Setting up as a Charity
Church plants exist for charitable purposes under English and Welsh law – that is we exist to spread religion! As such when income grows to more than £5000 per annum, there is a statutory duty to register as a charity. An added benefit is that as a charity, you can register with the Inland Revenue for gift aid tax relief which will further boost income. This article outlines my experience in setting up as a Charity in two church plants and is in no way intended to be legal advice.
This article is about registering as a charity in England and Wales – different rules apply in Scotland and Northern Ireland.
At the point of formally establishing the charity you must have more than just vision and ideas. You need to be able to demonstrate to the Charity Commission that you are financially viable and ready to operate. Some evidence of income, or prospective income is normally expected .
What type of charity?
Currently there are two types of charity – charitable trust and charitable company
A Charitable trust is simpler to set up and operate. The disadvantage is that the trustees are
personally liable for debt, third party claims and so on.
A Charitable Company is registered with the Charity Commission and Companies House. The charity is then a legal entity in itself and any liabilities are to the Charitable company not the trustees themselves. An incorporated charity does not eliminate all risk but it does significantly minimise it. Charitable Incorporated Organisations are new type of charity that is due to start sometime until at least 2009. They are as yet untested and untried and Stewardship Services and Independent Examiners are both not recommending them.
How do I set up as a Charity?
If you are going to become a Charitable Company you will definitely to pay to get it done. Two well reputable organisations well experienced in charity formation, which do charitable trusts and companies are:
Independent Examiners – www.indepentexaminers.co.uk 01243 555611 Daryl Martyn is very willing to
give an hour’s free advice to Church planters.
Stewardship Services – www.stewardship.org.uk 020 8502 5600.
When setting up The Bridge Church, I used Stewardship Services and found them excellent. Second time round in King’s Lynn we did it ourselves pretty simply. The Evangelical Alliance have produced a model trust deed for leader led churches, which separates eldership from trustees and makes sure elders/leadership teams legally lead the Church! Using the EA model trust deed and filling in the blank allows a fast-track approach which has takes some plants just two weeks to become a Charity for very little work.
- Choose your trustees and get Enhanced Criminal Records Bureau checks done for them. Getting CRBs is usually the main hold up! When I last applied, the Charity Commission wanted to see them. Daryl Martyn of Independent Examiners reports that is no longer the case, although they would still need to be done. CRBs can take 6 weeks to come through. Some Newfrontiers Churches have umbrella status for handling CRBS, or you can use a local body for which an admin charge is made… http://www.crb.gov.uk/default.aspx?page=349 to find an umbrella body. You will need each trustee to provide identification documents in the application process http://www.crb.gov.uk/pdf/crb11%20guidance.pdf
- Create an ex-offenders policy statement is the CRB’s generic one CRB_DIP011-Policy-Statement_Ex-offenders_Eng
- Create a child protection policy safeplace document is our one
- Search the Charity Commission database for your intended trust name to make sure it is unique
- Download the Evangelical Alliance model trust deed and notes and fill in the blanks. http://www.eauk.org/resources/publications/trust-deed.cfm
- Hold a trustees meeting to sign the deed.
- Download and fill in the charity Commission forms from http://www.charitycommission.gov.uk/registration/regpack.asp
CC5a – Application for registration – you will only need to fill in parts for a fast-track application using the EA model deed.
CC5c – Trustee declaration. Make sure each trustee has a copy of CC3 – The Essential Trustee: What you need to know
- Send off the forms, policy documents and CRBs A number of recent plants have done the DIY approach with success.