East London and Essex-based accountancy, tax and business advisory services for charities, please contact us.