Small charities can achieve great things, but their needs, challenges and legal requirements are often different to larger charities. Find out how to set up and run a small charity, and what to do if you expand.
Setting up a charity
The first thing to decide is whether setting up as a charity is the right thing for what you want to achieve. Depending on your aims, you could work alongside or fundraise for an existing charity instead, for example.
If you have researched the options and decided to set up a charity, read our guide:
Setting up a charity Use this guide to find out what it means to be a charity and decide if setting up a charity is the best way to meet your purposes
There are two types of charity: registered and unregistered.
Charties that receive more than £5,000 a year need to register with us. But you can still set up a charity if your income will be less than £5,000, so long as it is set up with charitable aims and you can demonstrate public benefit. Find out what this means:
All charities need a governing document – a rulebook to help them run and stick to their aims. The type of governing document you need depends on the structure of your charity. Many small charities will use a constitution as their governing document.
Don’t use the word ‘registered’ when describing your charity, as this may mislead the public into thinking you’re a registered charity.
You can download a template constitution for small charities using the link below.
When completing your governing document, you will need to use wording that makes your organisation charitable in law. Read our advice on governing documents and example wording for help with this:
Model constitution for small charities A template governing document for charities with incomes below £5,000.
There are many organisations that offer support especially to help small charities set up:
Bank accounts for unregistered charities
Even a small charity needs a bank account. Lots of banks offer ‘treasurer’ or ‘community’ accounts – these are suitable for small, unregistered charities.
Tax and accounts for unregistered charities
All charities can apply to HM Revenue and Customs (HMRC) to be recognised as a charity for tax purposes – this allows you to pay less tax and claim gift aid on donations.
When you have registered as a charity with HMRC, they will give you a reference number.
You can tell the public that you are registered as a charity with HMRC – this will help give people confidence that you are a legitimate organisation. But don’t display your tax reference number in the same way charities display their registered charity numbers. You should only use your tax reference number when you communicate with HMRC.
- Apply for recognition as a charity for tax purposes – HM Revenue and Customs
- Gift aid – HM Revenue and Customs
Unregistered charities do not need to have their accounts audited and don’t send their accounts to us.
Raising funds: tips for unregistered charities
There are lots of ways you can raise money – from organised collections to applying for grants. A small, unregistered charity may need to take extra steps to show funders it is a legitimate organisation.
Here are some ways to show potential donors you are trustworthy:
- be honest and up-front that you are not a registered charity – this helps to build trust
- create a website so people can read about what you do
- make online contacts with other organisations, using social media for example
- put some or all of your governing document online so that people can read about your aims
Find out more methods to raise funds for your charity:
What happens as your charity grows
As your charity grows, you might think about employing staff or taking on volunteers to help you do your work. Getting bigger may also expose your charity to more risk. Find out more:
When to register your charity
Charities with incomes over £5,000 a year must register with us. Charities set up as charitable incorporated organisations (CIOs) must also register with us no matter what their incomes are: