A charity is a specific type of voluntary organisation and must conform to the regulations set out in charity law particularly the Charities Act 2011.
Charity is a legal status for an organisation, not a legal form or organisational structure.
Do I qualify as a charity?
You will need to meet two criteria in order to be able to be considered a charity:
- the purposes of your organisation must be exclusively charitable. You cannot have a mix of charitable and non-charitable purposes.
- your organisation must be set up for public benefit (rather than for an individual or small select group of people)
The Charity Commission of England and Wales is the regulator for charities. Usually, your organisation must register with the Commission if you meet the definition above and:
- your charity is based in England or Wales and has over £5,000 income per year.
- If your charity is a charitable incorporated organisation (CIO) it must register whatever its income.
Only apply to register your charity once it’s set up.The commission will take action if it identifies a charity which isn’t registered but should be.
There is more information about the qualification and registration processes on the Charity Commission website.
Whatever their size, charities can register with HMRC for tax purposes.. The process involves demonstrating the charitable purposes of the organisation. Registration can give your organisation additional legitimacy. Do not quote your HMRC number on your website or in the public domain. You can state, however, that you are a voluntary organisation ‘recognised as charitable by HMRC for tax purposes’.
Ownership & Control
Charities are not owned by anybody. The charity is controlled and its assets held in trust by a board of trustees. Trustees are responsible in law for ensuring that charities are well run to deliver their charitable purposes for the public benefit as set out in their constitution. To understand the role and responsibilities of Charity Governance and Trusteeship, visit the Governance section.
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.
What other options are there?
If you don't meet the legal requirements for setting up a charity, or decide that it isn't the right approach to achieve your objectives, there are alternative options. See our page on legal forms for voluntary organisations.
- Setting up and registering a charity - Gov.UK: Web resources taking you through the start up and registration process.
- Setting up a social enterprise - Gov.UK: Information to set up a social enterprise (using profits to benefit others.
- Get Legal from Bates Wells Braithwaite law firm provides online legal documents and information for charities, voluntary organisations and social enterprises. It includes a very useful decision making tool for new organisations to determine an appropriate legal form and developed with NCVO