A Comprehensive Guide to Charity Structures and Options
Navigating the world of charity structures can be a daunting task. With various options available, it's essential to understand the pros and cons of each to make an informed decision. In this guide, we'll explore the different charity structures and their implications.
1. Incorporated vs Unincorporated Charity Structures
Incorporated Charities:
Act as a separate legal entity, allowing them to own property and sign contracts in their name.
Offer a defined structure, protecting members from personal responsibility.
Require auditing if turnover exceeds £25k and submission of annual reports, leading to more administrative work.
Unincorporated Charities:
Offer flexibility in terms of membership and trustee work.
Easier to wind up if things don't pan out.
Trustees are personally liable for contracts and finances, and the charity can't own property or employ staff.
2. Independent Charities vs Subsidiaries
Independent Charities:
Operate with their own structure, allowing for the employment of different individuals.
Offer easier administrative and accounting processes.
Provide flexibility in decision-making.
Subsidiaries:
Can offer tax exemptions and relief if incorporated as a trading company.
Allow for increased donations through both structures.
Commonly used when there's a need to monetise work outside the main charity's purposes.
Can transfer profits to the main charity as Gift Aid.
3. Types of Incorporated Charities
CIO (Charitable Incorporated Organisation):
An incorporated organisation with its own legal personality.
Offers various formats and governing documents based on purposes.
Must be registered and accepted by the Commission to exist.
CIC (Community Interest Company):
A blend between a commercial trading company and a charitable company.
Can be established as a subsidiary to an existing charity.
Regulated by the Community Interest Companies Regulator and must be registered with the Companies House.
Companies Limited by Guarantee:
Registered with the Companies House with no shareholders or dividends.
Common for clubs and community projects.
Can be registered with the Charity Commission.
Conclusion
Choosing the right charity structure is pivotal for the success and smooth operation of your charitable organisation. By understanding the nuances of each option, you can make an informed decision that aligns with your charity's goals and objectives.
For more resources on charity structures and options, consider visiting the following:
General Info on social enterprises
Disclaimer: This article serves as a guide and does not constitute legal advice. Always consult with professionals when making decisions related to charity structures. You can contact us here for more information.
