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The Benefits of Registering as a Charity

The term "charity" is a legal bestowment that is reserved to organizations that meet the qualifications set forth in the Charities Act 2006.

Although there are many organizations in the UK that have very community-minded goals and are very worthy of your support, not all of these organizations are able to legally define themselves as charities. (To learn more about what it takes to become a Charity, please visit the article Distinguishing Official Charities Amidst a Sea of Charitable Causes)

Those organizations that do qualify as legal charities are able to reap several benefits from their distinction. First and foremost, the organization is able to label itself as a charity, which ensures that the public can easily understand that they are a not-for-profit organization dedicated to some aspect of society's betterment.

In addition, such organizations are able to stretch their resources and donations further thanks to certain financial benefits. For example, charities are often exempt from income/corporate tax, capital gains tax, stamp duties, and inheritance tax in the case of gifts. Moreover, normal business rates for buildings used by charities are usually capped at no more than 20% and, in some circumstances, charities can get special VAT treatment.

Finally, organizations that are recognized as charities are able to benefit from the resources of the government Charity Commission. These benefits include the added public trust since the organization is closely monitored by a government body, and the official legal advice that the Charity Commission can provide.

Of course, even the benefits of being a charity are moderated by the classification's limitations. In order to closely govern the operations of charities, the Charity Commission places restrictions on what charities can do, whom they can assist, and the manner by which they can operate. By failing to comply with these restrictions, an organization runs the risk of losing their official distinction as a charity.

Some organizations do choose to forgo the benefits of being classified as a charity in order to retain the freedom in their public service. In some cases, an organization's goal and manner of achieving that goal may even be inhibited by the restrictions of the Charity Commission.

For example, the following characteristics would prevent an organization from becoming an official charity, but may still assist in the organization's publicly-minded goals:

• Operating with non-charitable aims. An official charity must conduct exclusively charitable aims, ceasing any non-charitable activities.
• Exceeding the limited level of political and campaigning activities sanctioned for charities.
• Going beyond the strict regulations for financial trading.
• Compensating trustees with financial benefits such as salaries, services, and business contracts.

The value of an organization to our society is not necessarily determined by its qualification as a legal charity. Although the benefits of such a distinction are clear, there are many organizations that do not quality, but are still worthy of your support.

If you are considering supporting an organisation with either your time or your money you should consider the manner by which the organization is run, but, more importantly, you should seek an organization that matches your personal interests and values.


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