Applying for charitable status:- help

[Stewart HartParticipant @stewarthart90345]

A friend asked me if I knew anything about applying for charity status for a club or society and If I knew what the requirements that they need to satisfy for a successful application. I went on the ugov web site to read up on the subject but I must admit that after 10 minutes my brains were starting to seep out of my ears. So is there anyone out there who has any experiences of going through the process who could a simple explanation what the basic requirement are for a successful application.

Thaks

Stew

[Stewart HartParticipant @stewarthart90345]

[SamsarandaParticipant @samsaranda]

Go to the Charity Commission website they have various documents that can be downloaded which deal with all the requirements that need to be complied with for Charity Registration, some of these documents are about 50 pages long and not easy to understand, there is no easy way to achieve compliance. They will be required to write a trust document and submit it for approval, I suggest that they look online at other similar organisations who have published their trust documents to help those who are registering their charities. I speak as one who chaired a Village Hall Charity for over 30 years and dealt with the Charity Commission, it ain’t easy, there is no quick way and what ever you put in writing you will be held legally responsible for, I wish them good luck, they will need it. Dave W

[pgk pgkParticipant @pgkpgk17461]

At one time I did consider creating a charitable branch of my business and I discussed it with my accountant who would have happily set up all the paperwork, Sadly it fell through due to the intransigence of the British protectorate that would have benefitted refusing to accept my UK qualifications instead of their usual USA requirements.
I’ve just had a quick dig about in some of the requirements that were melting your brain – and it seems that it fundamentally depends on size of income and whether the organisation owns property.

If income is under £5K then this quick guide may be a suitable start here

Legal structures for community groups and not-for-profit organisations

pgk

[Nick Clarke 3Participant @nickclarke3]

While not a legal expert I am trustee of two charitable organisations.

If you are not already a company there is no requirement to publish your accounts but if you become a charity you must annually and you must also maintain the list of trustees and publish an annual report.

Banks are becoming quite unfriendly to clubs – shutting branches, not giving cheque books and refusing to accept cash (eg from donations boxes, while charities and companies seem to have an easier time at present.

If you are a club all of the property is the property of all members and while this means if the club is wound up in theory all property should be shared however there is no mechanism apart from your own rules to stop it being done unfairly.

If you are a charity the disposal of assets in the event of the charity being wound up is part of the articles of the charity – and there could be restrictions on what you can do and the trustees are the only people with a say – while as a company or a club every shareholder or member could vote on an issue. For example who could benefit from the charity is set out when it is set up and trustees cannot benefit.

I the age profile of your charity is similar to many clubs and societies my advice would be to have plenty of trustees as the demise of a couple could make management difficult.

Charities can access some funding that clubs and companies cannot – but there are other sources where the reverse is true.

I do not know if 'club' insurance and boiler testing schemes can be used by charities – you need to check on this.

In the event of a catastrophic accident beyond the level of insurance all club members could be held liable, shareholders in a limited company have a limited liability and the trustees of a charity are the only ones in a club set up as a charity who could be held liable – hopefully never an issue.

 

Edited By Nick Clarke 3 on 05/12/2021 13:11:13

[John HaineParticipant @johnhaine32865]

I guess an important question is why a charity? If they are not raising money specifically for a charitable purpose then there are quite a few reasons why not. A limited company, possibly "by guarantee" could be more appropriate. We have a company which owns and maintains the land round our small estate of 10 houses. It raises money by subscription and spends it on land maintenance, insurance and so on. No profit is made. The reporting requirements are minimal. This link may help – it's specific to golf clubs but the principles are generally applicable.

**LINK**

[BazyleParticipant @bazyle]

Have a look at "CIC" Community Interest Company which might be suitable for your purposes. It is a lot easier, fewer hoops, fewer jobsworths looking over your shoulder. However it is a full company requiring registration with Companies House and the inland revenue and accounts etc submitted to both just like a company so quite arduous for a non-accountant. However unless you have a big turnover the small company process can be followed which is a bit easier but be warned you must do the returns months and months before the deadline because they won't bother to process them for 6-8 weeks, send them back for a missing full stop, and resubmission still take a month to accept all of which delay they blame on you.
A CIC is regarded by most fund donating organisations that are picky as being equivalent to a Charity. But still it is better to avoid formality if at all possible and just choose officers that are too rich AND honest (ie not politicians) to want to embezzle the funds.

[Dave Smith 14Participant @davesmith14]

I am involved at the moment in changing the status of the model railway club of which I am chairman and is currently a non incorporated organisation. The main reason for this is that our landlords are moving from a service letter agreement for our room rental, to a commercial tenancy. We have decided change to a Company Limited by Guarantee, having considered changing to a charitable status for a couple of reasons:

1 We are bunch of people who build model railways, we do do not anything which 'benefits the community' as charitable status requires you to do.

2. We have substantial assets and if the club is dissolved then the assets are distributed amongst the members. This is not permitted if you are a charitable trust, the assets must be passed to another organisation to use.

3 We think it is easier to take the potential hit on taxation of any profit than the additional hassle that goes with being a charitable trust brings.

We will classed as a micro entity which makes the annual accounting much simpler and does not require the accounts to be audited under the small company rules.

[Stewart HartParticipant @stewarthart90345]

Thank you for your insight and links Gents very useful

Stew

[Dave Smith 14Participant @davesmith14]

Stew

PM me your email address and I will send you some info I have which explains the process very simply.

Dave

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