Charities throughout the UK are regulated by the Charity Commission. The Charity Commission offers charities advice and guidance, and in the event a charity regulated by them is facing issues the Charity Commission is able to intervene and take action where necessary.
The accountability that accompanies registration with the Charity Commission assists in obtaining donations as people are more likely to donate to a registered charity due to the transparency afforded.
It is advised charities should register with the Charity Commission on creation. The initial work involved in registration can be significant and in the early days of a charity being established the efforts of the trustees may be better placed elsewhere. The expected success of a charity is also unknown and for smaller charities, the trustees may prefer to delay registration until the charity is operating in accordance with its charitable purpose. If a charity therefore falls within the exemptions, registration can be delayed, if not avoided entirely if appropriate.
The main class of charities that may be exempt are:
- Educational Charities;
- Museums and Galleries;
- Community Benefit and Friendly Societies, including Social Housing providers;
- Church of England and Methodist Church Investment Funds; and
- Charities with an income below £5,000.
Whilst charities falling within the above exemptions are not required to be regulated by the Charity Commission, most will be regulated by other regulators. For example, educational charities may be regulated by the Higher Education Funding Council for England and others by the Financial Conduct Authority.
The exemptions most likely to attract no regulation are those set up for Community Benefit and with an income below £5,000. This allows smaller local charities to operate smoothly with minimal interference which is often required whereby smaller charities may have less rigid structures in place and rely on the assistance of the community.
Exempt charities are not bound by the rules set out in the Charities Act 2011 allowing a degree of flexibility where suitable. Charities that have not registered with the Charity Commission are still able to obtain advice from the Charity Commission albeit their assistance is limited when compared to the registered charities.
It should be noted the exemption to register with the Charity Commission does not extend to HMRC. Any charity receiving donations should be registered with HMRC and file returns where required.
If you would like any advice on charity registration please do not hesitate to contact a member of the Charity Team.
How can Nelsons help
Stuart Parris is an Associate in our expert Dispute Resolution team, specialising in inheritance and Court of Protection disputes.
If you require any advice on the above subjects, please contact Stuart or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online enquiry form.
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