Considering setting up a charity? Understanding the legal requirements from the outset can help you avoid common pitfalls and support long-term success. 

Not everyone who contacts a solicitor has firmly decided to establish a charity. More often, they have an idea. They may have been fundraising informally for a local cause, supporting a community project, or working with a group of volunteers, and have reached the point where they are asking whether a more formal structure is needed. 

There can sometimes be an assumption that if an organisation is carrying out valuable work which appears to be “charitable”, it should automatically become a charity. In practice, the position is not always straightforward. While charitable status can offer a number of benefits, it also brings significant responsibilities. Trustees become accountable for how the organisation is run, and must comply with ongoing regulatory obligations to the Charity Commission.

What should I do if I am considering setting up a charity?

If you are considering setting up a charity in the UK, one of the most useful things to do is take a step back and think about what you are trying to achieve. 

• What is the organisation's purpose? 
• Who will benefit from its activities? 
• How will it be funded? 
• Who will be responsible for making decisions? 

These are the questions that help shape the future structure, yet in our experience, they are frequently overlooked.

Most successful charities begin with a genuine desire to make a difference. However, from a legal perspective, good intentions alone are not enough. To become a registered charitable organisation, the organisation must be established exclusively for charitable purposes, and those purposes must operate entirely for the public benefit.

We regularly advise founders who are enthusiastic about a particular issue but have not yet considered how their objectives fit within the legal framework established by charity law. A sound understanding of that framework, combined with practical experience of dealing with the Charity Commission, can often be the difference between a successful application and one that is delayed or refused. In some cases, a few minor adjustments to an organisation's stated aims can significantly improve the prospects of registration.

What does the Charity Commission want to know?

The Charity Commission will need to understand what the organisation is being set up to achieve and who it intends to benefit. They will expect clear and detailed explanations, and every question in the application must be answered clearly and consistently. This can make the application process considerably smoother, reduce the extent of further questions raised by the Charity Commission, and ultimately speed up the registration time. 

What structure should my charity take?

In terms of structure, there is no single model that works for every charity. What may be appropriate for a local volunteer-led project could be entirely unsuitable for an organisation intending to employ staff, lease or buy premises, or manage substantial funds.

Many organisations now choose to operate as a Charitable Incorporated Organisation (CIO), largely because it provides a separate legal identity and offers a structure designed specifically for charities. However, a CIO is not appropriate in every case. Depending on the circumstances, a charitable company, or possibly a community interest company, may be more suitable. One of the advantages of taking advice at an early stage is that it allows founders to understand the implications of each option before decisions are made, ensuring that the chosen structure aligns with the organisation’s intended activities and growth.

Why are the charity’s trustees so important?

One issue that is often underestimated is the role of charity trustees. The individuals responsible for delivering the charity’s objectives can have an enormous impact on the organisation's future success. Charity trustees must not only oversee governance, make strategic decisions and manage risk, but also ensure that the organisation is run in accordance with charity law and relevant Charity Commission guidance. Acting within that framework is essential to maintaining good compliance, protecting the organisation’s reputation and ensuring that it continues to operate in furtherance of its charitable purposes.

The process of charity registration is an important milestone, but it also marks the point at which ongoing responsibilities begin. Depending on the nature of the organisation, this may involve employment matters, property issues, fundraising activities, data protection obligations and commercial arrangements to name a few. 

When a charity is established, understandably the focus is often on the short to medium term plan. What is equally important, however, is considering where the organisation may be in five or 10 years' time. Will it continue to be volunteer led? Will it need to recruit employees? Could it acquire property or enter long-term contracts? How will decisions be made if the organisation grows significantly?

Whilst no one can predict the future with complete certainty, considering these questions at an early stage can help create a stronger foundation for sustainable growth. The charities that tend to flourish over time are often those that balance passion with planning. They remain focused on their objectives whilst ensuring that appropriate structures and governance arrangements are in place to support future development.

Seeking charity legal advice

Every organisation is different when it comes to establishing a charity and dealing with the application to register. Whether you are exploring the possibility of setting up a charitable organisation, considering charity registration or reviewing existing governance arrangements, obtaining charity legal advice at an early stage will provide clarity and avoid unnecessary complications later down the line.

If you are considering setting up a charity or would like guidance on the most appropriate structure, our experienced charity solicitors would be pleased to discuss your circumstances and help you understand the options available.