Setting up a charity
Introduction
Elle’s career has taken off in the last few years. Following her return from her maternity leave, Elle has wowed fans with most spectacular saves in the Women’s World Cup. She is quickly becoming a household name and young girls and boys up and down the country look up to her as one of the best players on the pitch.
Elle acknowledges the influence she has over young people and wants to be a positive role model.
Making a positive impact:
Elle has recently taken a keen interest in charitable work and would like to give back to her community.
Elle is a strong advocate for LGBTQ+ and minority rights and is a firm believer in the power of sport to drive social change. She wants to use her newfound success to help others.
She has a vision of how she wants to make a positive difference and has been considering different ways she could bring this vision to life.
Elle is aware that some of her fellow sportsmen and women have set up charities in order to achieve their philanthropic and charitable goals.
Working with Mills & Reeve, Elle has decided to set up her own charitable foundation.
Benefits of charitable status: aside from being a vehicle by which Elle can pursue an interest she feels positively about, tax relief will also be available on the funds transferred to the foundation alongside public recognition and support.
Elle-evate:
Elle wants to create a charitable foundation which encourages young people to get involved in sports and widens participation in sport by creating a space where people from all backgrounds feel welcome. Elle recognises that there are a variety of barriers to getting involved in sports e.g. physical disabilities, financial background, being part of a group that is made to feel excluded, whether that be because of sexual orientation or gender identity.
Elle has decided to create her own sports club which runs free of charge football sessions for people from all backgrounds. The sports club would have a specific focus on diversity and inclusion so that everybody feels welcome.
The charity would also provide sporting kit and transport to training sessions for those who would otherwise not be able to afford to attend.
Elle has decided to call the charity Elle-evate.
Setting up Elle-evate:
Structure
The most common forms of structure used to set up a charity are 1) charitable trusts 2) charitable companies and 3) charitable incorporated organisations (CIOs).
A charitable trust is most suited to charities where the main or sole activity is grant making. Elle-evate will go beyond grant making as Elle wants to run sports sessions and employ coaches, with the potential for expansion in the future.
Charitable companies and CIOs can own freehold or leasehold interests in land, enter into significant contracts and employ staff so they can go far beyond grant making activities. Therefore, one of these structures would be most appropriate for Elle-evate.
CIOs are essentially companies but with the simplicity of a trust. CIOs are also cheaper to set up and administer than a charitable company as a CIO is only registered with the Charity Commission. A charitable company is required to be registered with both the Charity Commission and Companies House. As Elle-evate is a smaller-medium sized charity (with low risk), the complexities and additional burden of complying with company law could be onerous on Elle-evate.
Guided by the Mills & Reeve team, Elle has decided to set up her charity as a CIO.
Charitable purposes
To achieve charitable status, an organisation must be established exclusively for charitable purposes. The Charities Act 2011 sets out 13 charitable purposes. When making an application to the Charity Commission you must be able to explain what your charitable purpose/s are.
One of the charitable purposes under the Charities Act 2011 is the advancement of amateur sport (section 3(1)(g)) and this is one that Elle-evate would certainly rely on.
Registration with Charity Commission and HMRC
Now that Elle has decided on a structure for her charity and knows what the charitable purpose will be, it is time to take some practical steps to bring the charity to life.
Firstly, the charity needs to be registered with the Charity Commission. This step creates the charity and grants charitable status to Elle-evate.
Once the charity is registered with the Charity Commission, it can be registered with HMRC to claim tax relief.
These steps can be technical and difficult to navigate but Mills & Reeve have a wealth of experience guiding charities through the process seamlessly. With Mills & Reeve’s help, Elle-evate is now set up and ready to start making a positive impact!
Mills & Reeve are experts in setting up new charities, but also understand the importance of ongoing advice once the charity is established. By providing well-thought-out advice in relation to ongoing compliance obligations and governance, Mills & Reeve will support Elle-evate on its journey to making a real difference for years to come!