What Steps Are Required to Set Up a Charitable Organization / Non-Profit?

April 17, 2013
/ Relationships
/ By Jacob A Irwin
/ 2 COMMENTS

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The following is a guest post. Enjoy!

With more than 150,000 charities around today, we take our hats off to you if you’ve managed to find a worthy cause that’s not yet covered. However, if there’s an already established charity doing the same good work, it’s worth making donations to them, or volunteering for the cause. For some fantastic volunteering opportunities that match your concerns, check out this page. Or if you’d like to do good for all sorts of causes, consider working with the Charities Aid Foundation – a non-profit organization that works to financially support all charities.

Contrary to what you may think, charities can be tricky to establish – it’s often like starting up a business, but with all the added complications of charity law! But, if you still are not dissuaded from pursuing your own charity, here’s some helpful advice.

Can Your Organization Become A Charity?

To be considered a charity in the eyes of the law, you must a) exist for the public benefit and b) only conduct charity.

The kind of causes that are established as ‘for the public benefit’ can be anything from supporting the arts to helping to relieve poverty. For a comprehensive look at what qualifies, read the Charity Commission’s guidelines. If your cause doesn’t quite come under already specified, beneficial causes, you may want to consult a lawyer before proceeding further.

The Business Of Charity

If you plan to run your charity like a business (read: purchasing property and employing staff), you have to treat it like one.

Draft up a constitution or ‘governing document’ that details what you want to achieve through your charitable works and how the organization will be run. For more guidance on how to prepare your governing document, head to the Charity Commission’s website. You should factor in tax and legal costs here, as you establish your corporate charity. Like any business, you should have your own account and company plan.

Charity Commission, Are You Necessary?

If you plan to draw in a significant amount of donations each year, you’ll have to register with the charity commission. Do not start taking people’s money until this is finalized. You could be waiting for more than 40 days to receive your completed registration, so use this time to brainstorm the finer points of your charity and start making plans. The Charity Commission will probably ask you a lot of questions about how you foresee your charity growing, so make sure you have all the answers. Talk to a charities solicitor, if you’re not sure which rules apply in your country.

Choosing Your Trustees

Jointly responsible for running the charity, a trustee has a lot of responsibility on his or her shoulders. The trustee’s role is explained on the Charity Commission’s website. To ensure that you get the best support possible, you should enlist three separate trustees with a variety of skills. Trustees cannot be paid for their work and it’s considered a voluntary service.

How about you all? Have you ever set up or know any one that has gone through the steps of officially creating a non-profit/charity?

Was it harder or easier than you would expect?

Share your experiences by commenting below!

***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/f/f7/Contract_signing.jpg

About the Author Jacob A Irwin

Hi folks! My name is Jacob. I am the owner and operator of My Personal Finance Journey. I started this blog in January of 2010 and have enjoyed the journey ever since. Since finishing up graduate school in Virginia in 2014, I have been working in biopharmaceutical development in Colorado. You can read more about me and this site here. Please contact me if you have any questions!

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Jenny@FrugalGuru says:

April 18, 2013 at 12:32 am

There are so many well-run charities already–I just donate to them! I use Charity Navigator to make sure they use donations responsibly. :_
My recent post Want A Deal? Just Ask.

MyPerFinJourney says:

April 18, 2013 at 2:52 pm

Thanks for your comment Jenny! That's what I do as well. What's your favorite charity to donate to?

Reply

What Steps Are Required to Set Up a Charitable Organization / Non-Profit?

Can Your Organization Become A Charity?

The Business Of Charity

Charity Commission, Are You Necessary?

Choosing Your Trustees

About the Author Jacob A Irwin

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