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How Are Charities Set Up?

Updated on October 7, 2015
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Charity in the UK

The charity sector has, in recent decades, become a huge industry. There are thousands of different charities in the UK with different purposes and aims that are working towards making people’s lives and society a better place. Charity and charitable organisations are nothing new however, the concept of charitable giving has been around for hundreds of years. In earlier years charity was often associated with the church. In medieval times alms would be given to the poor and needy and hospitals would provide shelter for the elderly and the sick. Charity became more organised and regulated under Elizabeth I and this could arguably be seen as when the concept of charity became much closer to what we know today. The Charitable Uses Act of 1601 formed a list of activities that would be beneficial to society and encouraged people to make donations.

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History & Development

Following the introduction of the Charitable Uses Act the concept of ‘charity’ began to evolve and over the centuries thousands of different organisations were set up. The Victorian period was a particularly prolific time for charitable organisations and many of the charities that are well known today were set up in this era. Barnardo's, a leading children’s charity was set up in the Victorian period as were the Salvation Army and the NSPCC. The reason behind the proliferation of charitable organisations in this period was mainly due to the Poor Law and its increasingly restrictive measures. People began to find that charitable organisations were a better alternative to the Poor Law and could provide useful help and assistance to their members. Today there are more than 160,000 charities in England and Wales that take almost £60 billion in income annually.

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Setting Up a Charity

Contrary to what some people may believe you cannot just set up a new charitable group and start doing good work. There are a number of regulations in place to make sure that organisations are set up correctly and are not abusing the charitable sector for their own personal gains. Firstly, your organisation needs to fall under the definition of a charity. In general terms a charity is an organisation that focuses on philanthropy and non-profit goals and that will often aim to improve social well-being. Charities must register with the Charity Commission if their income is more than £5,000 a year and they are based in England or Wales. Smaller organisations do not have to register with the Charity Commission and can be an unregistered charity. These kind of charities have to apply HM Revenue and Customs for tax purposes. In order to be recognised as a charity by the Charity Commission the organisation in question will need to be set up for ‘charitable purposes’.

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Charitable Purposes

So what are ‘charitable purposes’? A charitable purpose is the aim that the organisation wants to work towards. Often this will encompass the advancement of some aspect of society - for example this includes the advancement of poverty relief, education, religion, health, the arts, amateur sports, human rights, environmental protection and animal welfare. A charitable purpose can also be working towards the ‘relief of those in need’ due to financial, age, health or disability reasons. Organisations can also be considered a charity if they are working towards the improvement of emergency services, such as police, fire, ambulance and rescue services, and the armed forces. There is such variety and diversity among charitable organisations that there are many different forms of charitable purposes.

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Other Regulations

The requirements for charitable purposes laid down by the Charity Commissions all cover principles that are for the benefit of the public. If your organisation does do work that is considered beneficial for the public then it is unlikely you will be considered a charity. If you set up an organisation that does work for the benefit of an individual, this is not seen as for public benefit and can disqualify you from becoming a charity. Equally if an organisation is set up for the benefit of an individual who is connected or related to those setting up the charity, it will not be recognised as a charitable organisation. Overtly political groups or ones with illegal aims are also not allowed to register as a charity. When setting up a charitable organisation you may also want to research whether there are any other charities already in existence that have the same aims and charitable purposes. You should also avoid confusion by choosing a name that is not too similar to any other charities.

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Applying To Be a Charity

If you feel that your organisation complies with the requirements of the Charity Commission then you can apply for charitable status. This process can done through the Commission’s website. It can be a fairly complicated process and it is important to know that you are following all the regulations correctly. It may be helpful, therefore, to engage the services of a charity law solicitor - a legal professional who specialises in dealing with charitable organisations and the applicable laws. A solicitors that deals with charity law will not only be able to help you set up and register your charity but will also be able to help organise the funding arrangements. When you have sent your application the Charity Commission will then decide whether your organisation is eligible - if successful your organisation will officially be recognised as a charity.

Total Annual Income & Number of Charities

At 31st Dec
Total Number of Charities
Annual Gross Income (£bn)
2012
162,915
58.48
2011
161,649
55.87
2010
162,415
53.86
2009
160,515
51.74
2008
168,354
48.40
2007
169,297
44.55
Statistics from the Charity Commission website.

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