Categories of charity wiki

Looks at the different categories of charities and the Charity Act 2006

The first charities were established over 400 years ago. Becoming a charity is still the most widely recognised way for an organisation with a social mission to be established. It has very generous tax benefits associated with it and is recognised by all funders. Although charitable status is not suitable for all organisations it should always be one of the options considered by founders and social entrepreneurs. Some arts organisations operate dual or multiple administrative bases where part of their operation follows a charty model, another part is commercial - this includes major symphony orchestras for example.  The charity status offers many advantages but there are issues a major one being reclaiming input VAT - at 20pc this is quite a factor..

Charity is a status, not a legal form. It can apply to any organisation which has exclusively charitable purposes under English law and exists to pursue public benefit. The only exception to this is a community interest company. A community interest company cannot also be a charity.

The Charities Act 2006

The Act includes descriptions of the main purposes/objects which are charitable:

• the prevention or relief of poverty
• the advancement of education
• the advancement of religion
• the advancement of health or the saving of lives
• the advancement of citizenship or community development
• the advancement of the arts, culture, heritage or science
• the advancement of amateur sport
• the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity
• the advancement of environmental protection or improvement
• the relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage
• the advancement of animal welfare
• the promotion of the efficiency of the armed forces of the Crown; or the efficiency of the police, fire and rescue services or ambulance services, and;
• any other purposes charitable in law

All organisations with charitable status must exist for the public benefit. The Charity Commission has published guidance on what this means and is conducting a review of charities currently registered to ensure they meet this requirement. It has been particularly controversial in relation to fee charging charities like private schools.

More information about charitable purposes and registering as a charity can be found on the Charity Commission website.

All activities carried out by charities must be in furtherance of their objects and must be for the public benefit. This does not mean that charities cannot trade. Find out more about charities and trading.

Categories of charity

There are three categories of charity:

• registered charities (which are registered with the Charity Commission)
• exempt charities
• excepted charities.

Until recently exempt charities were not allowed to register with the Charity Commission because it was thought they were adequately overseen by other public bodies, such as the Financial Services Authority or the Tenant Services Authority. Exempt charities have always been obliged to comply with charity law and following the Charities Act 2006, those that do not have a regulator that is able to regulate them as charities will be obliged to become registered charities.

Some organisations have been excepted from registering as charities. These include some religious charities, Boy Scout and Girl Guide charities and some armed forces charities.  Some of these organisations are now obliged to register as charities. Find out more about exempt and excepted charities.