Register a Charity

Legal Considerations

Legal Advice

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: +44 1624 685520).]

Copies of the following can be obtained from the Tynwald Library (for a small fee):

• Trustee Act 1961
• Trustee Act 2001
• Recreational Charities (Isle of Man) Act 1960
• Charitable Collections (Regulations) Act 1939
• Interpretation Act 1976, Section 3 (see above)

Practical Considerations

• 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.

Type of Organisation

You will need to decide whether to set up your charity as an Unincorporated Association, a Charitable Trust, or a Limited Company.

Unincorporated Association

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

Trust

A Trust is run by trustees, and its governing instrument is a Trust Deed.

Limited Company

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.

Requirement to Register as a Charity

The Charities Registration Act 1989 states that any institution which in the Island, or any Manx institution which in the Island or elsewhere 'takes or uses any name, style, title or description implying or otherwise pretends, that it is a charity; or holds itself out as a charity' must be registered as a charity.

If you are not sure whether your organisation should be registered as a charity, please seek independent legal advice or contact the Charities Section on +44 1624 687318.

Connection with the Isle of Man

All charities registered in the Isle of Man must have a 'substantial and genuine connection with the Island.'

Examples of a substantial and genuine connection with the Island are:

• Raising funds on the Island to provide charitable services for people or animals resident on the Island
• Raising funds on the Island, by an Island-based committee, to send elsewhere where needed, eg help to third world countries
• Raising funds on the Island, by an Island-based committee, to send to a parent charity in another country, usually England. The parent charities can include medical research and aid charities, and charities raising funds for the relief of poverty and for other charitable purposes
• An Island-based committee receiving funds from outside the Island, for example from charitable trusts or foundations which have been specifically set up to use these funds for charitable purposes on the Isle of Man

The final decision regarding whether an institution applying for registration has a substantial and genuine connection with the Island lies with the Central Registry.

How to Register a Charity

You need a Registration Pack, which can be found in downloadable documents. The Pack contains all the forms that you need to register a charity, and instructions for filling them in and applying for registration. The General Registry is bound by strict statutory timescales when considering an application, and if your application is not acceptable it will be refused.

To avoid the likelihood of refusal on administrative grounds, please proof-read your submission carefully to check, for example, that there are no typographical errors, that all paragraph numbers are correct and cross-referenced as appropriate. Please also ensure that your charitable objectives are clearly defined and that your constitution does not contain unneccessary detail which would be better placed in subordinate documents such as standing orders.

Remember that once a charity has been registered its constitution can only be changed following an application to the Court - this can be costly and time consuming so it is important to make sure that you get it right from the outset - if in any doubt you should seek professional legal advice.