Charities exist to benefit the public. The Charity Commission regulates charities in England and Wales.
In Leeds there's over 1,500 registered charities, (search for them using either the Charity Commission's Register of Charities or the Doing Good Leeds directory) which means there's many thousands of trustees in Leeds!
The Charity Commission rightly points out that setting up and running a charity requires a lot of work and indeed a lot of skills so it's important for trustees know what is required. Find out more about registering as a charity and the responsibilities of trustees below.
Registration as a charity
Think carefully before setting up a charity. For example, avoid setting up a charity that duplicates the work of existing charities.
Who can register
An organisation is required to register as a charity if it:
- has charitable purposes
- exists for the public benefit
- has an annual income of £5,000 or above
Requirements for registration
The requirements for registration and links to the online charity registration process are given below.
Only organisations with charitable purposes and with an annual income above £5,000 must register with the Charity Commission. This is known as ”the registration threshold”. Please note: there will be an exception to this from January 2014. New Charitable Incorporated Organisations (CIOs) with anticipated annual incomes of under £5,000 will also be able to register as a charity.
An organisation must have charitable purposes in order to register as a charity and all of the purposes must be charitable. The 13 charitable purposes are:
- 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
- Other purposes that are currently recognised as charitable or in the spirit of any purposes currently recognisable as charitable
The Charity Commission website gives detailed guidance on charitable purposes
In England and Wales, public benefit is a crucial part of what it means to be a charity. A charity must have only charitable purposes. That is to say all the purposes of a charity must be charitable! All of these charitable purposes must be for the benefit of the public. This is known as “the public benefit requirement”.
The public benefit requirement has two aspects:
- The benefit aspect
- The public aspect
In order to fully appreciate the meaning and significance of these aspects it is necessary to read the public benefit guidance provided by the Charity Commission.:
There are three guides:
- Public benefit: the public benefit requirement
- Public benefit: running a charity
- Public benefit: reporting
The Charity Commission website gives detailed guidance on public benefit.
What you need to know about the responsibilities of running a charity.
As a charity your organisation must comply with the Charities Act 2011. The Charity Commission website is the best place to look for everything relating to the responsibilities of charities.
The information that you will find includes:
- How to complete annual returns
- How to prepare annual report
- Legal requirements in respect of notifying the Charity Commission of changes to your charities
Good Practice guidelines including:
- The board
- Fit for purpose
- Improving your charity
- Being prudent
- Being accountable and transparent
There is a section on land and property which includes:
- mortgaging or transferring charity land and property.
There is guidance on:
- Accounts and financial matters
- Delivering public services
- Managing risk
- Reporting serious incidents
- International work
As at 31 March 2014 there were 181,038 charities registered with the Charity Commission. Of these, 19,400 operate internationally. Like all other charities international charities have a duty to act responsibly, to ensure that the charity is solvent, that its funds and assets are used wisely and reasonably and only in furtherance of the charity’s objects. Furthermore, the trustees must avoid undertaking activities that might place the charity’s endowment, funds, assets or reputation at undue risk. For details of trustee duties see http://www.charitycommission.gov.uk/publications/cc3.aspx
Think of the charity in the context of high risk international work: Examples are:
- Millions of people could be internally displaced
- Millions of people inside the country could be in need
- The whole country may be unsafe
- Terrorist groups may operate
- There may be a risk of kidnap
- Medical support may not be available
- There may be disruption to infrastructure, communications and transport
- There may be no access to cash
This kind of nightmarish scenario makes it immediately apparent that there are risks for the charity:
- Safety of staff, volunteers and beneficiaries: Volunteers and staff should be properly vetted before being allowed to travel. They should also receive appropriate training and briefings and be made aware of risks.
- Individuals involved in non charitable activities
- Misappropriation of charity funds or resources: trustees must be satisfied that the aid and activities further the charity’s purposes; alleviate the need; provide fair selection of beneficiaries; law abiding. See the link below
- Inadequate due diligence on partner agencies: trustees should carry out proper due diligence on those individuals and organisations that give money to, receive money from or work closely with the charity. The key principles of due diligence are to identify who you are dealing with; to verify that identity;(also check the proscribed organisation and designated entity lists) to know what the business of the organisation is; to have confidence in their ability to deliver for your charity; to be alert for anything suspicious. See the link below.
- Inadequate monitoring of charitable work: monitoring usually involves making sure that the project has been delivered; proof of proper use of funds; an audit trail; progress reports; See the link below.
Involvement in political activity: a charity must not engage in or fund political activity except where this is properly in support of delivering its charitable purposes. Political activity means any activity which is “aimed at securing, or opposing, any change in the law or in the policy or decisions of central government, local authorities or other public bodies, whether in this country or abroad”.
For Charity Commission guidance see
- The charity must follow the law relating to fundraising and best practice.
- All fundraising appeals should clearly explain what the funds will be raised for and how they will be used.
- Any funds raised for a specific activity must be spent on that activity.
- You must state what will happen to any surplus funds and also what will happen if not enough funds are raised.
- Ensure that all collectors are licensed, have ID and know what the money is going to be used for.
- The tins should be sealed
- All amounts returned by collectors should be checked.
- Any charity equipment such as distinctive clothing and ID cards should be collected at the end of the fundraising event.
- Proper accounting procedures should be in place.
See the following Charity commission guidance on all matters relating to fundraising:
Charities and fundraising (CC20) https://www.gov.uk/government/publications/charities-and-fundraising-cc20
The following links may also be useful:
The Charity Commission website is www.charitycommission.gov.uk
Guidance on reporting serious incidents to the Charity Commission:
Syria specific information:
Safer giving advice for Syria http://www.charitycommission.gov.uk/news/safer-giving-advice-for-syria-080413/
What a lot of links and all charity trustees have much reading to do in order to carry out their duties but international charities should be particularly vigilant because of the higher risks. That said, there are wonderful examples of charities making a difference and improving the lives of beneficiaries in every corner of the world.
Please note that most of this information was gained at a Charity Commission Workshop held in Leeds on 21 May 2014.
More help for charities
Voluntary Action Leeds (VAL) runs a 'How to register as a charity' training course at frequent intervals.
The Charity Commission provides useful information on setting up and registering a charity (updated June 2014).