Is setting up a charity the right thing to do?
There are a lot of reasons why people decide to set up a new charity. However, setting up a charity is not always the best way to proceed and, in some cases, it may not be legally possible.
A charity is a particular type of voluntary organisation - one that takes a distinctive legal form. Charities must provide benefit to the public, not to a specific individual. Their aims, purposes or objectives have to be exclusively those which the law recognises as charitable.
In accordance with charity law, an organisation must also apply for registration as a charity in Northern Ireland if:
- it has exclusively charitable purposes
- it is governed by the law of Northern Ireland
- it is an institution, that is, it is an organisation that is an independent body, the hallmarks of which include having control and direction over its governance and resources.
Registered charities have to obey a number of rules and regulations set out in charity law. A registered charity, for example, is not allowed to have political objectives or take part in political lobbying (other than in a generally educational sense). Charities that are registered as companies have to comply with company law too.
These things may suit your aims or they may restrict what you want to achieve.
A registered charity can usually be given a special tax status and benefit from a number of tax exemptions and reliefs.
While you are awaiting registration as a charity with the Commission, it will still be possible to claim Gift Aid if you have been granted charitable tax status by Her Majesty's Revenue and Customs (HMRC).
HMRC assess applications for charitable tax status under the Finance Act 2010. If you already have charitable tax status before registering with the Commission, you will not need to reapply to HMRC and your HMRC reference number will remain the same.