How to Start a Charity: A                  Comprehensive Guide

This article guides to how to start a charity for a cause or anything else. Many individuals are motivated to do so due to their personal experiences and/or a desire to help others. However, running a charitable Organisation comes with many responsibilities, especially in today’s climate, where transparency is expected regarding how donations are utilised.

In this guide, we will explore the current challenges facing charities and the steps you need to take to start your own.

The Cost of Starting a Charity

Starting a charity does not come with a fee, but there are still costs involved in starting an incorporated charity, such as a £13 fee from Companies House. You will also need funding to cover expenses such as staff, premises, and equipment.

On average, UK charities spend 60-70% of their annual income on supporting their cause, with the rest going to administration, governance, and running costs.

The exact percentage may vary based on the size of the charity, with smaller charities potentially spending a higher percentage and larger charities spending a lower percentage.

Impact of COVID-19 on Charities in the UK

There are approx. over 165,000 registered charities in the UK in the year 2022 with an average of 5,000 new charities being registered every year.

The COVID-19 pandemic has had a significant impact on charitable giving and has continued to pose challenges for fundraising, service delivery, and staff morale. Despite these challenges, charities remain more important than ever. Being well-prepared and informed is crucial to making your dream of starting a charity a reality.

Steps to follow when starting a Charity!

 

Step 1: Finding Trustees

Charities are governed by a board of trustees who oversee operations and ensure compliance with regulations.

Ideal trustees should have relevant experience, and the ability to recruit staff and manage communication and public relations. You will need at least three trustees who are thoroughly interviewed, have the right skills and experience, are subject to reference and background checks, are not disqualified from acting as trustees, and are free of conflicts of interest.

To find the right people, consider advertising open positions through local press, social media, or websites like the Small Charities Coalition and Trustees Unlimited.

Step 2: Choosing Charitable Purposes

Determining your charity’s purpose is essential for recruiting, registering with the Charity Commission, and building your brand.

There is a wide range of charitable purposes to choose from, including human rights, poverty alleviation, education, animal rights, community enrichment, the arts, sports, social justice, environmental welfare, and religion.

Take the time to think about your passions and what motivates you, as authenticity is crucial to a successful charity brand.

Step 3: Naming Your Charity

Importance: The name of your charity is crucial for your brand and how people will recognise your organisation. It defines who you are and what will be the purpose of your charity will be.

Check the Charity Register: Search to see if the name you have in mind has already been taken by another charity. Check both registered and unregistered charities.

Inspiration: Connect with your personal experiences to bring inspiration to your brand. Aim for a name that is engaging, informative, and eye-catching.

Approval Needed: If you want to use “charity,” “charities,” or “charitable” in your name, you must get approval from the Charity Commission.

Translation: Make sure to include a translation of any non-English words in your charity’s name when registering.

Step 4: Choosing a Structure

• Importance: Just like a business, a charity needs a structure to help it thrive.
• Common Structures: How the charity will be registering. A few options will be as below:

1. Charitable Company: A private company limited by guarantee regulated by the Charity Commission and Companies House.
2. Charitable Incorporated Organisation (CIO): An incorporated body with its own legal capacity regulated by the Charity Commission.
3. Charitable Trust: Trustees manage assets like money, investments, land, or buildings.
4. Unincorporated Charitable Association: Allows volunteers to run a charity for a common aim but carries risk for trustees.
5. CIC (Community Interest Company) or Social Enterprise for mixed purposes.

 

Step 5: Designing Your Code of Conduct

• Importance: A code of conduct outlines the rules and regulations for board members and can be accompanied by a code of conduct for employees and volunteers.
• Building Trust: It creates accountability and supports strong governance and compliance, building trust with the public.
• Key Elements: Asset protection, attendance expectations, conflicts of interest, privacy and confidentiality, disciplinary actions, diversity, management of volunteers, charity culture, employee conduct, and fund and asset management.
• Legal Requirement: Not legally required but important for preventing and resolving conflict.

Step 6: Drafting Your Governing Document

• Importance: A legally binding document required by law to start a charity, works alongside your code of conduct.
• Elements: This would include the name of your charity, purpose, powers for trustees, trustee appointments, meetings, voting system, membership, legal accounting requirements, financial controls, and amendment procedures.

Step 7: Setting up a Bank Account:  

A bank account is a crucial tool for managing your charity’s finances. It operates similarly to a personal or business account but should be registered under your charity’s name. Most banks and building societies offer charity accounts, but they often have eligibility criteria based on the charity’s structure, status, or projected annual income.

Before choosing a bank, compare monthly account charges and overdraft fees, as well as value-added services.

Step 8: Register Your Charity

It’s time to make your charity official by registering it. If your charity is based in England or Wales and has an income of £5,000 per year or is a CIO, registration is mandatory.

If your charity operates in Scotland, you need to apply for SCIO status. In Northern Ireland, register with the Charity Commission for Northern Ireland per the Charities Act.

To register, you’ll need information such as your charitable purposes, financial documents, personal details of board members, and a governing document.

Step 9: Create a Fundraising Strategy

Fundraising is a crucial aspect of running a charity, and you need to make sure that it is done ethically and sustainably. In England, Northern Ireland, and Wales, the Fundraising Regulator oversees charity fundraising, while in Scotland, it’s the Scottish Fundraising Standards Panel.

Before you start fundraising, check if your activities comply with the Advertising Standards Authority, Information Commissioner’s Office, and Charity Commission for England and Wales.

Step 10: Make Donations Accessible

To reach a wider audience and encourage donations, consider embracing multiple donation channels. Digital fundraising is a secure, simple, and accessible option, particularly for tech-savvy donors. To keep up with changing consumer habits, integrate contactless donation boxes and units into your fundraising efforts. Currently, cash payments make up only around 20% of UK payments, while contactless payments account for over 30% as of 2022.

Conclusion:  Setting up a charity can seem daunting but following these ten steps can make the process smooth and more straightforward. Good luck!

Hibabox, an inspiring Fintech company, helps charities to resolve donation collection challenges. Its contactless donation devices on site and online widget to your website allows you to create multiple collection channels. With the added security and customisation, your charity can do fundraising with ease and in a secure cashless environment.

To find out more about how we can help, get in touch with our experienced team today or visit the website to get started