Charitable Status
Introduction
If your organisation
is a registered charity, then this brings with it an added set of
responsibilities. The organisation is likely to have chosen charitable
status for the advantages that it gives in potential sources of
funding, rates relief, exemption from corporation tax, and eligibility
for tax relief on donations and covenants. It also gives some restrictions
on how the organisation operates, of which you need to be aware.
You need:
- to know about
restrictions on a charity's operations and ensure that the organisation
operates legally
- to ensure
that the organisation fulfils the reporting requirements for charities
- to ensure
that the organisation satisfies the requirements on insurance,
and fund-raising.
Unpaid Directors
Unless specifically allowed within your constitution, the governing
body (Directors, Trustees, Committee) of the organisation cannot
normally receive remuneration from the company, eg cannot be paid
staff or freelancers receiving a fee.
The members
of the governing body of a charity must avoid any conflict between
interests of the organisation and personal interests.
Other Restrictions
The organisation's activities cannot be directly political. The
definition of political here is far wider than party political,
and includes campaigning.
A charity cannot
trade, unless this is very closely associated with its primary purpose,
for instance charges for admission to the arts events. Minor trading
such as cups of coffee and programmes is acceptable, but major activities
such as restaurants, bars used by the public not attending the arts
events, the hire of facilities for private or commercial use etc
are not allowed. Your organisation may already have a separate trading
company operating alongside the charitable organisation which donates
its profits to the charity.
There are reporting
requirements to the Charity Commissioners, and also requirements
on insurance, and stipulations on fund-raising activities, in particular
the use of professional fund-raisers. Registered charities must
state that they are a charity or include their charity number on
letterhead, cheques and any fund-raising information.
Further information
is available from the Charity Commissioners
Charitable status
is undergoing a major review at present. See the Charity Commissioners
website and the legal update service (see below) [link www.sandy-a.co.uk],
NCVO and Directory of Social Change for commentaries on it.
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