How to Form a Charity
There are a number of different ways to form a charity principally:-
- Charitable Trust
- Charitable Company Limited by Guarantee
- Charitable Incorporated Organisation
In each case once the legal “vehicle” to run the charity has been prepared an application is then made to the Charity Commission for confirmation that the organisation satisfies the criteria for a charitable status and can be registered.
This is formed by the preparation of a Deed of Trust. A Trust can be slightly cheaper to form and administer. However, Trustees face greater exposure to personal liability than do Directors of a company. Furthermore if the charity holds assets such as land - any change of Trustee requires alterations to the Deeds at the Land Registry - itself incurring extra expense.
A company is formed at Companies House. The charity is governed by company memorandum and articles. The charity then faces “dual” regulation by the Charity Commission and Companies House. Regulation under the company regime is more stringent. However, Directors are less likely to face personal liabilities (although they may still potentially do so).
Charitable Incorporated Organisation (CIO)
These organisations are a corporate legal entity – but regulated only by the Charity Commission (not also by Companies House)The Directors will have the same level of protection as those of a Limited Company. Companies can “switch” to CIO status.
We are able to advise you as to the most appropriate vehicle for your charity and to draft the necessary constitutional documentation.