Whether you want to support a cause close to your heart or address a pressing social need, establishing a charity involves legal, administrative and financial steps. In this guide, we’ll walk you through how to set up a charity, covering everything you need to know to get started, from defining your charity’s purpose and selecting your trustees to creating a governing document and registering with the Charity Commission.
What is a charity?
A charity is an organisation that operates for public benefit rather than for profit. In the UK, charities are regulated by the Charity Commission, which ensures they meet specific criteria, such as having a charitable purpose and operating in the public interest. Charities can support different causes, including education, poverty relief and animal welfare.
What qualifies as a charity in the UK?
For an organisation to qualify as a charity in the UK, it must meet two key requirements:
- Charitable purpose: The organisation must have an aim that falls within one of the 13 charitable purposes defined by UK law. These include the advancement of education, health, environmental protection and human rights.
- Public benefit: The charity must show that it benefits the public or a sufficient section of it.
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Types of charities in the UK
There are four main types of charities you can set up in the UK:
- Charitable companies
- Charitable incorporated organisations (CIOs)
- Unincorporated associations
- Trusts
Charities in the UK include:
- Education charities that support schools, universities and scholarships, such as The Access Project.
- Mental health charities that support people facing mental health challenges, such as Mind.
- Animal welfare charities that help vulnerable animals or support local shelters, such as RSPCA.
- Health and care charities that provide services or research into medical conditions, such as Cancer Research UK, which funds research into cancer treatments and prevention.
- Social charities that help look after vulnerable or disadvantaged sections of society, such as Age UK.
- Housing charities that help to fight homelessness and poor housing in the UK, such as Shelter.
- Humanitarian charities that support people in crisis, providing emergency assistance and disaster relief, such as the British Red Cross.
Many smaller community-based charities also focus on local or specific causes, such as education, healthcare or alleviating poverty.
How to set up a charity in seven steps
Setting up a charity requires several important steps to guarantee legal compliance and operational efficiency. Here’s how you can get started.
Step 1: Decide if setting up a charity is the right choice
Before you jump into the paperwork, it’s important to consider whether setting up a charity is the best option for your cause.
Your eligibility
To start a charity in the UK, an organisation must meet specific legal criteria. It must be for the public benefit in a way that’s clearly identifiable and must align with one of the 13 charitable purposes recognised by UK law.
Check alternatives
In some cases, starting a charity might not be the best solution for your goals. You may want to consider setting up one of the following instead:
- Non-profit organisation: If your primary focus is delivering social benefits but without the full legal obligations of a charity.
- Social enterprise: If you plan to trade or generate income with a business that has social, environmental or community-based objectives, then set up a social enterprise. The rules on ‘charitable purposes’ do not apply here.
- Named fund or trust: If you want to raise money for a certain cause, set up a fund through a community foundation. If you have more than £10,000 to donate, you can set up a CAF charitable trust.
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The costs
While registering a charity is free in the UK, there are set-up costs and running expenses to consider:
- Legal fees, particularly if you need help drafting your governing document or structure.
- Administrative costs, including setting up your charity’s infrastructure, creating a website and securing office space.
- Ongoing operational expenses include staff salaries, office space rent, fundraising efforts, printed advertising materials and maintaining compliance with legal and financial regulations.
Can you make money owning a charity in the UK?
Charities operate on a not-for-profit basis, meaning any income generated must be used to further the charity’s goals. However, charities can use their profits to cover operating costs, including staff salaries and administrative expenses. So, while trustees and founders cannot profit personally from the charity, reasonable compensation for staff and operational costs is allowed.
For more detailed guidance on whether starting a charity is the best option for your organisation and its goals, it’s important to check charity restrictions and if there is an existing charity with a similar cause.
Step 2: Define your charity’s purpose
Your charitable purpose is important because it forms the backbone of your organisation’s activities. Your purpose must align with the 13 charitable purposes recognised by UK law, such as the advancement of education, environmental protection or the arts.
Charitable purposes should clearly state:
- What the charity aims to achieve
- How it will achieve these outcomes
- Who will benefit from it
- Where these benefits will extend to.
An example of a well-defined purpose might be: “To advance the education (what) of disadvantaged children (who) in inner-city London (where) by providing after-school tutoring, mentorship and access to educational resources (how).”
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When writing your charity’s purpose, make sure that it:
- Addresses a specific need: whether you’re supporting mental health, environmental conservation or local education, the need for your charity must be clear.
- Defines public benefit: the purpose should show how your charity will benefit a broad section of the public or a specific group in need.
- Meets legal criteria: ensure that your purpose aligns with Charity Commission requirements.
To define your charity’s purpose, follow the Charity Commission’s handy guide to how to write charitable purposes.
Step 3: Name your charity
Choosing the right name for your charity is essential because it’s the first impression most people will have of your organisation. The name should reflect your mission, be easy to remember and comply with Charity Commission naming rules.
Here are some tips for naming your charity:
- Avoid overly complicated names that might be hard to remember.
- Your charity’s name must be unique. To check whether a name is available, search the charity register for the existing names of registered charities.
- The name should reflect your charity’s core activities or mission, helping potential donors and beneficiaries understand what you do at a glance. It shouldn’t be misleading in any way.
For instance, if your charity focuses on animal rescue, a name like “Safe Paws Animal Rescue” is direct and meaningful.
Need more help? Check this useful guide to naming your charity for more information on naming rules and regulations.
Step 4: Pick your trustees
Trustees play a vital role in overseeing the operations of your charity and checking that it stays on track with its mission. In the UK, trustees are usually volunteers, and they have legal and financial responsibilities that must be taken seriously. It’s important to find trustees who are dedicated to the charity’s objectives and have the right skills to support its activities.
Trustee eligibility
Trustees must meet certain eligibility criteria. For instance, they must be at least 18 years old (or 16 if your charity is a company or charitable incorporated organisation).
Some individuals, including those with unspent convictions for specific offences or those who are bankrupt, are disqualified by law from acting as charity trustees.
Always check prospective trustees meet the legal eligibility requirements before appointing them will help avoid any delays with your application.
Trustee skills and experience
Having a well-rounded team of trustees with a variety of skills will strengthen your charity’s governance and help it run smoothly. This could include:
- Financial management to help oversee budgets and financial reporting.
- Legal expertise to ensure compliance with laws and regulations.
- Fundraising skills to support your charity’s fundraising efforts.
- In-depth knowledge of your charity’s area of focus.
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Trustee legal responsibilities
Trustees are legally responsible for the management and administration of your charity. They have six main duties:
- Ensure the charity is fulfilling its public benefit requirement and that all decisions align with its mission
- Comply with legal and regulatory obligations, including the governing document
- Safeguard the charity’s assets and manage resources responsibly
- Ensure the charity is accountable
- Act with reasonable care and skill
- Act in the best interests of the charity
Being up front with your trustees about their roles, legal responsibilities and liabilities will set up the charity for success and avoid any confusion down the line.
Finding and appointing trustees
Finding the right trustees can be challenging, but it’s critical for the success of your charity. You may already have people in mind who share your vision, but there are other ways to find suitable candidates:
- Use your network of contacts to reach out to professionals or volunteers already involved in your cause.
- Use charity recruitment platforms like Reach Volunteering and Trustee Finder to advertise trustee vacancies.
- Access professional associations that can help bring specific expertise to the board.
Once you’ve identified potential trustees, you’ll need to formally appoint them. This process involves agreeing on terms of appointment and ensuring they understand their roles and responsibilities.
Step 5: Map out the structure
Your charity structure determines how it operates and is defined by its governing document (the legal document that says how the charity should be run). Choosing the right charity structure is important, as it affects who will make decisions, how much liability trustees have and whether you can employ staff.
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There are several types of charity structures in the UK, including:
- Charitable trusts where the assets are held by trustees for a charitable purpose. This is suitable for charities with a primary focus on managing funds or property.
- Charitable incorporated organisations (CIOs), a legal entity that allows your charity to enter into contracts, employ staff and own property. CIOs offer the benefits of limited liability for trustees.
- Charitable companies that are set up as charities.
- Unincorporated associations, which have a simpler structure, are ideal for small volunteer-led charities that do not require the ability to hold assets or employ staff.
Step 6: Create a governing document
Your governing document outlines how your charity will be run, including the rules and procedures for decision-making, trustee responsibilities and how finances will be managed. This is essentially the constitution of your charity and is legally binding.
A governing document typically includes:
- Your charity’s objectives and purpose and what it can do to carry out its purposes.
- Your trustee roles and responsibilities, including how they will be appointed, what their duties are, whether they can change the governing document and how they can be removed if necessary.
- Operational procedures include how meetings will be conducted, how decisions will be made, and how financial records will be kept.
Check the UK gov website for additional information and guides, like this one on how to write a governing document.
Step 7: Register a charity in the UK
Once it is ready to operate, you’ll need to register your charity with the Charity Commission and get recognition from HMRC for tax benefits. The registration process includes providing all your legal documents, like your governing document, and explaining how your charity meets the legal requirements.
How to set up a charity in the UK FAQs
How long does it take to register a charity?
It can take around 40 working days for the Charity Commission to review your application, but the timings may vary depending on the complexity of your charity’s governing document.
How much does it cost to start a charity in the UK?
While registering a charity itself is free, there are other costs involved, like legal fees, setting up a website and administrative expenses.
What can I do if my application to register a charity is refused?
If your application is refused, the Charity Commission usually provides a reason. You can either make changes to your charity’s structure or governing document and reapply or appeal the decision.
How to start a charity successfully?
To help guarantee success, plan meticulously, check your compliance with legal requirements and assemble a skilled team of trustees. Define clear objectives, keep your finances transparent and continuously engage with your supporters and beneficiaries.
