Small charities – how do we sign up?

Information for supplementary schools running charitably and with under £5,000 income

Source: The Small Charities Coalition

http://www.smallcharities.org.uk/starting-new-charity-faqs/

When can we register our charity?

If your annual income is likely to be less than £5,000 you are not required or able to register with the Charity Commission. Once your income exceeds this, provided that your organisation / project is charitable, you are obliged to register with the Charity Commission.

The Charity Commission has resources to support charities that are ready to register.

If your charity is a CIO, you are required to register with the Commission regardless of the charity’s income. Registering your Charity – Charity Commission

How do we define our charity if we are too small to register?

As long as you adhere to charity law (e.g. have charitable purposes, can prove public benefit) you may refer to your organisation as a charity. DO NOT use the word(s) “registered” or “charity status” or anything else that may mislead funders, donors or the public. If your charity has an HMRC number you may wish to state this fact e.g. “our charity is a not-for-profit organisation recognised as charitable by HMRC for tax purposes” but DO NOT quote your actual tax number – this could make your charity vulnerable to fraud.

How do we prove our legitimacy to funders and donors without a registration number?

Be as open and transparent as possible when you market or fundraise on behalf of your charity and be very careful not to mislead potential funders and donors with confusing language regarding your non-registered status. The key is to build trust and confidence with your funders and donors and there are a number of ways you can do this:

• Have an online presence so that potential funders and donors can read up about the work you do.
• Make your Governing Document (or parts of it) available on your website or in printed form to further prove you are who you say you are and to demonstrate the good work you are fundraising for.
• Any charity, no matter how small, can register with HMRC for tax purposes. This is particularly useful when claiming Gift Aid. By registering with HMRC you receive recognition for your charitable purposes and so give your charity further legitimacy.

HMRC Guidance on Applying for Recognition as a Charity for Tax Purposes

How do we open a bank account if our charity is not registered?

Unfortunately, there’s not a lot of consistency when it comes to opening a bank account. Some banks insist on an HMRC number, and others will only recognise registered charities. However, it is possible to open a charity bank account or similar specialist account without being registered with HMRC or the Charity Commission.

As well as charity bank accounts, some banks offer other specialist accounts, such as “Community”, “Not for profit” or “Clubs and Charities” accounts (e.g. NatWest). There are also specialist charity banks (e.g. CAF Bank, Unity Trust Bank), as well as high street banks out there.

Finding the right bank for your organisation can be a difficult process, so it is worth spending some time researching and speaking personally to a number of banks to find out if they can meet your needs and what they require from you.

If for whatever reason it is not possible to register a bank account in the charity’s name, your Treasurer may consider opening a personal one, but do so separately from any other account he or she may have. If possible, facilitate two signatures to sign cheques. Additionally (but certainly if the latter cannot be done) make a statement to the other Trustees to the effect that the Treasurer holds money in Account X on behalf of the charity, and to leave that statement with the charity’s records.

(Thanks to Allan Hargreaves of OMNIS Tax Consultancy for his contribution)

How do we register with HMRC for tax purposes?

Visit the HMRC Charities webpage (or more specifically the part about charitable recognition). You will need to complete the ChA1 form, so do read all the guidance provided to do this. Please be aware that as part of your application, you will need to provide supporting evidence of your charitable purposes, and normally a Small Charity Constitution will not suffice. You will probably have to consider developing one of the longer model Governing Documents provided by the Charity Commission. HMRC also expect your charity to already have a bank account set up.
Applying for recognition as a charity for tax purposes – HM Revenue & Customs

Registering for Gift Aid infographic – HM Revenue & Customs

If you have any questions, call the HMRC Charities Helpline (0845 302 0203). They are usually very helpful.