It is a common myth that all charities must be registered with the Charity Commission, however it is compulsory that all charities must have a constitution to regulate their activities. Additionally, all charities must meet the test of public benefit.
There are a number of governing documents that a charity can currently use but more are expected soon. Using one of the model governing documents will save you time and speed up your application for registration. Each of these contains the basic provisions which many charities use. These are:
• The constitution or rules for an unincorporated association. This may be appropriate if the organisation does not have valuable assets, they have a stake, and the views of local residents or other agencies need to be represented through membership or as users of the facilities.
• A trust deed. This may be most appropriate for charities that provide grants. This often occurs when a benefactor desires to create a simple charity to make gifts of money to worthy causes.
• Articles of association for a company limited by guarantee. A company, like an individual, can own land and enter into contracts in its own name. This may be appropriate to establish a company where the organisation is to be quite large, as this passes risk away from the individual charity trustees; or it will deliver charitable services under contractual agreements or it will have employees; or it will regularly enter into commercial contracts; or it will be a substantial owner of property.
• A small charity constitution. This may be appropriate where the organisation’s annual gross income will remain under £5,000.
• Constitution for a Charitable Incorporated Organisation (CIO). It will be appropriate in the same circumstances as for a limited company but will not require registration at Companies House and compliance with company law.
We can help you decide whether a charity is the right vehicle for your needs; whether it meets the public benefit test; we can assist you in determining how to constitute the charity, and we can aid you in creating the charity’s governing document and register it with the Charity Commission, Companies House and HM Revenue & Customs as appropriate.