Stewardship, the Christian financial support services group, explain how churches and community projects can set up a registered charity.

Setting up a charity can be a daunting prospect. You may have heard stories of long, cumbersome procedures, and how difficult the Charity Commission can be. Well, the good news is, it doesn’t have to be like that.

As with so many things, the key is to get the right advisor. They know how to navigate the smooth channels and avoid the rocks. Critically, they should set you up with a governing document and structure that is robust, future-proof and acceptable to the Charity Commission.

Finding the right advisor is critical, and not necessarily easy. Check their experience. It’s a specialist field and few solicitors are experts in it. Stewardship has extensive experience in this area, focussed particularly on the needs of churches and Christian organisations.

Alternatively, you could always do it yourself. The Charity Commission provides a lot of useful guidance and, provided you find the right governing document, the procedure is not rocket science. But be aware that the saving on fees can be more than offset by the potential delays and complications of going it alone.

Is a charity the right structure for you?
There are many benefits of having charitable status, but the downside is that you are more restricted on your freedom of operation and control.

	Benefits include: · Tax relief - e.g. Gift Aid (28% extra from the Revenue on gifts by taxpayers), plus no income/corporation tax. · Status – having a charity registration number can be invaluable, giving credibility to your work in the community. · Clear legal structure – if you are not a charity, what are you? If your status is unclear, there is a danger that you could be taxed as a private enterprise. Disadvantages include: · Limits on activities - for instance in relation to trading. · Charity Commission regulation – much of this is about good practice, sound management and accountability for any organisation. · Control - if single person ownership and control is important, the charity structure will not allow this.

When is the right time?
If you are looking to formally establish a charity, you must have more than just vision and ideas. You need to be able to demonstrate to the Charity Commission that you are financially viable and ready to operate. Some evidence of income, or prospective income of at least a few thousand pounds a year is normally expected. Anything below this and you have to query the value of setting up a charity.

What will the legal structure be?
The classic structure is the charitable trust. This is relatively simple and suitable if the charity is run by a small group of people. Another alternative is a charitable company, an increasingly popular model. While more complicated than a trust, being a charitable company can limit trustee liabilities in relation to potential claims that might be brought against the charity.

The governing document
Having decided on your legal structure, you need a specific governing document. If you have chosen the company structure it will be Memorandum and Articles of Association. If you want to become a trust, you will need a Trust Deed or Declaration of Trust.

But what will it actually contain? Your advisor will have model documents you can use, which have been developed over time and work! Resist the temptation to reinvent the wheel. That said, there is of course scope for tailoring, but listen to your advisor - they know where you might be storing up trouble for the future or potentially fall foul of the Charity Commission.

Charity Commission models (available from their website) are good to a point, but can be quite conservative, for example over trustee remuneration powers. If you are preparing your own, take care and try to work from something that has been previously accepted.

Trustees
You need at least three trustees to act as key decision makers for the charity. Paid church leaders can be made trustees with a suitable power included for this purpose. The Charity Commission are also becoming more flexible on senior paid employees of other charities being trustees.

Charitable purposes
Your charitable purposes will need to be wide enough to cover all anticipated activities. Be careful not to be too precise or limiting, and allow for wide geographic operation. These purposes also need to be expressed in ways recognised by the law and the Charity Commission as being charitable. (e.g. raising money for another charity’s activity is not a charitable purpose)

With a church or community project, you may want to include the object of advancing the Christian faith. You should first consider whether you need a specific Christian objective for your intended activities. Will it hinder your access to funding? If you are concerned about maintaining the Christian basis of your organisation, requiring trustees to adhere to a statement of faith or some other foundation statement could achieve this. What you choose will depend on your specific situation.

More information
For further information and advice about forming a registered charity, contact Stewardship on 08452 262627 or visit www.stewardship.org.uk.

Alternatively, visit the Charity Commission website on www.charitycommission.gov.uk - where you will find extensive guidelines relating to setting up and operating a charity.