The role of the Charity Commission.
The Charity Commission is an advisory body to the government that regulates charities in England and Wales. All charities in England and Wales must register with the Charity Commission if there is £5000 or more in the accounts. It is optional for other charities to apply for registration. Registering with the Charity Commission has advantages of building trust from the public and fund providers.
The Charity Commission monitors and hold charities to account. It regulates all aspects of the charity. If you register with the Charity Commission, you are responsible for producing annual accounts, preparing annual reports about your charity. The trustees or management team approve accounts and reports and are responsible for submitting these to the Charity Commission. Depending on the financial status, the Charities Commission can require that a charity’s accounts and reports be audited and inspected.
The Charity Commission has the power to challenge charities in the High Courts for breaches to the Charities Act or unethical practices. It has the power to advise or challenge the legal status of a charity and the effectiveness of its leaders. So, by registering with the Charity Commission, a charity can provide confidence in the public for its fund-raising activities and causes.
Charities that must register with Charity Commission
All charities with a turnover of £5000 must register with the Charity Commission. All charity incorporated organisations must also register and comply with the Charity Commission although some do not have to follow Company Law. The law requires that some charities register with the Charities Commission unless they are exempt or excepted.
Charities that are exempt from registration
Exempt charities do not have to register with the Charities Commission. These charities still operate under the charity law but are regulated by their own professional bodies. These include universities, schools and colleges, museums, churches and hospital trusts. They need to register with HMRC to claim tax benefits and tax relief.
Charities that are excepted from registering with Charity Commission
Some charities (excepted charities) are don’t not have to register with the Charities Commission. These include armed forces, charities funds, scouts groups, girl guide groups and some religious charities. Charities that are excepted from registering from the Charity Commission still need to apply to HMRC to be recognised as a charity to claim tax benefits.
What penalties are there if I don’t register my charity?
The Charity Commission can use its regulatory powers to investigate the legal status of an organisation operating as a charity. It also inspects and takes action on mismanagement and unethical practices in registered charities. The sanctions and penalties listed include:
- restricting the transactions that a charity may enter into
- appointing additional trustees
- ‘freezing’ a charity’s bank account
- suspending or removing a trustee
- appointing an interim manager
Professional advice is best if you want to start and maintain a charity as a credible and trusted organisation.
What causes you to want to establish a charity?
Bearing in mind, the specific purposes of a charity, consider the following achievements ambitions for your charity. Consider the following intentions when registering with the Charity Commission. Would you like to:
- Enable the expression and developments in the arts, cultural heritage, sciences, sport, religious and racial harmony?
- Promote cohesion, harmony, progression and diversity in communities such as disadvantaged groups, youth, the disabled, or the gifted and talented?
- Promote better education, health, citizenship and saving lives and animal welfare?
- Enhance the effectiveness of the armed forces, emergency services and saving lives?
If you would like to start a charity, no matter how small, its best to consult about the legal status of charities and which one would be more suitable for your charitable cause.