How do you set up a charity? This is the question that most people ask when they want to know how to start their own charity. The good news is that it's possible for anyone with the right motivation and commitment to set up a charity.

There are, however, some steps you will need to follow in order for your organisation to become fully recognised by law and able to operate as a registered charitable institution.

These steps will vary from country to country and can be quite complicated, we strongly recommend you take professional advice if you want to set up a charity and aren’t sure about any of the elements of setting up.

You may find this article informative and interesting, but it is not a substitute for professional advice.

Step 1: Understand the structure that is right for you

In many countries, including England, where Greater Change was established, there are different types of charities. There may also be special structures for social enterprises.

The journey to becoming a charity was not straightforward. It began with an idea, which we then developed in two incubators: Oxford University Innovation and Aspire Oxfordshire.

Once we were ready to launch our own entity, we sought professional advice from a legal firm on exactly what charity structure we should take. This helped us understand the best options to give us the best chance of achieving the societal impact we were seeking to create.

Due to the specific circumstances of Greater Change, we decided it would be best to form two entities. The main considerations for us were:

• We wanted to lock in the societal purpose, the priority was and is to support homeless people, and we wanted that to be clear and transparent to people. We also wanted that to permanently be the first priority. 
• Another key consideration was that what we are doing is quite different and needed some new technology, research and innovation to set up. This meant it was likely to require some financing.
• There were also many other considerations to take into account, too many to list. But things like whether we thought we would have earned revenue and that it would be useful to be able to benefit from Gift Aid on donations, for example.

After considering what we needed to do, we decided it would be best to set up two entities in a partnership structure. We set up The Greater Change Foundation, which is a charitable incorporated organisation. We also set up Greater Change Community Interest Company. 

The charitable foundation fits our objective of supporting people out of homelessness. It also meant we could do things like claim Gift Aid on individual giving to the charity and more easily attract corporate support. 

The Community Interest Company is a special type of company. As stated on the British Government website, “it exists to benefit the community rather than private company shareholders.”

The social purpose is locked in through ‘the community interest statement’, which the business must prioritise and has to put well over half the profits back into benefiting the community instead of paying those profits out to shareholders.

We set up the Community Interest Company largely due to two factors. The first was that we thought we might require some significant investment, and this would be easier to achieve with a social enterprise structure. Secondly, we expected to generate significant earned revenues, and we felt that, in our case, this better fit within a social enterprise structure.

Step 2: Consider what purpose your charity will have

You’ll need to understand what charitable purpose your charity will fit.  The high-level categories in England and Wales are: 

1. The prevention or relief of poverty

2. The advancement of education

3. The advancement of religion

4. The advancement of health or the saving of lives

5. The advancement of citizenship or community development

6. The advancement of the arts, culture, heritage or science

7. The advancement of amateur sport

8. The advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity

9. The advancement of environmental protection or improvement

10. The relief of those in need because of youth, age, ill-health, disability, financial hardship or other disadvantages

11. The advancement of animal welfare

12. The promotion of the efficiency of the armed forces of the Crown, or of the efficiency of the police, fire and rescue services or ambulance services

There is also an 'other charitable purposes category', this covers those not described above and potentially new charitable purposes that may be recognised in the future as being similar to another charitable purpose. Some examples are:

“The provision of facilities for recreation and other leisure-time occupation in the interests of social welfare with the object of improving the conditions of life for the persons for whom they are intended.

The provision of public works and services and the provision of public amenities (such as the repair of bridges, ports, havens, causeways and highways, the provision of water and lighting, a cemetery or crematorium, as well as the provision of public facilities such as libraries, reading rooms and public conveniences)

The defence of the country (such as trusts for national or local defence)

The rehabilitation of ex-offenders and the prevention of crime

You can find the full list on the government’s website. 

It will probably be quite clear which purpose you fit into. However, you still need to be clear on the public benefit, and it must be demonstrated in your charity’s case.

You should also think carefully about how your charity might develop, it may be easier down the line if your charity’s governing document already encompasses future charitable activities.

Step 3: Set your goals.

Be clear in your mind about what you want to achieve and think about how to explain it clearly.

Without knowing very clearly what you want to achieve, it may be difficult to explain to stakeholders. This can create problems in the short term as well as the long term. For example, a funder may not want to support your organisation if you cannot clearly explain the goals.

In the long run, a potential problem might be that a stakeholder feels the charity isn’t aligned with what they expected because the goal had never been communicated to them clearly enough.

Getting your mission statement to reflect your charity's mission is a good opportunity to refine your messages clarity.

How will you be different from other organisations?

If your charity does the same as another, without any differences or improvements, it may be much more efficient for you to support the existing charity instead. If a charity looks very similar to what you plan to set up, consider whether you could have a greater impact by supporting the other charity.

Another reason to not set up a charity that is too similar to another charity is it will be more difficult to get funds and resources. The more similar charities out there, the more competition your new charity will have, which can make it harder for that new charity to raise funds and achieve its aims. If there are no existing charities doing what you plan on doing, then it may be easier for your new charity to get off the ground.

What do you want to be known for?

It’s important to be clear on what your charity is about and what you want it to be known for right from the early stages. This is because people will initially form a first impression of it from what they hear. This can be very hard to alter. If you aren’t clear about what you stand for from day 1, you might find yourself spending many years where some people have an incorrect perception.

Step 4: Choose a name for your charity.

Once you've chosen the charity's purpose, you can start choosing a name for your organisation. In this section, we'll go over some of the things you may want to consider when choosing a name for your charity and some tips on how to do so.

• Choose a name that is easy to remember and spell. Otherwise, it will be harder to spread through things like word of mouth if people are constantly forgetting your name or don’t know what to type on a search engine. 
• Make sure your organisation's name isn't offensive.
• You should also make sure your organisation is not similar to an existing charity's name or a trademarked name.

Step 5: Develop a business plan that includes information on funding, staffing, programs and partnerships.

The business plan should be a detailed document that outlines your goals and how you will achieve them. It's a tool for you to use to help yourself achieve your goals, so it should include information on funding, staffing, charity structure, programs and partnerships.

A good business plan also includes an analysis of your competition as well as an explanation of how your charity is unique or different from other charities operating in the same field. The business plan may be used to apply for grants and funding.

Step 6: Incorporate your charity and apply for charitable status.

There are multiple legal structures that allow you to become a charity. In the UK, you apply for charitable status with the charity commission.

The Charity Commission has the power to register charities if they meet certain conditions so that they can begin using their charitable purposes within society. The charity must have charitable purposes that help the public.

If the Charity Commission accepts your application, you'll receive an official document telling you when you officially become a registered charity, as well as some other information about its tax status and any other rules which relate to carrying out its work effectively (such as filing the charity's annual income accounts).

Conclusion

It requires a lot of work, but the rewards are great. You will need to have a good team and a good plan, but you can become an incorporated charity with dedication and perseverance.

These are just some of the things that you need to consider when starting a charity. If you feel like there is something we have missed, please contact us at enquiries@greaterchange.co.uk

Disclaimer: This article should not be considered as advice, and the information contained may be out of date. You should not take any action based on the information contained in this article. You should do your own research and take professional advice.

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