Registering as a charity (CC21)

(Version July 2011)

Registering as a charity (CC21) Find out about starting and registering charities in England and Wales, including the process we use to register charities.

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Contents

What is this guidance about?

We are delighted that you want to play an active part in a charity. This guidance is about some of the issues that you may want to consider if the charity is in England or Wales. It covers:

  • whether you need to start a new charity;
  • which charities need to register;
  • the registration process.

This guidance reflects the definition of 'charity' set out in the Charities Act 2011.

Meaning of words or expressions used

The following terms are used throughout this guidance, and should be interpreted as having the specific meanings given below:

The Charities Act means the Charities Act 2011.

Aims: in this guidance we use this term to mean the purposes of an individual organisation. It is important to be able to distinguish clearly between an individual organisation's purposes and charitable purposes in general. We have therefore used the term 'aims' as shorthand for the purposes of an individual charity or organisation applying for registration as a charity.

Beneficiaries means the people (or in some cases, organisations) which the charity's aims are intended to benefit. The charity's governing document usually explains who the beneficiaries are.

Breach of trust means acting in a way which is inconsistent with the powers and duties of the trustee, whether those powers and duties are set out in the charity's governing document, or are part of general law.

Governing document means any document that sets out a charity's aims and, usually, how it is to be run. It may be a trust deed, constitution,articles of association, Scheme of the Commission, Royal Charter, conveyance, will or other formal document.

Objects: an organisation's aims (or purposes) are usually expressed in the 'objects clause' of its governing document. However, not all charities have a governing document with an objects clause, and sometimes the objects clause does not adequately or fully express the organisation's aims. There is therefore a distinction between an organisation's aims and the words that appear in its objects clause.

Paying includes not only payment in money, but also benefits in kind, such as free (or subsidised) accommodation or the provision of a car.

Promoters are people intending to set up (establish) a charity - if the charity is registered then they may become its first trustees.

Property means land, buildings, cash, investments or any other possession, which are owned by the charity.

Public benefit reporting requirement: this means the requirement for charity trustees to report in their trustees' Annual Report on their charity's public benefit.

Statutory guidance on public benefit: this is the guidance on public benefit that the Charity Commission has produced.

The Register of Charities means the Register of Charities of organisations that have been recognised as charitable in England and Wales. The Register can be viewed on the Commission's website.

Trustees means charity trustees. You are a charity trustee if you are:

  • the trustee of a charitable trust (charitable trusts can be created by a declaration of trust or by someone's will);
  • the director of a charitable company (a charity that is a company with articles of association as the document which sets out how the charity is to be run); or
  • a member of the committee which is responsible for running a charitable group such as a community association or a parent teacher association.

As a charity trustee you are responsible for the general control and management of the charity. Because of this you may be known as a 'managing trustee'. There are two other types of trustees that you may hear about or wish to have: 'holding' trustees and 'custodian' trustees. These types of trustees have particular functions, which are described below, and they must always act on the lawful instructions of the managing trustees.

Custodian trustee means a corporation (not individuals) whose main function is to hold the legal title to investments and property on behalf of the charity. Custodian trustees can act only on the lawful instruction of the charity or managing trustees. A custodian trustee is a form of holding trustee but it has specific responsibilities as set out in section 4 of the Public Trustee Act 1906: it does not have any powers of management.

Holding trustee means a person, corporation or individual who holds legal title to a charity's property on its behalf. The name of the holding trustee is shown on the land register or company stock register as the person holding the legal title to land or shares belonging to the charity. The charity's governing document may confer additional powers and responsibilities on the holding trustee(s), but holding the legal title to the charity's property is usually all they do. Provided that holding trustees act only on the lawful instructions of the managing trustees they will not be held responsible for any action (or lack of action) of the managing trustees.

Must or need to are used to refer to actions that trustees, or their agents or employees, have to take by law.

Where we use terms such as the trustees should or we suggest, recommend or advise we are referring to actions which the trustees, their agents or employees could take and which we consider to be good practice, but which are not legal requirements.

PART I - STARTING A CHARITY

Setting up a new charity

1.Many people assume that they must set up a new charity if they want to carry out voluntary work. However, this is not always correct. Before setting up a new charity, please read our guidance About charities. This will help you to decide if starting a new charity is the right option. You can find out more about social enterprises and other alternatives to starting a charity from Gov.uk:

Setting up a social enterprise - Gov.uk guidance

What is a charity?

2-3. This is explained in our guide What makes a charity (CC4). (This replaces paragraphs 2 and 3 of this guidance.)

What are charitable purposes?

4-6. This is explained in our Guidance on charitable purposes. (This replaces paragraphs 4 to 6 of this guidance.)

What is meant by 'public benefit'?

7-11. This is explained in our guidance Public benefit: an overview. (This replaces paragraphs 7 to 11 of this guidance.)

Charity trustees' public benefit duties

12-13. You can find out about your duties regarding public benefit in our Public benefit guides. (These replace paragraphs 12 and 13 of this guidance.)

Assessing the public benefit of organisations applying to register as charities

14-15. See Public benefit: the public benefit requirement (PB1). (This replaces paragraphs 14 and 15 of this guidance.)

Aims which are not for the public benefit

16-18. See our Public benefit guides. (These replace paragraphs 16 to 18 of this guidance.)

Some non-charitable aims which are often presumed to be charitable

19. The following are examples of organisations or aims which are often assumed to be charitable, but in fact are not:

  • individual sports clubs set up to benefit their members or promote excellence (as distinct from sports facilities open for everyone or specifically provided for special groups of people, such as elderly people, or as a method of promoting healthy recreation);
  • the promotion of political or propagandist aims, or the promotion of a particular point of view (for more details please see our guidance Speaking out: Guidance on Campaigning and Political Activity by Charities (CC9));
  • aims which include arrangements where people running the organisation get significant personal benefit;
  • raising funds for other charities where the organisers do not have any say over how the funds are spent; or
  • aims which promote friendship or international friendship, for example, town twinning associations.

Appeals for funds

20. Fundraising is not a charitable object in itself: it is simply an activity which can be undertaken to help achieve a charitable purpose. If a charity wants to raise money to carry out work which is not covered by the existing objects of the charity, it can create a new charity with specific aims. Please contact us if you have any doubts about whether your proposed fundraising aims are authorised by the objects of your charity.

21. There are complex rules about fundraising and you may need to take professional advice on this. We offer advice in Charities and Fundraising (CC20). We recommend you read this and consider the following points of good practice.

  • Great care should be taken over the wording of a written appeal when asking for money from the public. We recommend that you make sure the aims for which the charity intends to use the money are accurately described.
  • The record of a speech or broadcast may be regarded as evidence of the aims of an appeal. The organisers of that appeal cannot alter the aims of the appeal to something which is not consistent with the terms under which donors were invited to contribute. We recommend that care be given to the wording of any spoken appeal.
  • If you want to raise money for the general purposes of an existing charity, you must make this clear and avoid any suggestion that the money will be used for a more specific purpose.
  • If an appeal is for a specific purpose, such as paying for or restoring a building, we recommend that it states what will happen to the money if either not enough, or too much, is raised.

Disaster appeals

22. We advise that particular care is taken over an appeal to help the victims of a disaster (or their families) where the beneficiaries may be a relatively small number of people. Disaster appeals are not always charitable. A charity cannot be created if it is intended that specific people will have the right to assistance whether or not they are in actual need, or that the benefits are only for particular private individuals. Where a charitable disaster appeal fund is set up, people will only be allowed to benefit on the basis of their proven need.

23. We appreciate that decisions on disaster appeals normally need to be taken very quickly. We suggest that promoters should consult us at an early stage before launching such an appeal. The Attorney General has issued guidelines about disaster appeals which are available from us (Disaster Appeals: Attorney General's Guidelines (CC40)). HM Revenue and Customs have also issued guidance called Guidelines on the Tax Treatment of Appeal Funds, which is available on their website www.hmrc.gov.uk or from them at the address given at the end of this guidance.

What are the main advantages of being a charity?

24. The main advantages are that charities:

  • do not normally have to pay income/corporation tax (in the case of some types of income), capital gains tax, or stamp duty, and gifts to charities are free of inheritance tax;
  • pay no more than 20% of normal business rates on the buildings which they use and occupy to further their charitable aims;
  • can get special VAT treatment in some circumstances;
  • are often able to raise funds from the public, grant-making trusts and local government more easily than non-charitable bodies;
  • can formally represent and help to meet the needs of the community;
  • are able to give the public the assurance that they are being monitored and advised by us;
  • can seek advice from us; and
  • can get information from us, for example, our range of free publications.

What are the limitations of being a charity?

25. There are restrictions on what charities can do, both in terms of the types of work they do, and the ways in which they can operate:

  • A charity must have exclusively charitable aims. Some organisations may carry out their aims by a range of activities, some of them charitable, some of them not. To become a charity, this type of organisation would have to stop its non-charitable activities. (The non-charitable activities can, of course, continue if carried on by a separate non-charitable organisation.) Promoters will need to consider carefully if becoming a charity will severely restrict their planned activities. If so, charitable status may not be right for your organisation.
  • There are limits to the extent of political or campaigning activities which a charity can take on - we have published guidelines on this in Speaking out: Guidance on Campaigning and Political Activity by Charities (CC9).
  • Strict rules apply to trading by charities. Guidance on this can be found in Trustees, trading and tax (CC35), on our website.
  • Trustees are not allowed to receive financial benefits from the charity which they manage unless this is specifically authorised by the governing document of the charity or by us. Financial benefits include salaries, services, or the awarding of business contracts to a trustee's own business from the charity. Benefits which are incompatible with the establishment of an organisation for exclusively charitable aims cannot be authorised at all (further guidance can be found in Trustee expenses and payments (CC11)). There are similar problems where the spouse, relative or partner of a trustee receives such benefits. Trustees are, however, entitled to be reimbursed for their reasonable out-of-pocket expenses, for example, train fares to trustee meetings.
  • Trustees need to avoid any situation where their personal interests conflict with their duties as trustees.
  • Charity law imposes certain financial reporting obligations; these vary with the size of the charity. Further details may be found in our guidance Charity Reporting and Accounting: The essentials April 2009 (CC15b).

What problems might a new charity face?

26. Setting up a new charity does not need to be a complicated process. However all organisations need a name, money, people and clearly set out ways of operating. As a minimum you will need to consider the following questions:

  • What will you call your charity?
  • How will you raise the money you will need to run your charity and achieve your aims?
  • Do you need to work alone or is there another group you could join or work with?
  • How will you recruit trustees to administer the charity?
  • What type of governing document will your charity need?

We have set out some guidance below to help you answer these.

Choosing a name

The charity's name

27. The name of a charity is important. It is the name, rather than the charity registration number, that members of the public remember most about a charity. It is the charity's name that appears on its appeal literature and collecting tins. It is therefore important that charity names are sufficiently different to avoid confusion, and do not mislead members of the public in any way. Section 42 of the Charities Act gives us powers to make a charity change its name in certain circumstances.

28. A charity name must not include a word or expression which might cause offence. This would not be in the interests of a charity or the charitable sector as a whole. In some cases, such names might not be allowed by law.

29. Before we register a new charity, we will compare the proposed name with those already on the Register to see if there are any identical or similar names. If the proposed name is the same as, or too similar to, a name which has already been registered, we will decide whether the proposed name is acceptable for use again. Where it is not acceptable we will ask you to change the name. Whilst we cannot insist that a name is changed before registration takes place, we do have a power to order a name change once a charity is registered.

30. We strongly advise that, before setting up a new charity and executing a governing document, you carry out your own checks regarding the availability of names. You can do this by viewing the online Register of Charities.

31. Entering a name on the Register does not give the charity which uses it any rights to the name under general law. Nor can we guarantee the use of a particular name, even if at the time of enquiry, there appeared to us to be no objection to the use of that name. This is because we may not know of all names used by unregistered charities, or of names which may be legally protected by another charitable or non-charitable body.

32. Please note that the entering of a name on the Register does not prevent us from subsequently directing that the name be changed. We will not be responsible for any costs incurred directly or indirectly by the charity as a result of any subsequent direction to change a name.

33. We cannot suggest names for charities.

Companies using the word 'charity' or 'charitable' in their title

34. If an organisation applying for company registration wants to use the words ‘charity’, ‘charitable’, ‘charities’ or ‘charity's’ in its name, Companies House requires evidence that the Charity Commission does not object before it issues a Certificate of Incorporation. Therefore if your company wishes to use one of these words in its name you should make a formal request to us and at the same time apply for charity registration. We will then consider both requests at the same time.

What are the prospects for raising funds?

35. The funding available to the charitable sector is limited. Any new charity may find it more difficult to get funding because local authorities, the public and organisations who give money to charities may prefer to continue to give to charities with a proven track record, rather than a new charity. Our guidance Charities and Fundraising (CC20) gives more information about this.

Is there another charity already doing similar work?

36. There are more than 160,000 registered charities, working throughout the UK and overseas, which undertake an extremely wide range of work. It is very likely that a charity already exists which is doing the kind of work which you would like to carry out, and there may be one working in your area of the country. We suggest that you think about whether it would be better to offer your services to, or combine with, an existing charity. It is usually less effective to have several organisations trying to carry out the same work in the same place, and it duplicates running costs.

37. If you wish to commemorate someone close to you, it may be possible to create a separate named fund within an existing charity: this may be just as effective as creating a new charity.

38. If you would like to look for charities in your area, you can find them on the online Register of Charities.

What are charity trustees?

39. These are the people who are responsible for "the general control and management of the administration of a charity" (s.177 of the Charities Act). This is a legal definition of those people who will run and be responsible for the charity. When you set up a charity you need to think carefully about who the first trustees will be.

40. All charities must have a clearly identifiable body of trustees, but they are often called various names depending upon what type of governing document the charity has. Some examples are in the following table:

Type of governing document

Charity trustees will usually be called

Constitution or Rules

Executive or management committee members

Trust deed

Trustees

Articles of association

Board, council of management or directors

Considerations for potential trustees

41. Whatever the trustees are actually called, their responsibilities as trustees are the same. The directors of charitable companies also have responsibilities under company law. The duties and responsibilities of a charity trustee are wide ranging and need to be taken seriously. Anyone who wants to be a trustee needs to be prepared to give the necessary time and effort to understanding and carrying out those responsibilities. Our guidance The Essential Trustee: What you need to know (CC3) sets these out.

42. It is a general legal principle that those who run the charity (the trustees) should not financially benefit from it, unless they are specifically authorised to do so either by the charity's governing document or by us. Trustees must avoid being placed in a position where their duties as a trustee conflict with their own personal interests. However, this legal principle does not prevent the charity trustees of a community charity (eg a temple) from enjoying the benefits of that charity as a member of their community. If you are in doubt as to whether this may apply to your charity please see our guidance Users on Board: Beneficiaries who become trustees (CC24).

43. We have issued a range of guidance for trustees (or those who are thinking of becoming a trustee), for example Trustee expenses and payments (CC11) and Finding new trustees: What charities need to know (CC30).

Can anyone act as a trustee?

44. No-one under the age of 18 can be appointed as a trustee unless the charity is a registered company. The minimum age for company directors is 16 years (although the Secretary of State can make regulations providing for exceptions to this). Some people are disqualified by law from acting as charity trustees, and these are described in the Charities Act. Broadly that covers:

  • anyone who has been convicted of an offence involving deception or dishonesty, unless the conviction is spent;
  • anyone who is an undischarged bankrupt;
  • anyone who has previously been removed from trusteeship of a charity by the Court or by us;
  • anyone who is subject to a disqualification order under the Company Directors Disqualification Act 1986.

45. It is an offence to act as a charity trustee while disqualified unless we have given a waiver. In addition to the disqualifications detailed in the Charities Act, which apply to all types of charities, the Safeguarding Vulnerable Groups Act 2006 prohibits certain individuals from acting as trustees of a children's charity or a vulnerable adults' charity where they have been barred by the Independent Safeguarding Authority.

What are the qualities needed to be a trustee?

46. Trustees need to be able and willing to give time to the efficient administration of the charity and the fulfilment of its trusts. We recommend that they be selected on the basis of their relevant experience and skills and need to be prepared to take an active part in the running of the charity. They ought not to be appointed for their status or position in the community alone; this is the function of patrons.

47. We believe that diversity across the trustee body is an important factor for accountability. Selecting trustees from a range of social and economic backgrounds is a good way of achieving this. More guidance is given in Finding new trustees: What charities need to know (CC30).

What principles are needed to guide trustees when administering their charity?

48. Trustees need to follow certain guiding principles:

  • The income and property of the charity must be used or applied for the aims set out in the governing document and for no other purpose, and must be applied (including where the application is by way of providing services) fairly between persons who are properly qualified to benefit from it.
  • The trustees should only retain the charity's income as a reserve if they have a clear policy covering reserves (for example to cover a contingency). Our guidance Charities' Reserves (CC19) explains more about this.
  • Trustees are required to act reasonably and prudently in all matters relating to the charity and need always to bear in mind the interests of the charity. They cannot let their personal views or prejudices affect their conduct as trustees.
  • They need to exercise the same degree of care in dealing with the administration of their charity as a prudent business person would exercise in managing their own affairs or those of someone else for whom they are responsible.
  • It is good practice that where trustees are required to make a decision which affects the personal interests of one of their number, that person should not be present at any discussion or vote on the matter. This should be set out in the governing document.

49. In matters of doubt, trustees should seek their own professional advice.

50. We believe that it is important that organisations working with children and vulnerable adults have a suitable child or vulnerable adults protection policy. If you apply to register your charity and plan to work with children or vulnerable adults you will be asked to supply us with a copy of your protection policy. Charities working with children or vulnerable adults may also be required by law to make the appropriate checks on trustees and/or employees with the Criminal Records Bureau. Further information on which charities should seek CRB disclosures for their trustees can be found in Finding new trustees: what charities need to know (CC30).

What are the liabilities of trustees?

51. If trustees act prudently, lawfully and in accordance with their governing document then any liabilities they incur as trustees can be met out of the charity's resources. But if they act otherwise they may be in breach of trust and liable to meet any liabilities of the charity which are a consequence of their own actions, or to make good any loss to the charity. Since trustees must act jointly in administering a charity, they will also be responsible jointly to meet any liability incurred by them or on their behalf. We are able to take proceedings in court for the recovery, from trustees personally, of funds lost to a charity as a result of a breach of trust by the trustees.

52. If trustees enter into contracts in the course of administering the charity, and as a result incur liabilities or debts which amount in total to more than the value of the charity's assets they may be sued personally for the difference by the charity's creditors. We strongly recommend that trustees be particularly careful when entering into substantial contracts or borrowings to ensure that the charity has the means to meet its obligations. If your organisation is likely to be entering into contracts to provide services, or plans to directly employ staff, you should consider using the company format. Annex A gives further information.

Types of governing document

Choice of governing document

53. All charities need a governing document. The governing document sets out how the charity's income can be spent, how the trustees are appointed and how the charity will operate.

54. There are three main types of governing document, and the type you choose will determine the type of organisation the charity will be. The three main types of governing document are:

  • Constitution or Rules;
  • Trust deed; and
  • Articles of association.

55. Brief guidance is given in Annex A on these types of governing document. If you require information in greater detail, please refer to Choosing and Preparing a Governing Document (CC22).

Model governing documents

56. We produce model forms of these types of governing document:

  • Charitable Companies: Model Articles of Association - GD1
  • Charitable Trusts: Model Trust Deed - GD2
  • Charitable Associations: Model Constitution - GD3

57. Our models contain administrative provisions that are suitable for each of these types of organisation. However, it is still necessary for anyone using those models to insert the objects of the organisation, complete blank spaces left in certain clauses and select some clauses where options are available. 

58. The Charity Law Association (CLA) also produce suitable model governing documents, for which a charge is made. To order copies of the CLA governing documents please e-mail the CLA administrator.

59. We have published some example objects which, if suitable, can be included in a governing document, particularly a model governing document.

Approved governing documents

60. Some large national charities produce an approved governing document that can be used by organisations associated with that charity. These approved governing documents contain both agreed objects and administrative provisions that are specific to a particular type of organisation. We publish a list of organisations for which an approved governing document has been agreed.

Do you need to register your charity?

61. We are the Charity Commission for England and Wales. We cannot register organisations set up under the laws of a foreign country, or in Scotland, Northern Ireland, the Isle of Man, or the Channel Islands. Whether we can register the organisation therefore depends on whether the law which applies to the organisation is that of England and Wales. For companies this normally means that they must themselves be registered in England and Wales. In other cases if the governing document itself does not make this clear, the law which applies will be that of the country with which the organisation has its closest connection. This will depend on the extent to which:

  • the organisation's centre of administration is in England and Wales;
  • most of the trustees live in England and Wales;
  • most of the organisation's property is in England and Wales.

62. We will give advice where there is any doubt about the registration of such an organisation.

63. The minimum requirement for registration is that a charity must have an income of more than £5000 a year.

64. Organisations with an annual income not exceeding £5,000 from all sources will be able to seek voluntary registration when the part of the Charities Act 2011 that permits this comes into effect. We will publicise this before it happens.

65. We will only consider an application for registration from an organisation below the minimum income in exceptional circumstances. Examples of when we might do this are:

  • high profile organisations likely to receive significant funding in a very short time and where public confidence in charity would be diminished if we were not seen to be exercising our regulatory function;
  • where the organisation can provide specific evidence that significant grant funding rests upon it being a registered charity.

66. We will not consider an application simply because the trustees think they will have difficulty in attracting funding without a registered charity number. There are other ways in which the organisation can establish its credibility. For example, for small charities HMRC will assess whether tax relief can be given. An HMRC number will provide the evidence of charitable status. Alternatively you may wish to set up a named account with an existing charity until you have achieved the required level of income.

67. If you submit an application, and do not have either:

  • the necessary evidence of income; or
  • a letter or email from us confirming that we have agreed to assess the application;

your application will be sent back to you to hold until such time as the charity has an income of more than £5000.

68. For evidence of income we normally require one of the following:

  • latest annual accounts;
  • a bank statement; or
  • a formal offer of funding.

69. If you do not have an HMRC reference number then banks may not allow you to open a tax free account. However, you should still be able to open a treasurer's account. This can be converted into a tax free account when and if you become a registered charity or can show that HMRC have recognised the organisation's charitable status.

70. An organisation must register with us if it fulfils both the requirements for charitable status (see paragraph 2) and the minimum requirement for registration (see paragraph 63).

Which charities do not need to register?

71. Most charities will meet both sets of criteria described above and must register. However, some charities, called exempt charities, have not been able to register, and have not been subject to our supervisory powers. These charities (listed in Schedule 3 of the Charities Act) include some educational institutions, and most universities and national museums. More detail on exempt charities may be found in Exempt Charities (CC23). In due course, all currently exempt charities will either have a principal regulator or will lose their exemption and therefore have to register with the Charity Commission. (Principal regulators are existing regulatory bodies that take on additional responsibility for monitoring charity law compliance.) This new framework will be phased in for different groups of exempt charities. Initially, exempt charities with no suitable principle regulator will have to register with the Commission if their annual income exceeds £100,000 (an interim threshold that will be reviewed in 2011).

72. Some other charities are excepted from the need to register, although (in contrast with exempt charities) they are still subject to the other provisions of the Charities Act, and our supervision. These charities have been specifically excepted from the requirement to register by legislation or by a Commission Order. The underpinning excepting regulations have been extended until 2012. However, excepted charities with an income over £100,000 have a duty to register with us.

73. In exceptional circumstances, we will consider registering, on a voluntary basis, a charity which is excepted from the need to register. The applicant will need to persuade us that there is some compelling reason to do this. As a general rule we are working with umbrella bodies that have oversight of groups of excepted charities. This work will mean that we have agreed procedures in place and approved governing documents (for example for the different types of churches) when registration is required. Most of the national bodies do not want the local branches of their organisations to come to us independently in advance of this.

PART II - THE REGISTRATION PROCESS

How to apply

74. To register a charity, you can use our online application service.  Only use this service if, having read this guidance, you believe that:

  • your organisation is charitable; and
  • it is required to register.

75. You should make an application only after you have formally adopted a governing document. The tables in Annex A explain how to adopt different types of governing document. However, we may (in exceptional circumstances) consider a request from an organisation which has not yet formally adopted a governing document. Each request will be considered on its own merits but examples of the circumstances where we may consider a draft governing document are:

  • where a disaster appeal is due to be launched and time is short; or
  • if the proposed charity is operating in a field which is on the fringes of charity law, and the views of our legal staff may need to be sought; or
  • where the proposed charity is a company and wishes to use a sensitive word in its name (see paragraph 34).

76. Your organisation should apply for registration via the Commission's online application for registration service. It provides a quick and easy means of getting the registration application form and governing document to the Commission. The user-friendly system will provide you with online guidance throughout completion of the form, and allows you to save the form at any time and come back to it another time if you wish. Access to the online application for registration service is via our website. Before completing your online application you will need to have a clear idea of what your organisation does and the way it operates. We will also require the names and addresses and dates of birth of all of the trustees. You will also need to have your governing document and signed trustee declaration available as a PDF file as they must be attached to the application form at the time you submit it.

77. Where the applicants propose to work with vulnerable beneficiaries the trustee declaration requires the trustees to confirm that the organisation has carried out any necessary or recommended checks with the Criminal Records Bureau or any other relevant agency.

Speeding up your application

78. If you adopt an appropriate approved governing document (see paragraph 60) without amending it (other than to fill in blanks or delete optional paragraphs) this will speed up your application for registration. Organisations using an approved governing document must confirm:

  • that the national body has agreed to their use of the approved governing document; and
  • that they will operate within the guidelines issued by that body.

79. You can speed up your application by making sure that you have supplied all of the information requested in the online application form. You should also attach, as PDF files, the governing document, the signed trustee declaration, proof of a gross income of £5,000, Certificate of Incorporation (if your organisation is a company) and any supporting documentation you feel will be helpful. When you correspond with us you should always use the reference numbers we use on our correspondence.

80. Organisations that adopt one of our model governing documents will have governing documents that are easier to consider because the administrative provisions have already been agreed.

81. However, if an organisation is to be recognised as a charity it must have exclusively charitable objects. Getting this right can be difficult. To help you with this we provide some example objects for a wide variety of different types of charity.

82. If the way in which the objects clause is worded is not capable of being charitable then we will have to ask you to amend the governing document before we can proceed. This is likely to cause significant delay.

83. Before using an approved governing document or a model with example objects you need to be sure that the governing document you create accurately reflects what the organisation will do and how it will operate.

Declaration by the trustees or promoters

84. All the trustees must sign the declaration form. To establish that a person is not disqualified from being a trustee, we need to have:

  • all the names by which trustees are, or have been, known;
  • their addresses; and
  • their dates of birth.

85. However, only the preferred name of each trustee will be displayed on the public Register.

How do we decide whether your organisation is a charity?

86. We must apply charity law in making our judgments as to whether an organisation is charitable. This includes:

  • Checking that the objects are capable of being charitable. This normally involves considering whether the objects are currently recognised as being charitable. If they are not we will apply the principles in Recognising New Charitable Purposes (RR1A) in considering whether a new charitable purpose can be recognised within the law.
  • Checking its activities or proposed activities to see whether these are capable of furthering the stated purpose.
  • Being satisfied that the organisation demonstrates sufficient public benefit.

87. Our decision will be based mainly on the information you supply.

88. We must have some basic factual information about the charity and the trustees in order to make the appropriate entries in the Register of Charities. We must be satisfied that the organisation is eligible to be registered and not exempt or excepted from registration (please refer also to paragraphs 71 and 72).

89. If the organisation cannot operate, and has no plans to enable it to operate in the foreseeable future, then it cannot remain on the Register. In addition we must be satisfied that each of the trustees is eligible to act as a trustee. We will carry out checks with other agencies (eg the Insolvency Service), and where children are involved we need to be satisfied that any necessary checks have been made through the Criminal Records Bureau against the lists it administers under the Protection of Children Act 1999.

Supporting information

90. In many cases we find that whilst the objects as worded are not capable of being charitable, the proposed activities when fully explained, clearly show a charitable intention. In such cases we will advise on changes to the wording of the objects, rather than simply rejecting the application.

Giving advice and guidance

91. Our functions under the Chariries Act include:

  • encouraging the development of better methods of administration;
  • investigating and apparent misconduct or mismanagement in the administration of charities.

92. As the regulator of charities, we have a number of objectives as well, including to increase public trust and confidence in charities. We believe that a good time to offer guidance to organisations is before they start their life on the Register. We should all share the objective of seeing every charity having the best opportunity to flourish. As a result where we consider it appropriate we will offer guidance on governance and good practice issues at this stage. This may involve changes to the administrative provisions of your governing document which do not affect the charitable status of the organisation. Experience has shown that organisations appreciate being given this sort of guidance at this time.

What happens when we receive your application?

93. When our Registration team has received:

  • the completed application form;
  • the trustee declaration; and
  • the supporting documentation listed in Appendix A;

the officer who will assess your application will send you an acknowledgement. If you apply online then you will receive an automatic acknowledgement.

94. Registration Division aims to provide an initial response to the application within 15 working days. If you have used an approved governing document without changing it and there is no significant private benefit to any trustee or related party we will normally be able to approve your application and give you the registration number within this time frame.

95. However, quite often we will need to ask further questions, before we can tell whether the organisation is charitable in law. If this happens we will give you the name and contact number for the person dealing with your application. You will also be provided with a reference number to quote in future correspondence.

96. If we need to contact you for further information or clarification, we will try to be clear about whether our questions directly relate to charitable status or to issues of governance and good practice. Sometimes as we are building up a picture of an organisation it may not be possible for us to differentiate clearly between the two until we have the necessary information.

Will we consider an application where the governing document is in draft form, that is, the organisation does not yet exist?

97. In general the answer to this is 'NO'. The reason for this is that, in our experience, organisations which already exist have a clear idea of the ways in which they will carry out their objects. In the past we have found that, where an organisation submits a draft governing document, this often leads to lengthy correspondence because the promoters have no clear understanding of what they want to do. In many of these cases the organisation is never actually set up.

98. The only general exception is for applications from companies wishing to use the word charity or charitable in its name (see paragraph 34) or for disaster appeals (see paragraphs 22 and 23).

99. Where the objects and activities appear to be charitable you will be asked to submit a formal application, but this is no guarantee that registration will be granted.

What happens if your application is unsuccessful?

100. If, having considered all the information provided with the application, we decide that your organisation is not exclusively charitable we will write to you and let you know why. The letter will also explain that if you disagree with our decision or if you feel we have misunderstood your application, you will need to write to us setting out the reasons why you think your organisation is charitable. This will allow us to review our decision. You have a right of appeal to the Charity Tribunal where, despite a review of the decision, we are unable to register your organisation.

Date of registration

101. If your application is successful, the date of registration is the date on which we enter your organisation on the Register of Charities. However, charitable status does not depend on registration but on the date that the organisation was set up as a charity (for example, the date charitable objects were adopted). HM Revenue and Customs may backdate tax exemption to the date on which your organisation started to carry out exclusively charitable aims, even if this was before the date of registration.

102. Details about your charity will appear on the Public Register within 2 working days of being accepted for registration.

What happens after registration?

103. Registration is not the end of the process. You will have a number of ongoing duties and responsibilities, some of which may involve regular contact with us. This contact will not only provide you with advice and help when you need it, but provides the general public with confidence that charities are being effectively monitored and checked to make sure they are doing what they should. The following is a list of some of the things you will have to do if you are the trustee of a registered charity:

  • keep your charity's accounts;
  • tell us about any changes to your governing document (for example, changing the specified date of an Annual General Meeting or changing the number of trustee meetings);
  • tell us about any changes to the details of your charity shown on the Register of Charities (for example the correspondent's address) - one way of discharging this duty is to return the charity details update form we send out each year;
  • tell us if your charity no longer exists or operates; and
  • charities with a gross income exceeding £10,000 have a legal duty to send us the Annual Return we issue each year. Charities with a gross income exceeding £25,000 must additionally send us their Accounts, Examiner’s or Auditor's Report and Trustees' Annual Report. These documents must be sent to us within 10 months of the end of the charity's financial year.

104. If your application for registration is successful, we will send each trustee a letter and booklet welcoming them to trusteeship and reminding them of these duties, and we will also write to the nominated correspondent confirming your charity's entry on the Register of Charities.

Annex A: What legal structure is best for your organisation?

Constitution

What kind of organisation does a constitution create?

Type of organisation:

Unincorporated Association

Trustees are usually called:

Executive or Management Committee members

A constitution may also be known by another name, such as Rules.

The 'association' part of the description means that it is an organisation consisting of a group of people who have decided to co-operate in furthering what the organisation is set up to do, and who have certain parts to play in its administration.

The 'unincorporated' part of the description tells you that the organisation is not a company. This means that the association will not:

  • have limited liability and a legal personality of its own (ie the charity trustees may be liable for the repayment of any debts which they have incurred on behalf of the charity, such debts can be met from the charity's own funds unless the charity trustees had not acted prudently, lawfully, and in accordance with the charity's governing document); or
  • be able to own land (and usually investments) in its own name.

It may be appropriate to establish an unincorporated association where any one or more of the following applies:

  • The organisation is to be relatively small in terms of assets.
  • The organisation is to be a local branch of a national charity, and a standard constitution exists for branches.
  • It has a membership.
  • The charity trustees are elected or appointed to hold office for a fixed period, usually 1 year.
  • The charity trustees are to be elected by members.
  • The views of local residents and organisations need to be represented through membership or as users of the facilities.
  • The objects of the organisation are to be carried out wholly or partly by, or through, its members (ie where the members undertake office or voluntary work on behalf of the organisation).

Professional legal advice

Generally, you do not need this. As a constitution is a less complex document than a trust deed or articles of association, you may not need the help of a professional legal adviser to set it up. Further guidance on preparing a constitution can be found in Choosing and Preparing a Governing Document (CC22).

How is a constitution put into operation?

In practice, it is normally put into operation by being adopted (accepted for use) at a formal meeting of those people who are, or will be, the charity trustees and the general membership.

You will require a final typed version of the constitution which must:

  • be signed by all the charity trustees;
  • dated the day of the meeting at which it was agreed; and
  • a note that the constitution was formally adopted should be made in the minutes of that meeting.

What documents are needed for registration?

As well as the application form and the trustee declaration, we need:

  • a copy of the current version of the constitution;
  • confirmation from one of the trustees of the date on which a members' meeting adopted the constitution; and
  • evidence of the required level of income, or a copy of a letter or email from us agreeing to consider the application.

Trust deed

What kind of organisation does a trust deed create?

Type of organisation:

Trust

Trustees are usually called:

Trustees

Trust deeds may also be known by other names, such as declaration or deed of trust, or deed of settlement.

A trust deed will create a trust. A trust cannot own land or sign documents in its own name.

It may be appropriate to establish a trust where some or all of the following apply:

  • The organisation is to be run by a fairly small group of people.
  • There is no time limit on how long the charity trustees will be in office (although we recommend that the composition of the trustee body is reviewed regularly).
  • New charity trustees are going to be appointed by the continuing charity trustees.
  • The organisation is not going to rely on a membership for any part of its administration.
  • The administration of the organisation is going to be simple.
  • The organisation is to be a grant-making body only.
  • Land and buildings are to be held on trust for permanent use for the aims of the charity.
  • There is to be a restriction on spending capital.

Professional legal advice

A trust deed is a formal document, so you may need the help of a professional legal adviser to complete and execute it. Further information about preparing a trust deed can be found in Choosing and Preparing a Governing Document (CC22).

How is a trust deed put into operation?

It is executed: this means that it needs to be signed and dated, in the presence of an independent witness, by those who are setting up the trust. The witnesses must then sign their name against each of those signatures and give their address. The purpose of this is to verify the identity of those signing.

The trust deed should refer to a specific amount of money or some other asset that will belong to the trust at the time that the trust deed is executed. It is accepted for a nominal sum of money to be declared, say £5 or £10. If the trust deed declares charitable trusts, but does not refer to any actual assets which are held on those trusts at the time the deed is executed, then it is void and we cannot register. The trust also needs to meet the minimum gross annual income requirement for registration. We therefore need independent evidence that it has a gross annual income of at least £5,000 before we can register.

Does it need to be stamped?

Deeds executed before 1 December 2003 require stamping.

Deeds executed on or after 1 December 2003 but before 13 March 2008 only require stamping if the deed declares trust over stocks and shares.

Deeds executed on or after 13 March 2008 do not require stamping.

If your deed needs to be stamped then it should be sent to:

HM Revenue and Customs
Birmingham Stamp Office
City Centre House
30 Union Street
Birmingham
B2 4AR

Further information can be found on the HM Revenue and Customs website (www.hmrc.gov.uk) or by ringing the Stamp Duty helpline: 0845 603 0135.

What documents are needed for registration?

As well as the application form and the trustee declaration, we need:

  • a copy of the dated trust deed showing the names of the first charity trustees and the witnesses to their signatures;
  • a copy of any supplemental deeds or deeds of variation showing subsequent amendments; and
  • evidence of the required level of income, or a copy of a letter or email from us agreeing to consider the application.

Articles of association

What kind of organisation do articles of association create?

Type of organisation:

Company limited by guarantee

Trustees are usually called:

Board, council of management or directors

Articles of association create a company. A company has an advantage over a trust and an unincorporated association in that it is 'incorporated'. This means that the law considers it to be a person, in the same way as an individual. Therefore a company, like an individual, can own land. (As part of its articles of association document a company has a memorandum of association which refers to its subscribers' wish to form the company and their agreement to become its members.)

A company is a legal person quite separate from its members and directors. The directors are agents of the company and as such are not normally liable personally for its debts. A person who acts as a director whilst disqualified from being one may be personally liable.

A director may be liable to make payments to the company:

  • if he or she acts in breach of trust or duty to the company; or
  • if he or she is responsible for fraudulent or wrongful trading by the company (sections 213/214 Insolvency Act 1986).

The company will also have 'limited liability' which means, in the case of a typical charitable company, that its members are normally only liable for the debts of the company to the extent which they have undertaken to guarantee them (usually the limit of liability stated in the articles of association is a nominal amount like £5).

A company is subject to company law, as well as to charity law, and there are certain duties which must be observed, such as the annual filing of accounts with the Registrar of Companies.

However, charitable companies can never be the same as commercial companies. The main purpose of commercial companies is to make profits for distribution to their members. The constitution of a charitable company always precludes the distribution of profits to members. All the property of a charitable company is applicable for charitable aims.

Which organisations use this type of structure?

It may be appropriate to establish a company where some or all of the following apply:

  • the organisation is quite large;
  • it will have employees;
  • it will deliver charitable services under contractual agreements;
  • it will regularly enter into commercial contracts;
  • it will be a substantial owner of freehold or leasehold land or other property (which is not permanent endowment).

Professional legal advice

Because a company is subject to company law (which can be quite complex) you may well need the help of a professional legal adviser to set it up.

How are articles of association put into operation?

They are put into operation by being subscribed to by one or more people in accordance with the provisions of Part 2 of the Companies Act 2006, and by registration with the Registrar of Companies at Companies House who will issue a Certificate of Incorporation. There is a fee for registering companies with the Registrar of Companies. (You can contact Companies House Cardiff CF14 3UZ, telephone 0870 333 3636 or on their website at www.companieshouse.gov.uk).

What documents are needed for registration?

As well as the application form and the trustee declaration, we need:

  • a copy of the articles of association;
  • a copy of the certificate of incorporation (unless because of words like 'charity' in the company's name we have to adjudicate before the company can be incorporated); and
  • a copy of any special resolution(s) showing amendments to the articles of association after incorporation; and
  • evidence of the required level of income, or a copy of a letter or email from us agreeing to consider the application.

Annex B: Useful addresses and telephone numbers

Charity Commission

Our website offers a wide range of easily accessible online services, tools, information and guidance. Before contacting us for advice or help you might like to search our online database of frequently asked questions. Most people can find the answer they need without making a phone call or writing an email. Alternatively, our Contacting us page is linked to from the top and bottom of every webpage.

Action with Communities in Rural England (ACRE)
Somerford Court
Somerford Road
Cirencester
Gloucestershire
GL7 1TW

Tel: 01285 653477
Website: www.acre.org.uk

The organisation offers advice and support on a wide range of issues from registration to maintaining buildings. It also provides training and publishes books and leaflets and has a special service for the managing trustees of village halls called 'The National Village Halls Advisory Service'.

Local ACREs assist charities and voluntary organisations in their area. The National Association offers advice direct, or can put charities in touch with their local ACRE.

ACF (Association of Charitable Foundations)
Central House
14 Upper Woburn Place
London
WC1H 0AE

Tel: 020 7255 4499
Website: www.acf.org.uk

The Association assists grant-making trusts and foundations, including new ones at the early stages of formation. It provides a variety of courses, seminars and publications on good practice in grant-making and on relevant aspects of charity law, and represents grant-making charities in the public arena. The Association is a membership organisation open to all grant-making charities, and welcomes enquiries from non-members without obligation to join.

Charities Aid Foundation
25 Kings Hill Avenue
Kings Hill
West Malling
Kent
ME19 4TA

Tel: 03000 123 000
Website: www.cafonline.org

The Foundation provides services to facilitate tax-efficient giving, and offers covenant administration services. It carries out research and publishes information on all aspects of funding concerning the voluntary sector. Its services are available to the voluntary sector in general.

The Charity Law Association
CLA Administrator

E-mail: admin@charitylawassociation.org.uk

Community Matters
12-20 Baron Street
London
N1 9LL

Tel: 020 7837 7887
Website: www.communitymatters.org.uk

The organisation provides advice and assistance, a Community Consultancy Service, courses, seminars, conferences and a wide range of publications. Its services are offered to new and established community organisations.

Companies House
Crown Way
Maindy
Cardiff
CF14 3UZ

Tel: 0303 1234 500
Website: www.companieshouse.gov.uk

Directory of Social Change
24 Stephenson Way
London
NW1 2DP

Tel: 0845 077 7707
Website: www.dsc.org.uk

The organisation offers a wide range of courses and training events on many subjects including volunteer management, communications and fund-raising. A wide range of publications is also produced (eg Fundraising Handbook, Guide to the Major Trusts). Services are available to any voluntary sector group.

Financial Services Authority
25 The North Colonnade
Canary Wharf
London
E14 5HS

Tel: 020 7066 1000
Website: www.fsa.gov.uk

Gambling Commission
Lotteries Section
4th Floor
Victoria Square House
Victoria Square
Birmingham
B2 4BP

Tel: 0121 230 6666
Website: www.gamblingcommission.gov.uk

The organisation provides information about the regulations concerning lotteries. It is a Government Agency, and any individual may therefore seek information from the Board.

HM Revenue and Customs
HMRC Charities
St John's House
Merton Road
Liverpool
L75 1BB

Tel: 0845 302 0203
Website: www.hmrc.gov.uk

HMRC Charities is the business stream of HM Revenue and Customs which is responsible for all matters relating to the taxation of charities, including VAT. They have a range of booklets about tax reliefs available to charities.

Tenant Services Authority
Maple House
149 Tottenham Court Road
London
W1T 7BM

Tel: 0845 230 7000
Website: www.tenantservicesauthority.org

Institute of Fundraising
Park Place
12 Lawn Lane
London
SW8 1UD

Tel: 020 7840 1000
Website: www.institute-of-fundraising.org.uk

The Institute of Fundraising is a registered charity offering education and training courses in charity fundraising with the aim of improving standards of performance and ethical practice in charity fundraising.

The Institute is a professional one, and membership is open only to individuals who must abide by a strict code of practice.

National Association for Voluntary and Community Action (NAVCA)
The Tower
2 Furnival Square
Sheffield
S1 4QL

Tel: 0114 278 6636
Website: www.navca.org.uk

This organisation is the national umbrella body for 250 Councils for Voluntary Service in England. A local Council for Voluntary Service provides advice, support and information to voluntary organisations and charities in their area, including help with registration. If you would like details of your local Council for Voluntary Service please contact NAVCA as above.

Similar organisations to the NAVCA exist for voluntary organisations and charities based in Wales. Please contact WCVA (see below).

National Council for Voluntary Organisations (NCVO)
Regent's Wharf
8 All Saints Street
London
N1 9RL

Tel: 020 7713 6161
Website: www.ncvo-vol.org.uk

NCVO is the largest umbrella body for the voluntary and community sector and offers advice and information on a wide range of subjects. As well as providing best practice advice, NCVO represents the sector when dealing with government and policy makers. NCVO is also a membership body and has over 4,200 organisations as members.

The Charity Commission for Northern Ireland
257 Lough Road
Lurgan
Craigavon
BT66 6NQ

Tel: 028 3832 0220
Website: www.charitycommissionni.org.uk

Office of the Scottish Charity Regulator
2nd Floor
Quadrant House
9 Riverside Drive
Dundee
DD1 4NY

Tel: 01382 220446
Website: www.oscr.org.uk

Wales Council for Voluntary Action (WCVA)
Baltic House
Mount Stuart Square
Cardiff
CF10 5FH

Tel: 029 2043 1700
Website: www.wcva.org.uk

WCVA is the voice of the voluntary sector in Wales. It represents the interest of and campaigns for voluntary organisations, volunteers and communities in Wales. It provides a comprehensive range of information, consultancy, funding, management and training services.

Wales Association of County Voluntary Councils (WACVC)
c/o Voluntary Action Merthyr Tydfil
89-90 Pontmorlais
High Street
Merthyr Tydfil
CF47 8UH

Tel: 01685 353912
Website:www.gwirvol.org

Annex C: Charity Commission guidance

Our website offers a wide range of easily accessible online services, tools, information and guidance. Before contacting us for advice or help you might like to search our online database of frequently asked questions. Most people can find the answer they need without making a phone call or writing an email. Alternatively, see our Contacting us page.

Guidance

Charities and Public Benefit PB1
Charity Commission Risk Framework  
The Essential Trustee: What you need to know CC3
Internal Financial Controls for Charities CC8
Speaking out: Guidance on Campaigning and Political Activity by Charities CC9
The Hallmarks of an Effective Charity CC10
Trustee expenses and payments CC11
Charity Reporting and Accounting: The essentials April 2009 CC15b
Charities' Reserves CC19
Charities and Fundraising CC20
Choosing and Preparing a Governing Document CC22
Exempt Charities CC23
Users on Board: Beneficiaries who become trustees CC24
Trustees, trading and tax CC35
Changing your Charity's Governing Document CC36
Charities and Public Service Delivery: An introduction and overview CC37
Disaster Appeals: Attorney General's Guidelines CC40
Charities and Meetings CC48
Charities and Insurance CC49

Review of the Register publications

The Review of the Register of Charities RR1
Recognising New Charitable Purposes RR1A
Promotion of Urban and Rural Regeneration RR2
Charities for the Relief of Unemployment RR3
The Recreational Charities Act 1958 RR4
The Promotion of Community Capacity Building RR5
Maintenance of an Accurate Register of Charities RR6
The Independence of Charities from the State RR7
Preservation and Conservation RR9
Museums and Art Galleries RR10
Charitable Status and Sport RR11
The Promotion of Human Rights RR12
The Promotion of the Voluntary Sector for the Benefit of the Public RR13
Promoting the Efficiency and Effectiveness of Charities and the Effective Use of Charitable Resources for the Benefit of the Public RR14

Model governing documents

Charitable Companies: Model Articles of Association GD1
Charitable Trusts: Model Trust Deed GD2
Charitable Associations: Model Constitution GD3

Small Charity Constitution

 

Research reports

Trustee Recruitment, Selection and Induction
Charities and Commercial Partners
Charity Reserves
Collaborative Working and Mergers
Small Charities and Reserves
Milestones - Managing key events in the life of a charity
Milestones - Summary
Membership Charities
Transparency and Accountability
Village Halls and Community Centres
Start as you mean to go on: Trustee Recruitment and Induction
Cause for Complaint? How charities manage complaints about their services
The Regeneration Game: The range, role and profile of regeneration charities
Tell it like it is: The extent of charity reserves and reserves policies
In their own words: How charities have responded in the first year of the Summary Information Return
Stand and deliver: The future for charities providing public services
Charities working in the field of human rights

Other formats

All of our publications are available in large print, Braille or audio CD on request.

Other languages

Most of our publications are available in Welsh.

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