When setting up a Not-for-Profit entity, it is important to ensure that the structure you choose is right for your purpose. Here, we give an overview of the main forms to consider.
Charity
A charity must have ‘charitable purposes’ that help the public. This is known as being ‘for public benefit’. Charitable purposes include things that contribute to, for example: relieving poverty, education or the protection of the environment.
The gov.uk website offers guidance on writing your charitable purposes and you can read more about public benefit here to decide if your aims are suitable for setting up a charity.
https://www.gov.uk/setting-up-charity/charitable-purposes
https://www.gov.uk/guidance/public-benefit-rules-for-charities
Check that being a charity will not stop you doing things you want to do, as there are restrictions. For example, charities cannot conduct certain political activities, like campaigning for a change in government.
Community Interest Company (CIC)
A CIC is a company that helps the public but is not a charity. Read our blog about setting up a CIC and check out the guidance on setting up a CIC here to see if this is a suitable structure for you.
https://www.torgersens.com/blog/setting-up-a-cic-points-to-consider/
https://www.gov.uk/government/publications/community-interest-companies-how-to-form-a-cic
Collaboration with another entity
Check whether there is a not-for-profit organisation that is already doing what you want to do. Working with another entity could be more effective than setting up a new one.
Social enterprise
This is a business that has social, environmental, or community-based objectives. The rules on ‘charitable purposes’ do not apply.
Set up a named fund or a trust
You can set up a named fund if you want to raise money for a certain cause. This saves the time and effort of setting up and running a not-for-profit organisation.
Set up a fund through a community foundation
If you have more than £10,000 to donate you could set up a Charities Aid Foundation (CAF) charitable trust. Please note that you can’t set up a charity to benefit an individual.
Further help
If you’d like advice on the form of not-for-profit entity that will work best for you, then please drop us a line at enquiries@torgersens.com.
