Registering a CharityLegal Considerations | Practical Considerations | Type of Organisation
You may need legal advice about setting up a charity, depending on the type of organisation you intend to set up. It is advisable to take legal advice regarding your responsibilities as a Charity Trustee.
- All officials of charities, whether they are members of a committee, trustees of a charitable trust, directors of a charitable company, or officials with any other titles, are Charity Trustees. Charity Trusteeship involves legal responsibilities and duties, and failure to carry out these duties may result in criminal prosecution.
- Once a charity has been registered, it cannot be disbanded simply because the people running it decide that they no longer wish to continue. Charities can only be deregistered where there is no longer a need for the services provided by the charity, or if the charity has exhausted its endowment, ie no longer has any funds.
- Accounts have to be filed at the General Registry, each year, within 6 months of the financial year end. It is essential to keep proper records of all the income and expenditure of the charity, so at least one of the team members should be competent and experienced in book-keeping and preparation of accounts.
- The formal structure of the organisation should be carefully considered (see Type of Organisation below).
- A knowledge of the relevant legislation is essential to avoid breaking the law - the Charities Registration Act 1989 is the most important Act to become familiar with. It is a good idea to become familiar with the contents of other charity legislation, so that you can ensure that your charity stays within the law at all times. Breaches of the charities legislation can lead to criminal prosecution of Charity Trustees, with the possibility of fines or imprisonment if convicted.
Charity Trustees should familiarise themselves with any legislation which may affect the charity. This includes the following:
[Please note that whilst every effort has been made to ensure that the following documents are accurate, they are intended for general information and guidance only. For authoritative copies of current legislation please contact Tynwald Library (tel: 685520).]
Copies of the following can be obtained from the Tynwald Library (for a small fee):
- A long term, steady commitment is required, by a group of people, particularly if the charity is looking after its clients directly, for example, helping disadvantaged people or animals.
- Are there enough people to share the work? Three people is a recommended minimum, but more is better, to enable the workload to be shared, and provide backup if a key person becomes ill or has to drop out of the charity. This is especially important where there is direct client care.
- Does your group have the right mix of abilities and strengths? A charity needs people with the following skills: fund-raiser/event organiser, publicity organiser, book-keeping and accounting, a person who is good at ensuring that all the small detailed jobs are done, team leader, and whatever other skills and personal qualities are needed to cope with the charity’s planned activities. It is also very useful to have backups for key people, ie assistant treasurer, secretary etc if at all possible.
You will need to decide whether to set up your charity as an Unincorporated Association, a Charitable Trust, or a Limited Company.
This is the most usual type of organisation for small to medium charities. The charity is run by a committee, and its governing instrument (the document which sets out the objects of the charity and how the charity will be run) is a constitution (or Rules).
A constitution should contain the following:
- Name of the charity.
- Objects of the charity.
- Management: Executive committee membership, meetings, administrative and organisational information.
- Accounts: duties of Treasurer, preparation of accounts, appointment of auditor.
- Restrictions on payments to committee members by the charity.
- Property: should be vested in a small group of trustees, who should have specified duties in relation to the charity’s property.
- Powers of trustees to lend or borrow money, if appropriate.
- Annual General Meetings and Extraordinary General Meetings: timing of meetings, calling meetings, agendas, notice to members of meetings.
- Quorum: details of quorums required for committee and general meetings.
- Voting: eligibility to vote, method of voting - eg by show of hands or secret ballot.
- Termination of membership of any member of the charity.
- Complaints and disciplinary procedures.
- Powers to amend the constitution.
- Procedures for dissolving the charity.
A Trust is run by trustees, and its governing instrument is a Trust Deed.
If a charity is a large organisation, which will own property, employ staff, provide charitable services under contractual agreements and enter into commercial contracts, it may be appropriate to form a limited company. Most charitable companies are Companies Limited by Guarantee.
How to Register a Charity
You need a Registration Pack, please use the link in the table below. The Pack contains all the forms that you need to register a charity, and instructions for filling them in and applying for registration.
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