We’re revisiting our theme of jargon busting this week by providing a comprehensive breakdown into the world of Charitable Organisations. What are Charitable Organisations, how do they differ from the other organisations we’ve spoken about before, and how are they managed differently from others?
Definition
To become a charity, an organisation must meet the definition as defined by the Charities Act in England and Wales* and must also fall into one of 13 categories to serve a charitable purpose.
A charitable organisation is:
- Established for charitable purposes only, and
- Subject to the High Court’s charity law jurisdiction
Within these 13 categories of charitable purpose, the charity must:
- Fall within the descriptions of the purposes
- Be for the public benefit
*Charities outside of England and Wales conform to a different definition.
Difference in Income
Annual Income Below £5,000
If a small charity has an income of below £5,000 it has the choice to remain unincorporated or they may register as a charitable incorporated organisation. Doing this comes with certain benefits:
- Allows the organisation to apply for charitable tax reliefs
- Gives charity trustees limited liability without the need for incorporation on Companies House
Annual Income Above £5,000
If the charity has an income of £5,000 or greater it is a requirement for them to register with the Charity Commission within their country, unless they have an exemption.
The Board
A charity’s board is commonly made up of “trustees”. All trustees must:
- Be recruited in accordance with the organisation’s governing documents
- Be over the age of 16 for incorporated companies or ICOs
- Be at least 18 years of age for any other type of charity.
Government guidance states that there are a number of reasons why individuals may not be eligible to become a trustee of a charitable organisation, and if circumstances were to change for any of these individuals they would have to step down from their position with immediate effect.
Support
We understand that it can be difficult when first getting to grips with these fundamental aspects of business. At Cygnul we are seen as trusted advisors to the Board for our clients, offering support to associations around the UK. If you want to explore how these services could help your organisation, please get in touch with us.
If you’re interested in finding out more about the types of organisations we work alongside, make sure to read out blogs on incorporated organisations and unincorporated organisations.