What Initial Points Should You Consider When Setting Up a Charity?

Before you go ahead with setting up a charity, you will need to consider a number of issues.

You will need to be satisfied that your plans are consistent with the constraints that apply to a charity (as opposed to some other type of organisation). For example, those constraints include the following requirements:

• all of a charity’s assets and profit must be applied only in furtherance of its charitable purposes
• it must have charity trustees
• trustees generally may not receive financial benefits
• it must not exist for political purposes.

You then need to consider and make a decision about the legal form that you will use to set up your charity. The choices are the following:

• charitable company limited by guarantee
• (CIO) charitable incorporated organisation (“foundation” or “association” model)
• charitable unincorporated association
• charitable trust. 

For some guidance to help you decide on which of these legal forms to adopt, see Charity Constitution Document Templates. 

For help with identifying the specific steps to be taken in relation to whichever of the legal forms you decide to adopt, see Charitable Company Formation Checklist, Charitable Incorporated organisation (CIO) Checklist, Unincorporated Charitable Association (UCA) Checklist, Charitable Trust (CT) Checklist, 

You will need to identify and appoint suitable initial trustees. They will need to have appropriate skills and experience, and they must be eligible to be charity trustees (as to which, see Who can be a trustee?) A charity will need a Chair, Secretary and Treasurer together with any further specific roles that you identify as necessary. A trustee will need to be appointed to each of these roles. 

Will the charity need to have members in addition to trustees? What will be the qualification for becoming a member?

Do you need to engage paid staff, and if so, what will their functions be and are you confident that you can recruit suitable individuals at the salaries that you are able to pay?

Do you need to rely on volunteers, and are you able to recruit an adequate number of suitable people?

Will you have access to adequate and suitable finance to launch and maintain the charity in the short and longer term? If you cannot obtain funds from donors, fundraising or grants, you might decide to use loan funding. If that loan funding will be provided by individuals, e.g. supporters or members of the charity, you might find it useful to document such loans by means of loan notes or promissory notes (see Loan & Promissory Note Templates).