Setting up a Charity (England/Wales)

There are advantages to having a trusted legal organisation 

as well as responsibilities. Let’s get started…!

Considerations before you start

What are the benefits of being a charity?

There are six key advantages to having charitable status:-

1. Recognition as `bona fide’ and trustworthy.

2. Rate relief on any premises you occupy: you are entitled to 80% relief, with the  possibility of a further 20% at the discretion of your rating authority. This can be  further extended to 100% relief if your Centre is registered as a ‘Place of Religious  Worship’. Guidance for the procedure for doing this can be found on the Triratna Centre Support website.

3. Relief from direct taxes such as corporation tax, income tax, inheritance tax, and  capital gains tax.

4. Tax benefits on gifts made to the charity through covenants, gift aid and legacies.

5. Some possible advantage in the payment of VAT. For details contact customs and  excise.

6. You may raise funds from trusts and donors that only give to registered charities.

Are there downsides?

Obviously there are requirements that need fulfilling to be a registered charity – these are outlined in more details in the Trustee’s Handbook (link) but include:

  • keeping good records of meetings and decisions
  • producing an annual report about its activities which demonstate it is fulfilling its aims and is of benefit to the public
  • maintaining good financial records which need independent examination once the turnover is more than £25,000 (they need an audit once over £1 million)

Charities must only undertake charitable activities. The following two areas are not usually regarded as charitable:

1. Political activity – charities cannot exist primarily for political purposes, although they  can campaign and lobby when to do so is: relevant to the Charity’s objects; in the  interest of the charity’s beneficiaries; not party political; is not the main work of the  charity.

2. Commercial activity (trading) – charities can carry out a trading activity if it directly  furthers the primary purposes of the charity, or if it involves the sale of things  produced by the beneficiaries, or it involves charging for services provided to the  beneficiaries (e.g. meditation tuition) or the sale of donated goods. Other commercial  activity may be undertaken if it is incidental and ancillary to the charity’s main work.

You may not consider these ‘downsides’, just what is required and what are the restrictions.

You could also consider opening an ‘unregistered’ charity, for the purposes of having funds held not by an individual. You can’t employ, enter into contracts etc, but if you’re income is unlikely to hit the £5k threshold (at which point you have to register) it might be the easiest option. No Gift Aid though. More details here

What sort of charity should we go for?

The Charity Commission consider 4 structures of charity but the one that is always advised in recent times is the CIO (Charitable Incorporated Organisation) which offers limited or no liability to trustees.

Within that, there is a choice of either a Foundation or Association model. Most Centres would choose the Association model where trustees are re-elected at the AGM, and local (or other) Order Members are ‘members’ of the charity and vote on who the trustees are.

The Foundation model is where the Trustees select other Trustees themselves and there are no members.

Opening of York Buddhist Centre (Oct. 2022)

What you will need

To start an application, go to this site

Find your trustees

You’ll need the names and details of at least 3 trustees – there is a middle way between being small and nimble (so it’s easy to arrange meetings) and being a larger body of trustees (which will extend the skills/experience to call upon, as well as allowing more chance of a quorate meeting). Most Triratna charities have between 5 and 10.

Make sure none of them are inelligible.

All trustees should understand their responsibilities and should be familiar with this handbook.

Create your constitution

It is advised by the Charity Commission to be as near to their suggested one as possible. Here is one that has been accepted in recent years – you just need to ‘make a copy’ and then replace the xxxx with the relevant details:

CIO (Association) Constitution

If you’ve decided you want a Foundation CIO, here’s a similar document

If you make changes from their agreed/approved constitution you need to explain why.

Be mindful of this in completing your application....

There are a few things to bear in mind that will help you succeed:

a) Make sure you explicitly state that your proposed charity has precedence, i.e. that there are already over 40 existing Triratna charities in England & Wales and you are the same kind of charity as them and linked to them.

b) In particular, explicitly state that you applying to adopt a CIO governing document that has already been accepted by the Charity Commission: that of the Mid Essex Buddhist Centre which was entered onto the Register of Charities with the Registered Charity Number 1172278 on 27 March 2017

c) When filling in your application form make use of the MEBC’s detailed response to the specific questions from the Charity Commission; see document 3 for this.  The suggestion is that it seems the CC wants quite thorough answers to certain areas of the registration document, and as Mid Essex provided satisfactory answers (on the second attempt) you might save yourself time and trouble by writing in similar detail. You will also find some useful advice (in the right margin of this document)

d) It is important for trustees to be very clear that this constitution permits a MINORITY of charity trustees or connected persons to receive payments and other benefits. Importantly, this must be obvious from your trustee meeting minutes. They need to show that, and how, you have managed any conflict of interest (e.g. by noting that a person in question left the room for the discussion and was not involved in the decision)