The question of whether or not to become a registered charity is one which often sparks a lot of discussion in societies. The two main concerns seem to be that (a) it might require a degree of legal expertise to take the society through the process; and (b) it could lead to restrictions in the way that the society operates (with the Charity Commission acting as Big Brother). I shall tackle each of these concerns below.
So, let’s start by looking at the pros and cons of taking out registration.
- Having a registered charity number to quote on grant applications gives your society credibility.
- Being a registered charity can give you discounts when hiring venues (as sometimes they take off the VAT).
- You can include a Gift Aid form with your membership subscription form, so that you can claim back gift aid each year on monies paid by those consenting taxpayers within your membership (subscriptions, donations, etc., though not on sales goods!). This is 25p in the £, so can boost your coffers considerably.
- The Charity Commission (CC) will assist you in producing a constitution which will help to safeguard the society and those who manage it. They will also provide helpful advice in other areas. They do not interfere in the day-to-day running of your society. It is only if you alert them to an issue that they will get engaged.
- You will probably have to rewrite your constitution and get it passed at an AGM or EGM. The CC’s website contains guidelines on how to do this (document CC22b) and has model documents for you follow.
- If your society becomes the victim of any fraud (e.g. a trustee embezzles money), you do have to report it to the CC and they will investigate to ensure that you are doing all you can to rectify the situation. They will also come up with advice as to how you can set in place future safeguards.
- If your society’s income is less than £10,000, you do not have to provide an annual return, although you should keep your contact and financial records up to date in case they are required by the CC. If your society’s income is more than £10,000 then you need to submit an annual return to the CC. This takes the form of a simple online form to amend any changes in trustees, and society operations; in addition to the final income total and expenditure total for the year. You are also required to have your annual accounts examined (by someone known to your society, not elected by the CC) – but this is best practice anyway – as a safeguard for your society and your members.
So, now that, hopefully, I’ve persuaded you that registration is a good thing, let’s see if you are eligible to apply! You are eligible to apply if:
- You have a charitable purpose and are not-for-profit. Of the categories set out by the CC, the most relevant would be (1) the advancement of education, and (2) the advancement of the arts, culture, heritage or science.
- Your organisational objects (usually a standard part of your constitution) are charitable – again ‘the advancement of education’ is key here.
- You do not have any directly political objectives in your constitution. You can engage in political activities but only in support of your charitable objectives.
- You conform to any of the criteria below.
There are different types of charity:
- Charitable Unincorporated Association. This is a membership organisation which does not have its own legal existence, which means that its trustees are liable for debts/obligations.
- Charitable Trust. It usually manages money or property for charitable purposes, and is much the same as the above.
- Charitable Incorporated Organisation. This can be the same as either of the above in the way that it is run, but it has its own legal existence, and is more complex to set up, but trustees have no individual liability for debts, etc.
- Charitable Company. This is a limited company with charitable aims and is similar to a CIO.
Charitable Unincorporated Associations and Charitable Trusts with a gross annual income of £5,000 or more are expected to register with the Charity Commission – although they are not obliged to do so. If your gross annual income is less than £5,000 then you cannot become a registered charity. You still have charitable status, however, although as an unregistered charity.
CIOs have to register, regardless of their income as they do not formally exist as charities until they are registered.
This may sound complex, but it really isn’t.
The Charity Commission is there to help and advise. They have lots of guidance notes and a helpline, which you can access via their website at https://www.gov.uk/government/organisations/charity-commission.
Linda J. Curry
(This article dates from Autumn 2017. There are slightly different frameworks in Scotland and to find out about these your first port of call is The Office of the Scottish Charity Regulator (OSCR) whose website is https://www.oscr.org.uk/ )