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Registered Charities in the UK

Within the UK there are known to be around 170,000 charities that have been registered by law as being charitable organisations. These charities will all be registered with the Charities Commission and be governed by strict criteria and guidelines so that it is recognised as a charity.

To be registered as a UK charity an organisation must demonstrate that it has ‘public’ benefit. By this is means that the charity needs to demonstrate that it is set-up for the public interest and its aims and objectives should highlight this. It is also vital that the charity has a ‘charitable purpose’ that is recognised by law. In the UK the Charities Commission recognises the following descriptions of charitable purpose:

• Prevention or relief of poverty
• Advancement of education, religion, health or the saving of lives, citizenship or community development, arts, culture, heritage or science, amateur sport, human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity, environmental protection or improvement
• Relief of those in need, by reason of youth, age, ill-health, disability, financial hardship or other disadvantages.

When an organisation passes these strict codes of conduct they can then register as a charity. The charity can be then be legally structured and there are three main formation structures a charity can take:

1. An unincorporated association is the most common form of charity formation and this structure means a contractual agreement is formed between all the individuals who want to create the organisation. The organisation will develop some governing document which will include the company rules to be adhered to and how membership of the organisation is created. The organisation however is not a legal entity and the main disadvantage to this is that the individuals of the company can be personally responsible for any debts the charity creates.

2. A trust is an agreement that has been formed between three parties. These three parties are the donor or owner of some assets, the trustees who own the assets and the beneficiaries (the beneficiaries in a charities case will be the people who benefit from the work of the charity). The charity will then be known as a ‘charitable trust’ and be ruled by Trust Deeds or a Declaration of Trust. Again with this type of legal structure the organisation is not a legal entity and if the charity is sued this means the trustees will be sued.

3. A company limited by guarantee is in essence a private limited company where all members’ liability will be limited. However, instead of the organisation having share capital its shareholders are members who are guarantors. This means that in the event that company closes its operations all members would agree to pay a nominal sum. This type of company formation gives members protection of limited liability and it is recognised as a company with a legal identity meaning it can enter into contracts.

In the UK there are many types of charities in operation and if you are looking to support a charity it will be worthwhile finding a charity that is registered. At present in the UK there are over 500,000 voluntary organisations but only about 170,000 are registered as charities so make sure that the charity you support is legitimate and that your donation or time goes to the most worthy cause.