Hello and welcome to this recording from Support Cambridgeshire, a partnership of Cambridge CVS and Hunts Forum. This module is the 2nd of several short recordings we have developed to help people set up their own community group. We consider how you know if your group is a charity and what this means. There are links to useful information to support you in the transcript.
Why does it matter?
- Charities can access grant funding and tax advantages unavailable to other groups
- People are more likely to donate to a charity
- Because of these advantages, charities are required to follow rules set by the Charity Commission even if they are not registered.
What makes a group charitable?
- Charities are independent organisations, which are established for purposes that add value to the community, or a significant section of the community, and which are not permitted by their constitution to make a profit for private distribution. Charities do not include local government or other statutory authorities.
- To be charitable an organisation must be set up exclusively to achieve charitable purposes as defined by charity law
- You must also be set up for public benefit to ensure the benefit will outweigh any potential harm and will apply to a sufficient section of the public.
If your group’s aims meet both these criteria, then you are a charity even though you may not be registered with the Charity Commission.
Who runs a charity
- Charities are managed by volunteers known as trustees, although some groups call them something else such as committee members, governors or directors, Charity trustees are the people who share ultimate responsibility for governing a charity and directing how it is managed and run.
What are charitable purposes?
- As already mentioned, to be a charity you must be set up exclusively to deliver one or more of the 13 charitable purposes defined in charity law
- Charitable purposes include the prevention or relief of poverty, the relief of those in needs by reason of youth, age, ill health, disability, financial hardship or other disadvantage and the advancement of animal welfare. The guidance in the accompanying links explains how the law interprets these purposes in very specific ways.
- If the aims of your group are not exclusively about one or more of the charitable purposes outlined in legislation and/or you are not benefiting a sufficient section of the public then it is not a charity.
Can you meet the public benefit test?
- It must be clear what the benefits of your charity are
- They must be related to the aims of the charity
- The benefit must outweigh any harm
- The benefit must be for the public or a section of the public
- Where the benefit is to a section of the public, the opportunity to benefit must not be unreasonably restricted:
o by the ability to pay any fees charged
o People in poverty must not be excluded from the opportunity to benefit
o Any private benefits must be incidental
The Charity Commission give some examples:
If you were set up to display art under the advancement of art purpose, you may need to provide evidence of artistic merit. Or if you were set up to run training programmes under an advancement of education purpose you would need to show evidence of learning having taken place.
Many organisations are set up to do things which benefit a particular community or group of people, or that are generally understood to be ‘good’. Not all of these organisations will be capable of being charities. This is because not everything that benefits the community, or a group of people is necessarily charitable. Crucially, an organisation should identify precisely what activities it undertakes, and show that it carries out its activities amongst people who are disadvantaged in some way may be by their age or ill health or because they are experiencing financial hardship. The organisation must demonstrate that its activities deliver improvement for the people it is set up to help.
You are NOT a charity if…
- You are not set up to exclusively deliver one or more of the 13 charitable purposes and you are not benefiting a sufficient section of the public.
If you are not a charity
- You can write your own rules within the law
- You do not have to report to the Charity Commission.
- If you are setting up a sports club there is likely to be an umbrella organisation for your sport that can offer a template and Sport England can also offer advice. There is a link to this in the information in the transcript of the recording.
Your next steps?
If you think your group is charitable check out our recording What structure will you choose?
Need some help? For more support, you can contact us on email@example.com