Choosing Whether and How to Set Up a Charity

Use this section before you commit to a legal structure or draft a governing document. It covers the three questions every founder should settle first: is a charity the right vehicle, will what you propose count as a charity in law and which structure suits your plans.

Is a charity the right choice?

A charity brings public trust and tax advantages, but it also brings regulation, trustee duties and restrictions on how funds can be used. For some aims a community group, a members' club, a social enterprise or an ordinary company may be a better fit. The Guidance Note: Is it necessary or appropriate to set up a charity? works through these trade-offs.

Will it be a charity in law?

An organisation is only a charity if all of its purposes are charitable and it is established for the public benefit. If any purpose is not charitable, the organisation is not a charity. The Guidance Note: What Makes an Organisation a Charity in Law? explains the test in plain terms.

Which legal structure should I choose?

The main options are a charitable company limited by guarantee, a charitable incorporated organisation (CIO), an unincorporated charitable association and a charitable trust. Each has a different registration route, a different governing document and different consequences for the trustees. The Guidance Note: Setting up a new charity introduces the choice and there is a separate formation checklist for each of the four structures setting out the steps the Charity Commission and, for a charitable company, Companies House will expect you to have covered.

When you have chosen, the governing documents for each structure are in the Set Up Your Charity section.

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