How to set up a charity: a step-by-step guide
Setting up a charity can seem like a daunting task, but with the right amount of passion and commitment to the cause it is achievable.
Comparable to setting up a business, there are a number of steps you will need to follow in order to operate within charity law. If you think you've got what it takes to set up a charity, have a look at our brief step-by-step guide. For more information, see the Gov.uk website.
1. Find trustees
You will usually need at least three trustees for your charity, and they must clearly understand their duties. Click here for information and processes on how to recruit the perfect trustees.
2. Ensure that your charity has 'charitable purposes for the public benefit'
If your goal is to conduct both charitable and non-charitable work (i.e. a revenue-generating business), you will need to look at starting another social enterprise instead, such as a Community Interest Company. Bear in mind that you cannot set up a charity to help one specific person. Charitable purposes include helping with education, health, relieving poverty, animal welfare and human rights – among many others causes.
3. Decide on a name for your charity
You will need to decide on an appropriate name for your charity; one that no one else is using. This name should reflect what your charity does and must not be misleading (for example, suggesting your charity does something it doesn't) or offensive. You may use abbreviations and the word 'charity' within your name, but you will need approval from the Charity Commission if using 'charity' when you register a company name with Companies House.
4. Choose a structure for your charity
There are four main charity structures when it comes to your charity: Charitable Company, Charitable Incorporated Organisation (CIO), Charitable Trust and Unincorporated Charitable Association. The structure you choose can have an effect on numerous factors, such as who is running the charity, how the charity is run and what the charity can do.
5. Create a 'governing document'
Essentially, this is a rulebook/guideline about how your charity is run. Your governing document should include your charity's aims and goals and how trustees are appointed, for example. The governing document you need will vary depending on the charity's structure. Click here for advice on how to write your governing document.
6. Register as a charity
Whether you register with the Charity Commission or not depends on your charity's predicted levels of income. If you are based in England or Wales and your charity's income is over £5,000 or you are a charitable incorporated organisation (CIO) you will have to register. The registration process will involve completing various Charity Commission forms and you will undergo scrutiny by the Registration Team. There are currently around 160,000 registered charities in the UK. The decision on your application for registration will usually take around 40 days.
7. Take out the correct insurance
Finally, you will need to make sure the correct insurance is in place; this will avoid any hefty pay outs should something go wrong. Naturally, that will mean ensuring that Buildings and Contents insurance cover any premises you own or rent on behalf of the charity.
Less obviously, there are a number of other insurance policies that you will almost certainly require. If it is likely that you will be holding fundraising events, Public Liability Insurance is essential to protect you from claims made by the public for injury or damage to their property.
Should you employ anyone, even on a voluntary basis, you must also hold Employer's Liability Insurance. In fact, failure to do so is against the law and you could be fined up to £2,500 for every day you are uninsured. It covers against a wide range of scenarios where your employee is injured, or suffers illness, that arises from their employment at your charity.
At Markel, we have over 20 years' experience insuring charities of all ages – from new to long established – against a wide range of risks, with cover available from as little as £6 a month.
Get a quote now, or call us on 0800 640 6604 to speak to a charity insurance expert.
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