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Setting up a Charity Business

All you need to know about starting and running your business

Business guides » Setting up a Charity Business

What is a Charity Business

A charity, or charitable organisation, is an institution that aims to benefit the public. It is a non-profit organisation that is established specifically and exclusively for charitable purposes.

A charity can help in many different ways, including:

  • Providing physical support, e.g. food, water, shelter, resources and equipment.
  • Providing emotional or mental health support.
  • Provide financial help or support.
  • Providing practical support, e.g. household repairs, taking people to appointments, providing transport, preparing meals and offering respite.
  • Helping people learn new skills or complete a training or education programme.
  • Providing information.
  • Providing advice.
  • Raising awareness of an issue.

 

Every charity must have a charitable purpose that helps the public in some way. This ensures that the charity has a public benefit. Your charitable purpose (sometimes known as the charity’s mission) is the reason your charity has been set up and what you are working to achieve.

Your charitable purpose can relate to many different public benefits, including:

  • Relieving or preventing poverty.
  • Advancing health or saving lives (e.g. preventing and treating cancer).
  • Advancing education.
  • Advancing religion or culture.
  • Protecting or improving the environment.
  • Advancing animal welfare.
  • Advancing social or public welfare (e.g. relieving unemployment).
  • Advancing human rights, conflict resolution or reconciliation or promoting religious or racial harmony, equality or diversity.
  • Advancing citizenship or community development.
  • Advancing the arts (e.g. music, theatre, literature, painting and sculptures), culture, heritage or science.
  • Advancing amateur sports.
  • Relieving those in need (e.g. because of youth, age, ill health, disability or financial hardship).
  • The efficiency of the armed forces, police, fire or ambulance services.
  • Supporting the rescue services, such as lifeboats, air ambulances, mountain rescue and first aid services.

 

When determining your public benefit, consider:

  • What your charity is set up to achieve.
  • Who your charity is designed to benefit (e.g. the section of the public or animals that will benefit from your charity).
  • Where your charity will operate and deliver services (this could be a specific town or region, the UK as a whole, a specific country or on a worldwide basis).
  • How your charity will achieve its purpose.

 

A charity brings together many different people who care about a specific cause so that they can make a difference. This can be trustees, volunteers, donors and supporters.

There are many different ways a charitable organisation can get the funds they need. This is known as income generation.

Some of the ways your charity can raise funds are:

  • Fundraising, e.g. through:
    – Donations, including one-off donations and regular direct debits.
    – Fundraising events, such as galas, bake sales and auctions.
    – Door-to-door fundraising.
    – Sponsorship, e.g. for events such as running a marathon or skydiving.
    – Receiving money from a person’s will.
    – National fundraising days, e.g. Red Nose Day, Christmas Jumper Day and Children in Need.
  • Grants, e.g. from the government.
  • Trading (selling goods or services), e.g. a charity shop.
  • Making investments.
  • Leasing, letting or selling land or buildings.

 

To maximise your income generation, it is recommended that you don’t rely on a single source of income. Instead, multiple methods of raising funds are likely to be more successful. Your income streams should be spread across several different types of sources (e.g. fundraising events, government grants and corporate donations), or you could have several funding relationships or funding strategies within the same type of income generation.

When setting up your charity, you will need to appoint trustees or a board of trustees. Trustees have overall control and responsibility for the charity and are entrusted to ensure the charity is doing what it is set up to do. You can act as a trustee for your charity, although you will also have to appoint other trustees.

A trustee has six main duties:

  • Ensuring the charity is carrying out its purposes for the public benefit.
  • Complying with the charity’s governing document and any laws and regulations.
  • Acting in the best interests of the charity.
  • Managing the charity’s resources responsibly.
  • Acting with reasonable care and skill, using their skills and experience, seeking appropriate advice (if necessary) and putting the appropriate time, thought and energy into the role.
  • Ensuring the charity is accountable.

 

As well as the responsibilities listed above, there are other duties associated with running a charity business. The day-to-day responsibilities can vary depending on the type of charity you run, the size of your charity and how directly involved you are in running the charity and managing the day-to-day responsibilities.

Some of the tasks you may be responsible for include:

  • Ensuring the charity is meeting the set expectations, purposes and objectives.
  • Creating the charity’s mission, policies and strategies.
  • Attracting new funding.
  • Fundraising in multiple ways, such as charity events, door-to-door fundraising and sponsorship events.
  • Sourcing funding by contacting businesses, trusts and individuals.
  • Recruiting, organising and managing volunteers and paid employees.
  • Organising or helping at charity events.
  • Developing and coordinating web-based fundraising.
  • Applying for government funding.
  • Overseeing corporate fundraising.
  • Promoting and advertising the charity, creating communication campaigns to increase awareness at local and national levels and encouraging donations.
  • Motivating and facilitating supporters to maximise the charity’s funds.
  • Encouraging and inspiring new donations.
  • Creating and maintaining relationships with donors to encourage consistent support.
  • Identifying and managing risks and not taking unreasonable risks that could affect the charity’s finances or reputation.
  • Collecting and managing donations, including cash, cheques, card payments and direct debits.
  • Deciding how to use charity resources and donations.
  • Keeping your charity’s members and the general public informed of any changes or necessary information.
  • Communicating with co-trustees, members of the board and members of the charity when necessary.
  • Ensuring the charity complies with all legal guidelines.
  • Ensuring the charity carries out its intended purpose, as set out in the governing document.
  • Keeping detailed and accurate financial records (e.g. income and expenditure).
  • Preparing an annual financial report for submission to the Charity Commission.
  • Managing your donor database.
  • Carrying out risk analysis and balancing time-cost ratios.
  • Working to high ethical standards.
  • Complying with all legal requirements.

 

Starting up a charity business can be extremely rewarding, both personally and to the public. A charity can make a real and significant difference in the lives of people or animals and can create positive change. If you are thinking of setting up a charity, you will first need to determine your charity’s cause. Choosing a cause you are committed to or passionate about is recommended, as this will ensure you are personally invested and passionate about ensuring your charity succeeds and fulfils its purpose effectively.

As well as a commitment to your charity’s mission, an understanding of the legal responsibilities of your charity and the laws and regulations you must comply with is essential. A desire to constantly grow and improve, compassion and empathy and strong interpersonal skills are also recommended. It is important to remember that a charity is also a business. A strong understanding of how to make your charity succeed, a flair for business and the ability to be creative are also important.

Types of Beneficiaries

There is a hugely diverse number of individuals, families, communities, organisations, industries and animals that can benefit from or use the services of your charity. Similarly, the type of donors your charity is likely to appeal to and receive donations from can vary significantly.

Multiple factors can influence the types of donors and beneficiaries that your charity is most likely to work with, for example:

Your charitable purpose

This will be the most important factor in determining the donors and beneficiaries your charity will work with. For example, a charity that specialises in providing skills and educational training to people recently released from prison is likely to have different donors and beneficiaries compared to a charity that works with families that have experienced baby loss. When setting up your charity, it is important to consider your charitable purpose and determine the sector of the public that will benefit from your charitable purpose, as well as the donors that are most likely to offer support and donations to your charity.

Your charity’s operating location

Where your charity will operate and deliver services is another key determiner of who your typical donors will be and who will benefit from your charity. You may operate your business in a specific town or region (for example, you may focus on relieving unemployment in Glasgow), you may focus on the UK as a whole or a country within the UK (for example, solving homelessness in the UK) or your charity may operate on a worldwide basis.

How you raise funds

Your strategies for income generation will significantly impact the donors who are more likely to donate to your charity. For example, if you fundraise through sponsorships (e.g. marathons), your typical donors will include the friends, families and colleagues of the individuals competing in the events. If you fundraise through corporate donations, your typical donors will be made up of businesses and corporations who support your cause or who are looking to increase their charitable donations.

How well known your charity is

The renown of your charity will depend on multiple factors, including:

  • How you promote and advertise your charity (e.g. televised advertisements).
  • Your charity’s communications.
  • The areas your charity operates.
  • The size of your charity (e.g. income and expenditures) and the size of your charity’s reach (e.g. the extent of the public that benefits from your charity).
  • The reputation of your charity.
Charity Business Cartoon
Charity Cartoon
Charity Business Setup Cartoon

Equipment You Will Need

The type of equipment you will need depends on factors such as:

  • The type of charity you are setting up.
  • The fundraising you specialise in.
  • Whether you have a business premises.

 

Although the required equipment can vary, below is a list of equipment typically required by a charity business.

A website

Your charity’s website will be one of the most important tools for running your business. Your website gives vital information about your charity and will give donors and members of the public a way to contact you, seek advice or help or offer donations. Your website will also include your charity’s mission, information about the help you offer and upcoming events, and may also have forums and support links. Your website should be well-designed, easy to use and search engine optimised.

Reliable laptops or desktop computers

You will need high-specification, reliable laptops or computers that can handle the amount of time you will be using them each day. If you plan to work from different locations or take your computer to in-person meetings with you, you will need a laptop, rather than a desktop. Your computer will be an important tool in your charity business as you will use it to conduct research, advertise your charity, conduct video calls and meetings, handle online donations and complete business and administrative tasks. Depending on the size of your charity, you will likely require multiple computers.

A donation system

The type of donation system you require will depend on the different ways your donors are able to make donations to your charity.

Some ways you can accept payments and track your donations include:

  • Collection boxes.
  • Collection tins.
  • A till and POS system.
  • An online payment system.
  • A charity bank account (e.g. for direct debits).

 

Fundraising packs

To help your volunteers and people who are fundraising or collecting donations for your charity, you will need fundraising packs.

These packs can include:

  • Information about your charity.
  • Sponsorship forms.
  • Fundraising ideas.
  • Risk assessment templates.
  • Games.
  • Posters.
  • Leaflets.

 

Badges and lanyards

Anyone fundraising for your charity (particularly if they are fundraising in the community, collecting donations at an event or fundraising door-to-door) will need to wear an ID badge that states the charity they work for and a landline number for the charity. To make your charity easily recognisable, the ID badges should also feature your charity’s logo.

A camera

A camera can be beneficial as a way of advertising your charity and gaining awareness and exposure. You can take pictures and videos of different aspects of your organisation, for example, fundraising events, packaging equipment or volunteers working hard. To ensure your photos and videos are of high quality and represent your charity positively, you will need a high-quality, reliable camera.

The camera you choose will depend on multiple factors, such as:

  • Your budget.
  • The type of photos and videos you plan to take.
  • Where you plan to publish the photos and videos (e.g. your website, social media, a newspaper).
  • Whether you require built-in audio.

 

Camera accessories

Many different camera accessories can be beneficial for helping you to photograph and film better content more efficiently and to help you advertise your charity.

This can include:

  • A tripod.
  • Lighting (e.g. reflectors or ring lights).
  • Mounts.
  • An external microphone.
  • Camera lenses.
  • A camera bag.
  • A camera cleaning kit.

 

Reliable and high-speed Wi-Fi

You will need Wi-Fi to help you run your charity. To help you run your charity business effectively, you will need to ensure your Wi-Fi is reliable and high-speed, particularly because many of the tasks you need Wi-Fi for, such as video and conference calls, require a strong and consistent connection. Ensure your Wi-Fi has a minimum connection speed of 20 megabytes per second (Mbps).

A printer

You will need a printer for tasks, such as printing paperwork and printing fundraising packs, leaflets, posters and other advertisements. You will likely need a printer that prints on paper of different sizes. Choosing a printer that comes with an in-built scanner can also be beneficial.

As well as your printer, you will also need:

  • High-quality printing paper and card of different sizes.
  • Black and coloured ink.

 

An email service

Setting up your own email service using your own domain may be beneficial as your business grows. A business domain can make your charity seem more professional and official. Using a public email domain such as @google or @hotmail can look less professional compared to using your own business domain, for example, @helpthehippos.co.uk. You will need to make sure your email service is fully secure and encrypted and abides by email security policies in the UK.

Business software

Business software can have a variety of uses, including:

  • Organising and managing daily operations.
  • Managing payments and expenditures.
  • Managing and tracking donations.
  • Accessing client information.
  • As a payroll tool.
  • Creating, tracking and sending invoices.
  • Scheduling appointments and meetings.

 

Depending on the business software you opt for, you could also have tools for increasing your revenue, including marketing tools. Many types of business software come with a mobile application for easy access on the go.

Business phones

Business smartphones can be used for keeping in contact with people involved in your business, conducting business phone calls and sending emails. Having business phones helps to keep your charity business separate from your personal life. Depending on the size of your charity, you may require multiple phones. If you offer telephone support to the public or accept telephone donations, you will need multiple landline telephones to allow your employees or volunteers to connect with multiple people at one time.

Headsets with microphones

If you do not use a headset with an attached microphone when making phone calls, the quality of your sound will be significantly impacted. Your phone or computer microphone can pick up background noises, which can be distracting and can create an echoing sound. A headset with a microphone results in higher-quality sound and enables you to hear your meetings and phone calls more effectively. A lack of background noise can also help members of the public who contact your charity to feel more at ease, as they will not feel like they are being overheard. You can opt for a wireless or wired headset.

A Microsoft Office subscription

You can utilise Microsoft Office for a variety of tasks, such as tracking finances in Excel, preparing documents and letters in Word and accessing Teams or OneDrive. You can also share documents through Microsoft, making it easier to communicate without having to schedule a meeting.

Electronic signature tool

To create a faster and more streamlined service, you will need an electronic signature (e-sign) tool. Having this tool will save you a significant amount of time compared to physically mailing each document when a signature is required (e.g. when you need a trustee’s signature). An e-sign tool allows you to email documents that need signing and receive an electronic signature immediately. Electronic signatures are legally recognised in the UK.

Storage equipment

If your charity handles equipment or resources, you may need storage equipment. The type of storage equipment you need will depend on the size, weight and volume of equipment you will be storing.

You will likely require industrial storage equipment, such as:

  • Pallet racking.
  • Static shelving.
  • Mobile shelving.
  • Multi-tier racks.
  • Boxes.

 

Delivery vehicles

You may need to deliver equipment and resources to members of the public, businesses or organisations. Depending on the size and volume of your equipment and the number of deliveries you need to make, you may require multiple delivery vehicles, most likely delivery vans. To help your charity gain exposure, you should also install adhesive door and body panels with your charity’s name and logo, your contact information and your charity’s mission.

Stationery

Several pieces of stationery can be beneficial to your charity business and can make it easier for you to make notes and plan meetings.

Some stationery you can purchase includes:

  • Pens and pencils.
  • Paper and notepads.
  • A diary and/or calendar.
  • Highlighters.
  • Post-it notes.
  • Folders.
  • Binders.
  • Envelopes and stamps.

 

Office furniture

Whether you run your charity from home or open a physical business premises, you will need to furnish your office with sturdy, good-quality furniture and equipment. The amount of furniture you require will depend on the size of your office and the number of employees you hire. Ensure the furniture is an appropriate height and doesn’t require you to strain your neck or back.

Some of the furniture you may require includes:

  • Office desks.
  • Ergonomic office chairs.
  • Secure filing cabinets.
  • Shelving units or storage cabinets.
  • A paper shredder.
  • A clock.
  • Lamps and lights.
  • Long tables (for meetings).
  • A kettle and coffee machine.

 

A CCTV system

If you run your charity from a premises, CCTV can protect your business from potential break-ins and theft. CCTV can also protect your business in the event of an accident, an incident or an allegation. You can choose the specification of the equipment and how many cameras you require.

 

 

There are many other types of equipment you may require to run your charity. For example, if you set up a charity shop selling clothing, you will need equipment to furnish your shop. If you are thinking of setting up a clothing shop, consult our business guide on setting up a clothing shop to find more information on the type of equipment you will require.

You may also need different equipment for different fundraising events. You will likely not purchase this equipment every time, as your equipment requirements can vary significantly from event to event. For example, the equipment you require for a charity gala will be very different from the equipment you require for a charity race or a children’s event. Instead of buying vast amounts of equipment, you can rent equipment separately for each event.

Charity Business

Typical Costs

When you are setting up your charity, an important consideration you will need to make is your expected start-up costs and running costs. Calculating your expected costs allows you to determine your initial investment requirements, your pricing strategy and your income goals.

There are multiple costs associated with setting up and running a charity. Some of these costs will be one-off initial costs that you will need to pay when you are setting up your business. Other costs will be ongoing costs you will need to pay regularly – usually weekly, monthly, quarterly or annually.

Although the costs can vary depending on the type of charity business you set up, some of the typical costs you can expect are:

Your premises

If you operate your charity from a business premises (e.g. an office, call centre or warehouse) or you run a shop to help you sell goods to raise funds, the cost of renting or purchasing your premises will be a major expenditure. You will need to rent your premises on a monthly or annual basis. Rental prices can vary significantly, depending on the location and the size of the premises. City centre locations and newly built premises usually have the highest rental costs. Rental costs are often calculated per square metre and can range significantly, from £500 to £15,000 per square metre annually. Alternatively, you could opt to purchase your premises upfront or take out a mortgage.

Refurbishment and installation costs

Unless your premises previously operated in a similar capacity and is already perfect for your needs, you will need to refurbish or convert your premises to install the equipment you need for your business and to make your premises fit for purpose. You may be able to do much of the work yourself, although you may need to hire professionals for jobs such as improving the lighting, installing a bathroom and installing equipment and furniture. Refurbishment and installation costs can start from as little as £500, depending on the scale of work required.

Equipment

Your equipment is an important purchase, as without it you will not be able to run your charity. Consult the list above to determine the type of equipment you require. The cost of your equipment can vary significantly, depending on how much equipment you require and the specification of the equipment. You may opt to purchase less equipment initially and then expand your equipment as your business grows. You can expect to spend between £3,000 and £30,000 on equipment. Keep in mind that if you rent equipment for fundraising events, your equipment costs will rise.

Maintaining, repairing and replacing equipment

Repairs, maintenance and replacements are ongoing costs you will need to factor into your budget. Although some of your equipment will come with warranties or guarantees, repairs and replacements are inevitable because much of your equipment will experience frequent usage and technology, such as laptops and phones, generally only have a lifespan of a couple of years. Maintaining equipment and ensuring it is used correctly can extend its life, but potential repairs and replacements should still be factored into your budget.

Monthly and annual equipment costs and subscriptions

Your monthly and annual subscription costs could include your Wi-Fi, website, email service and your secure storage. Depending on which subscriptions you require and the specifications of the ones you choose, expect to pay between £40 and £150 per month.

A vehicle

You may require a vehicle to transport equipment and resources, for example, for collecting donations or when setting up a charity event. You will likely choose a van as this will allow you to transport more equipment at one time. The cost of a van can vary, depending on whether you purchase it new or second-hand. Prices typically start at £5,000 for a second-hand vehicle and £25,000 for a new vehicle. You also need to incorporate your vehicle running costs into your budget, including your vehicle insurance, petrol, MOT, services and the costs of any repairs. These costs can vary significantly, depending on the age and condition of your vehicle, the level of insurance you choose and the amount of travel you need to do. Typically, you can expect to pay between £50 and £150 per month.

Your business website

Your charity’s website is an essential advertising tool, as it allows donors and the general public to find your charity online. You should ensure your website is attractive, functional, informative and easy to navigate. You should also utilise search engine optimisation (SEO) so that your website ranks highly on search engines, such as Google. Your website will need regular monitoring, updating and upgrading. You also need to make sure your website is secure, particularly if you will be collecting any personal information or banking details. You may choose to set up and run your website yourself or hire someone to do this for you. You can expect to pay between £20 and £100 per hour for someone to set up and run your website.

Branding

Branding is an essential expenditure for your charity. It can help you to establish your charity’s identity, make your charity and your mission easily identifiable to the general public and set you apart from other charities. Branding could include creating your charity’s visual identity, a logo and your charity name, and creating your website. You can hire a professional to help you with branding or do some of the work yourself. Branding can cost between £500 and £10,000, depending on the amount of branding you require.

Advertising and marketing

To ensure your charity business succeeds, becomes well known to the general public and maximises its income, you will need to invest in advertising and marketing. It is recommended that you spend no more than 1%-3% of your annual income on marketing. For example, if your charity’s annual income is £900,000, you should spend between £9,000 and £27,000 on advertising and marketing. You may need to invest more money when you initially set up your charity or when you are trying to grow your charity business. Advertising and marketing expenditures can include television and radio campaigns, online advertisements, leaflets, posters, talks and presentations and email campaigns.

Running costs

These are the day-to-day costs associated with running your charity. Some running costs are paid monthly, and others are paid quarterly or annually. If you open an office, shop or another business location, your running costs can include electricity, gas, water, council tax and insurance. To maximise your income, try to keep your running costs as low as possible.

Staff

Although charities usually utilise volunteers, you may also need to hire permanent employees. If you hire employees on a permanent basis, you will need to pay them at least the national minimum wage and account for other expenses such as holiday pay, sick pay and maternity/paternity pay.

Business insurance

Insurance is recommended to help protect your business, your donors, the general public and anyone associated with your charity.

Some insurance coverage you could opt for includes:

  • Public Liability Insurance.
  • Trustee Liability Insurance.
  • Professional Indemnity Insurance.
  • Employers’ Liability Insurance (if relevant).
  • Business Interruption Insurance.
  • Legal Protection.
  • Building and Contents Insurance (if relevant).
  • Equipment Insurance.
  • Travel Insurance (if relevant).
  • Events Insurance.

 

Insurance prices can vary significantly, depending on your insurance provider and the level of coverage you require. Prices typically start at £10 per month.

Safely Running a Charity Business

Safety measures and safe practices are essential when running your charity. Safe practices are designed to protect the health, safety, well-being and finances of your donors, beneficiaries, people associated with your charity and the general public.

Some ways you can safely run your charity business include:

Protect fundraisers

Depending on the type of fundraising strategies you use, your fundraisers may be out in the community, running events, visiting businesses or going door-to-door. It is important that any employees or volunteers are protected when fundraising for your charity.

Some ways you can keep your fundraisers safe include:

  • Make sure you know where your volunteers or employees are and when their shift starts and ends.
  • Record any incidents of abuse, assault or crime and report these to the police.
  • Ensure employees and volunteers are contactable at all times.
  • Advise door-to-door volunteers and employees not to enter people’s homes.

 

Comply with the Code of Fundraising Practice

The Code of Fundraising Practice was created by the Fundraising Regulator and applies to all fundraising that is carried out by charitable organisations in the UK. It ensures a high standard of fundraising and ensures honesty, openness and respect between fundraisers and the public. Although the code reflects the law and is designed in line with laws relating to fundraisers, it is not designed to be a legal handbook.

The code lays out the responsibilities of your charity relating to:

  • Your behaviour when fundraising.
  • Accepting, refusing and returning donations.
  • How to deal with complaints and concerns.
  • Paying fundraisers.
  • Using funds.
  • Solicitation statements.
  • Collecting money.
  • Processing donations (including cash, cheques, card transactions, direct debits and gift aid).
  • Fundraising involving children.
  • Fundraising involving volunteers.
  • Professional fundraising and commercial participators.
  • Fundraising communications and advertising.
  • Online fundraising platforms.
  • Fundraising events.
  • Lotteries, competitions and draws.
  • Legacies.
Charity
Charity Business Volunteers

Ensure trustees follow good practice

Although there are some legal requirements that your trustees must ensure they comply with, there are also some recommended duties that can help to ensure good practice and help you to run your business more safely and effectively.

To ensure good practice, your trustees should:

  • Implement financial controls.
  • Set a budget and track it carefully.
  • Protect the charity from financial crime (e.g. theft or fraud).
  • Manage risks relating to charity resources and finances.
  • Ensure they understand the charity’s purposes and objectives.
  • Plan, review and update the charity’s work and the charity’s objectives.
  • Act in good faith and in the charity’s best interests.
  • Keep accurate records of income and expenditure.

 

Carry out risk assessments

Risk assessments are a legal requirement for businesses with more than five employees. However, even if your business has fewer than five employees, risk assessments are still recommended to ensure the safety of anyone involved in your charity, including volunteers, donors and beneficiaries. Risk assessments can help you to identify any potential hazards and risks in your business and how these can be reduced or eliminated.

As part of your risk assessment, you should:

  • Identify hazards.
  • Determine who could be at risk.
  • Evaluate any potential risks.
  • Implement relevant safety measures.
  • Record the results of the risk assessment.
  • Review the risk assessment regularly.

 

Implement safety measures

If your charity operates from a premises or uses a premises for any fundraising (for example a charity shop), you will need to employ some safety measures on your premises. Safety measures can help to protect your charity, your equipment and any visitors.

Some safety measures you should implement include:

  • Install a CCTV system.
  • Install an alarm system and secure and reliable locks.
  • Keep a fully stocked first aid kit on site.
  • Ensure that other safety equipment, such as fire extinguishers, is easily accessible.
  • Wear Personal Protective Equipment (PPE) where necessary.

Legal Requirements

Complying with legal requirements is essential when setting up and running your charity business.

The regulations can vary depending on:

  • The type of charity you set up and the charitable purposes.
  • The annual income of your charity.
  • Whether you hire volunteers or paid employees.
  • Where your charity operates.
  • How you collect donations.
  • Whether you have a charity premises.

 

Some of the legal requirements you should be aware of include:

Charity Legal Requirements

Create a governing document

When setting up a charity, you need to create a governing document (also called a rulebook) that specifies exactly how your charity is run.

Your governing document will need to specify:

  • Your charity’s purpose.
  • Who runs the charity.
  • How the charity is run.
  • How you will appoint trustees.
  • Rules about trustees’ expenses.
  • Rules about payments to the trustees.
  • How to close the charity.

 

The type of governing document you need will depend on the structure of your charity.

Choose the correct structure for your charity

When setting up your charity, you will need to choose your charity’s legal structure.

There are four main charity structures:

  • Charitable incorporated organisation (CIO).
  • Charitable company.
  • Unincorporated association.
  • Trust.

 

The type of charity structure you need will depend on factors such as:

  • Who runs your charity.
  • How your charity is run.
  • Whether you employ paid staff.
  • Whether the charity owns land or property.
  • Whether you deliver charitable services under contractual agreements.
  • Whether members can vote on important decisions.
  • How your charity is governed.

 

Register your charity

You are required to register your charity with the Charity Commission if its income is £5,000 a year or more or if your charity is a charitable incorporated organisation (CIO).

When registering your charity, you will be asked to provide information about:

  • The charitable purposes of your charity.
  • The public benefit of your charity.
  • Proof of the charity’s annual income and most recent accounts.
  • The charity’s name.
  • The bank or building society details.
  • The trustees’ names, dates of birth and contact details.
  • A copy of the charity’s governing document.

 

The requirements for registering your charity can vary depending on where in the UK your charity is registered. Once your charity is registered, you must:

  • Inform the Commission of any changes (e.g. to the governing document or the trustees).
  • Send an annual return or annual update to the Commission.
  • Send annual accounts or reports to the Commission (if required).
  • Report any serious incidents that occur in the charity to the Commission as soon as possible.

 

Comply with the Charities Act

The Charities Act was introduced in 2011 and amended in 2022, with changes coming into effect in June 2023. The Act is designed to regulate charities and give charities greater freedom and the power to manage their assets and activities.

Although this Act is extensive, some of the key points include:

  • The purpose of your organisation must be exclusively charitable.
  • It defines the terms charity and charitable purpose.
  • It determines whether your charitable purpose is acceptable and in line with public benefit.
  • It sets out the legal obligations of charities in the UK.
  • It specifies that facilities provided by charities must be provided in the interest of social welfare and satisfy the basic conditions.
  • It states how land or buildings owned by the charity can be sold or disposed of.
  • It states that trustees and connected persons can be paid for providing goods and/or services.

 

Comply with the Charities (Protection and Social Investment) Act 2016

This Act sets out legal requirements for charities to demonstrate their commitment to protecting donors and the public from poor fundraising practices. It provides strict regulatory powers to the Charity Commission, any person operating a charity, or any person acting as a trustee.

Under this Act:

  • The Charity Commission has the power to fight a charity or trustee’s abuse of power.
  • People can be disqualified from acting as a charity’s trustee.
  • More controls are in place regarding charitable fundraising.
  • Charities have the statutory power to make social investments (e.g. to further your charity’s purpose or to achieve a financial return for the charity).

 

Comply with trustee legal duties

Trustees have independent control and legal responsibility for your charity’s management and administration.

A charity trustee must:

  • Act in the best interests of the charity.
  • Manage the charity’s resources responsibly.
  • Act with reasonable care and skill.
  • Ensure they are eligible to be the charity’s trustee.
  • Ensure the charity is carrying out its purposes for the public benefit.
  • Ensure the charity complies with legal requirements and its governing documents.
  • Declare any conflicts of interest or loyalty.
  • Deal with any conflicts of interest and loyalty.
  • Act collectively with other trustees.
  • Be able to demonstrate that the charity is complying with the law.

 

Ensure your charity is for the public benefit

Your charity must be for the public benefit and all decisions must be made with the public benefit in mind. The status of your charity and your charity’s operations and accountability must all be for the public benefit.

As part of your legal requirements, you must be able to explain:

  • The purpose of the charity.
  • Why your charity’s purpose is beneficial.
  • How your charity’s purpose benefits the public or a section of the public.
  • How your charity will carry out its purpose for the public benefit.

 

Obtain a criminal record check

If your charity or charitable work involves children or vulnerable people, you will need to apply for a criminal record check to check your suitability to work with vulnerable people.

The type of check you require depends on the country you live in:

  • England: Disclosure and Barring Service (DBS).
  • Wales: Disclosure and Barring Service (DBS).
  • Scotland: Protecting Vulnerable Groups (PVG) Scheme.
  • Northern Ireland: AccessNI.

 

Comply with door-to-door fundraising regulations

If you plan to utilise door-to-door fundraising to generate an income for your charity, there are multiple legal regulations you will need to comply with:

  • Apply for a licence from the local authority.
  • Be aware of Cold Call Control Zones (CCCZs).
  • The fundraiser should wear an ID badge that states the charity they work for and a landline number for the charity. Their badge must be clearly displayed.
  • Do not knock on people’s homes or businesses after 9 pm.
  • You cannot fundraise door-to-door in groups of more than two people.
  • Fundraisers cannot enter a person’s home unless that person invited them in.
  • Fundraisers should never collect banking information such as the card number, PIN or security code.

 

Comply with the Bribery Act 2010

The Bribery Act makes it an offence for any person in the UK to directly or indirectly pay or receive a bribe. The Act applies to transactions that take place in the UK or abroad. As a charity, it is your responsibility to put adequate procedures in place to prevent bribery or corruption from taking place. For example, gifts, hospitality or charitable donations may be considered as bribes if they are given with the intention of influencing decisions (such as the way the charity is run or where charity money is spent) or influencing the relationship with the charity. Charities must ensure ethical behaviour and financial probity and refuse any donations if they suspect bribery or corruption is taking place.

Name your charity

When naming your charity, there are certain guidelines you must follow. Your charity’s name:

  • Must not be similar to the name of an existing charity (unless you can prove the name is necessary to your charity).
  • Must not use words you don’t have permission to use (e.g. trademarks).
  • Must not use offensive words or offensive acronyms.
  • Must not be misleading.
  • Must include a translation of any non-English words.

 

Your charity name can include abbreviations or acronyms and your charity can have an alternative name it is known by.

Ensure you have the correct policies in place

There are many different policies required by law in the UK. Depending on the type of charity you run, UK laws specify that charities should have a policy framework in place that ensures they are operating in line with laws and regulations, that they are protecting people from harm and that they are managing money effectively.

There are many different policies you can implement, relating to:

  • Governance: Including your code of conduct, Memorandum of Understanding (MOU) and conflicts of interest.
  • Fundraising: Including accepting and refusing donations, performing your due diligence, ethical fundraising, fundraising with volunteers and grant agreements.
  • Finances: Including reserves, expenses, cash handling, investments, anti-money laundering, anti-bribery and risk management.
  • Safeguarding (children and young people): Including protecting people from harm, raising safeguarding concerns and handling incidents and allegations.
  • Human Resources (HR): Including safeguarding, bullying and harassment, volunteer selection and whistleblowing.
  • Social Media: Including social media guidelines and policies.
  • Operating Internationally: Including operating overseas and staying safe overseas.
  • Complaints: Including handling complaints and concerns.

 

It is the responsibility of the trustees and the trustee board to ensure your charity has the correct policies in place and that the policies are implemented effectively and are complied with consistently.

Comply with the Finance Act 2022

The Finance Act includes legislation that specifies that charities and other organisations that are entitled to UK charity reliefs are not managed or controlled by persons who may misuse any tax reliefs that the charity receives. The managers of a charity must be ‘fit and proper persons’. Your charity must also ensure it prevents the abuse of tax reliefs.

Comply with the Equality Act 2010

Under the Equality Act, all charities in the UK must not display any form of discrimination when accepting donations, working with volunteers, appointing trustees or allocating funds. You must be aware of the protected characteristics under this Act, which include age, sex, race, religion, disability, sexual orientation, gender reassignment, marriage and civil partnership, and pregnancy and maternity. Your charity must not discriminate based on these protected characteristics. If you believe any discrimination is taking place or you receive a report of discrimination, you should address this immediately and report the discrimination to the Charity Commission.

General Legal Requirements

The following legal guidelines apply to businesses, including charities, operating in the UK.

Comply with the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations (RIDDOR) 2013

RIDDOR states that you must report all injuries, diseases and dangerous events that occur in your charity, including when fundraising, during charitable events, on your premises or involving your charity’s facilities or equipment. Reports must be made to the Health and Safety Executive (HSE) using an appropriate recording document.

Appoint a competent person

A competent person should be appointed to help your business meet your health and safety legal duties. You can act in this role yourself or appoint another person to fulfil this role. The competent person should have the skills, knowledge and experience to identify any hazards in your business and put controls in place to protect people from harm.

Prepare a health and safety policy

The law states that every business in the UK, including charities, must have a specific policy for managing health and safety. Your policy should state exactly how you will manage health and safety in your business, who is responsible for specific tasks and how and when these tasks are completed. Follow the recommended tips from the Health and Safety Executive when creating your health and safety policy. You should make your policy easily visible to any visitors to your business.

Comply with employment legislation

If you employ any staff to work for your charity, you must ensure you follow employment legislation, including the Employment Rights Act (1996) and the National Minimum Wage Act (1998). You must also comply with legislation relating to recruitment, working hours, sickness, discrimination, dismissals, and maternity or paternity pay.

Comply with the General Data Protection Regulations (GDPR) and the Data Protection Act (DPA)

Data protection is designed to protect the personal information and banking information of your donors, beneficiaries, volunteers, trustees and employees. You must comply with both pieces of legislation when storing or sharing personal information, such as your customers’ personal information, contact details and banking information. You must also apply for a Notification to Process Personal Data Licence. You will also need to apply for a licence with the Information Commissioner’s Office and renew your registration every year.

Comply with consumer protection legislation

Legislation is in place that is designed to protect the rights of individuals and to prevent businesses from using unfair practices. If your charity sells goods or services as a way of raising funds, you must comply with this legislation.

Consumer protection legislation you must ensure you comply with includes:

  • You cannot make false claims about yourself or the service or goods you provide.
  • The service or goods you provide must be up to the expected standard.
  • Services must be performed with reasonable care and skill.
  • You must provide a description of the goods and the total price of the goods.
  • Products should be of good quality and fit for the intended purpose.

 

Comply with the Provision and Use of Work Equipment Regulations (PUWER) 1998

PUWER regulations apply to you and any employees you hire. You must ensure any equipment that your purchase or use in your charity is fit for purpose and is maintained and inspected regularly. You must also ensure that health and safety risks are minimised to an acceptable level, that you have the correct knowledge and training to use the equipment, and that protective measures are put into place. Equipment should also only be used under appropriate conditions.

Comply with the Electricity at Work Regulations 1989

The Electricity at Work Regulations state that any workplaces that use electricals must construct electrical systems in a way that prevents danger, maintain electrical systems to ensure they are safe, ensure electrical equipment is checked by a competent person annually and conduct Portable Appliance Tests (PAT). If you have a charity premises or land or buildings belonging to your charity or your use electrical equipment in your business, you must ensure you comply with these regulations.

Comply with fire regulations

If you have a business premises, as the charity’s owner, you are responsible for fire safety measures on your premises. There are multiple fire regulations you must ensure you comply with.

For example:

  • Perform a fire risk assessment.
  • Comply with the Regulatory Reform (Fire Safety) Order 2005.
  • Implement any necessary fire safety measures.
  • Implement emergency procedures and ensure these are clearly displayed.

 

Ensure your website is disability friendly

Under the Equality Act (2010), all websites in the UK must be accessible to people with disabilities. If you set up your own website, you must make reasonable adjustments to your website to ensure it is accessible, for example:

  • Having text-only versions of each page so that they can be read by text converters.
  • Ensuring your website is accessible without using a mouse.
  • Ensuring your website is accessible without using a mouse.

 

Ensure your website complies with the guidelines

If you set up your own website to advertise your charity, there are several guidelines you need to comply with, relating to:

  • Privacy policies.
  • Cookie legislation.
  • Service descriptions.
Charity Shop Business

Positives of Owning a Charity Business

There are many positives to running a charity.

Some of the main pros associated with this type of business include:

Choose a cause you care about

Because you are setting up your own charity, you can focus on a cause that you are passionate about and is close to your heart. Many people who set up charities do so following an event they experience (e.g. homelessness), something they witness (e.g. children going without food) or something that happens to them or a loved one (e.g. a disease or illness). You can raise money and awareness for a cause you are passionate about and offer help and support to people who truly need it.

Make a real difference

Knowing that your charity is making a real difference in the lives of other people and knowing you are offering physical, practical, emotional or mental health support can be extremely rewarding. Your charity can change people’s lives, raise awareness or even save lives. Although setting up a charity can be laborious it is an extremely worthwhile cause that can make a real difference in the world.

Benefit from the tax system

Not only do charities not pay income tax or corporation tax, but they are also not responsible for paying Capital Gains Tax or Stamp Duty. In the majority of cases, gifts left in an individual’s will are also free from inheritance tax, allowing the charity to maximise its income. Donors to your charity can also add gift aid, which allows you to reclaim any tax on donations made by UK taxpayers. Your charity will also pay no more than 20% of normal business rates on buildings that you use to further your charitable purposes.

A high level of trust

As a registered charity, people will have a high level of trust in your organisation. More people are likely to donate to your charity and businesses, corporations and organisations are more likely to partner with your charity or offer support. Charities also find it easier to apply for government grants compared to other non-profit organisations. This makes it easier for you to raise money for a cause you care about.

You can choose a local or global charity

Depending on the type of charity you set up, you can choose to set it up on a local, national or international level. A local charity is a smaller organisation that may operate specifically in your local community or operate on a smaller scale. A national charity may work with people across the UK whereas an international charity may work across the world, for example, your charity may help to fight poverty in third-world countries. You can choose the size, scale and reach of your charity.

Funding from a wide range of sources

There are many different ways you can opt to generate income and raise funds for your charity, including donations, trading goods or services, hosting events and government grants. You can choose the fundraising strategies that best suit you and your charity. You can also recruit volunteers and use multiple strategies to increase your income generation.

Trustee, employee and volunteer commitment

Any individual who works for or volunteers for your charity or helps you to raise awareness and raise funds is likely to care passionately about your cause. Working with individuals who believe in your mission and the goals and values of your charity means they will be more invested in helping your charity succeed.

Personally rewarding

Even though running a charity may not be financially rewarding, it will be extremely intrinsically rewarding. The pride, joy and satisfaction you (and people working with your charity) will get when you see the difference you make to people’s lives can be extremely rewarding and make all the hard work worth it.

Protection from financial liability

Charities don’t always succeed and a common concern for people thinking of setting up a charity is how it could affect their personal finances. Your personal finances will be protected if anything happens to your charity, or your charity goes into debt. This can reduce the risks associated with setting up a charity business and make setting up a charity financially feasible.

Gain exposure

Gaining exposure for your charity and raising awareness is relatively easy, particularly with the rise of social media. You can create informative and interesting posts and videos about your charity to share online. For example, if your charity’s goal is to supply books and school materials to children in war-torn countries, you can post pictures and videos from your warehouse and of the children using the books. Raising awareness online and gaining exposure can make your charity well known and increase donations and volunteers.

Make connections

An important part of running your charity is making connections with other people working in the charity sector or individuals, businesses and corporations that are beneficial to your charity. Working in the charity sector allows you to meet like-minded people and get ideas for fundraising and raising awareness. You can create professional and personal relationships with people with similar interests to you.

Donor loyalty

Many charities benefit from donor loyalty, where the same individuals, businesses and corporations make regular donations. This could be from direct debit donations, regular donations throughout the year or regularly helping to support your fundraising events. Loyal donors can help to increase the income your charity generates and can help to make your charity more successful.

Be as involved as you want

Once your charity is established, you can be as involved as you want in the day-to-day running of your business. You can decide whether to work as a trustee and serve on the board or whether to take a step back from daily operations. You can hand over control of the income generation strategies and much of the decision-making to people you trust. You can be as involved as you want in running your charity.

A varied working day

Every day at your charity will be different, from planning and running fundraising events to working with donors and beneficiaries to offering advice and raising awareness. There are many different tasks and projects to work on to help keep your charity operating. A varied working day means you will never get bored and will continue to enjoy what you do.

Opportunities for growth

A charity business has high scalability, meaning that it has the opportunity and capacity to expand and grow easily. Once your original business plan succeeds, you can grow your charity, for example, by increasing your fundraising efforts and your income, obtaining more grants, expanding your reach, hiring more employees and volunteers and marketing your charity. You will already have a proven successful business plan and a strong charity base, and you can utilise these to help you grow your business with minimal stress.

Unlimited income potential

The more exposure and awareness your charity gains, the larger your reach will be. As your charity grows and you develop a good reputation, you will see your income generation grow. With a good business plan and strategy for growth, your charity could have unlimited income potential, maximising the positive impact of your business.

Charity Volunteers Helping Charity Business

Negatives of Owning a Charity Business

Although owning a charity can be rewarding, there are some potentially negative aspects to this type of business that you should be aware of:

Recovering from the Covid-19 pandemic

The charity sector was one of the hardest hit during the Covid-19 pandemic, with much of the government funding being cut, fundraising events being cancelled and donations decreasing. In fact, charitable activities decreased by 60% and, on average, charities lost 13% of their income during the pandemic. Although the sector is recovering, the financial impact of the pandemic and the struggle for charities to recover their finances and meet demand could make now a difficult time for new charities to succeed.

Competition for funding

Following the Covid-19 pandemic and the significant increase in how many people needed to use the services of a charity, the competition for funding has significantly increased. Although you can utilise other strategies for raising funds, less available funding can have a negative effect on your charity’s finances.

The registration process is stringent

The Charity Commission has stringent rules for registering as a charity and there are many factors that could influence whether you are legally able to operate as a charity. If you do not comply with every aspect of the registration process, your registration will be declined.

Complying with legislation

The charity sector is highly regulated, with a large number of laws and regulations you must be aware of. You need to ensure you follow all policies and procedures, particularly those relating to health and safety and the way your charity operates, raises funds and spends money. Not only can it be time-consuming to ensure compliance, but failure to comply, even unintentionally, could have serious consequences.

Limitations to the way you operate

Once you have registered your charity and created your governing document, you are required to operate exclusively within the parameters of the governing document. You may find that the way your charity operates and the activities and income generation strategies you are able to engage in are limited. This can make it difficult to operate your business as your charity grows and changes.

Less control over your charity’s future

You will need to appoint a board of trustees to help you run your charity. Your charity will be primarily governed by the trustees, and they will be responsible for the overall operation of the charity and any decision-making. Even if you act as a trustee yourself, you will need to make all decisions in agreement with your co-trustees. This means you won’t have complete control over the future direction of your charity, which can be difficult when you have set the charity up from scratch.

High responsibility

As the charity business owner, you will likely feel a lot of responsibility to make your charity succeed. Not only can running a charity be mentally, physically and emotionally demanding but as the charity owner, you will have a lot of additional responsibilities, which can be both time-consuming and stressful. If your charity isn’t succeeding as well as you would like, this can be stressful and upsetting, particularly if it is a cause you are passionate about.

It can be time-consuming

Setting up and running a charity business can be time-consuming. You will also have a large number of business and administrative duties that you are responsible for, including advertising and raising awareness, planning and running fundraising events and strategies, running your website and social media, ensuring compliance with all legal guidelines and handling the overall running of your charity. This can be stressful and time-consuming.

High start-up costs

Starting up a charity can require a high investment, particularly while you are growing your reputation. If you have to fund the cost of a premises and equipment, this can be extremely expensive, meaning you may require a large amount of capital to set up your charity. Not only does this mean you may need to source outside investment, but it also makes your charity business high-risk. Having a large initial investment also means it will take longer before you can offset your investment and generate an income.

Building your reputation can be difficult

With so many charities operating in the UK, it can be difficult to market your charity, raise awareness and make it well known to the public. People generally donate to charities they have heard of, such as Cancer Research, the British Heart Foundation, Guide Dogs and Oxfam. If you struggle to raise awareness of your charity and build a strong reputation, you may be less likely to get donations.

Staffing and volunteer challenges

There are many staffing and volunteer challenges you could face, such as:

  • A lack of motivation.
  • Staff or volunteers being pushy or rude when fundraising.
  • Staff or volunteers not following regulations.
  • Staff or volunteers not fulfilling their expected duties.
  • Staff or volunteers not representing your charity well.

 

It can be difficult to create and maintain a positive work environment and ensure your charity is being highly represented if you have a large number of employees and volunteers. You could also have a high staff and volunteer turnover rate, which can result in a lot of time spent hiring and training staff. Short-term workers may also be less invested in the success of your charity.

No benefits

As you are self-employed, you won’t receive benefits such as pension contributions. You will also be responsible for doing your own taxes and organising your National Insurance contributions. You will also have a lack of job security.

Planning Your Charity Business

Although your charity doesn’t operate like a traditional business, creating an effective and well-designed business plan can still be instrumental to your charity’s success. Your business plan can also help you create your governing document.

A business plan can help you to focus on the specific steps that will help your charity succeed, plan your short-term and long-term goals, determine your financial needs and help your charity business to grow.

When creating your business plan, ensure it contains information such as:

  • Your charity’s information.
  • A description of your charity.
  • The services you will provide.
  • Your branding, marketing and advertising plan.
  • The structure of your charity business.
  • The operational plan for your charity.
  • The financial plan for your charity business.

 

Some of the factors you will need to consider when creating your business plan are:

Your charitable purpose or purposes

This is the first consideration you will need to make when setting up your charity. Your charity will focus on one specific charity purpose (for example, offering respite to carers) or multiple purposes within the same mission (for example, you could set up a Type 2 Diabetes charity with the aim to fund research, offer help and advice to people with the condition and offer practical and physical support). When deciding your charity’s mission, consider causes you are passionate about, sectors of the charity industry in which you think you could make a real difference and other already established charities.

Your fundraising strategies

As mentioned earlier, it is recommended that you don’t focus on only one strategy for income generation. Instead, utilising multiple sources of income will likely result in higher income generation and more funding for your charity. Consider how your charity operates, the fundraising strategies that are likely to be the most successful and your available resources. You should also consider cost vs. profit, for example, setting up a charity gala will have higher costs but what will the expected profits be? Keep in mind that your fundraising strategies may change as your charity grows and evolves.

Your typical donors and beneficiaries

This is another important step to help your charity business succeed. Determining what section of the public is likely to benefit from your charity should be relatively straightforward, as it will be heavily determined by your charitable purpose. For example, if your charity offers veterinary care to pet owners who can’t afford it, the section of the public that will benefit from your charity are low-income households, people who are unemployed and pets. Determining the people who are most likely to make donations to your charity can be more difficult, as it can depend on multiple factors. However, once you have identified likely donors, this makes it easier to focus your advertising and marketing strategies and how best to encourage them to donate.

Your charity premises

Not all charities operate from a premises (such as an office, call centre, warehouse or charity shop) and some charities don’t set up a business premises until their charity has grown. When deciding whether to set up a physical location for your charity, consider the prospective costs and compare this to the potential benefits.

Other charities operating in your sector

Being aware of other charities operating within the same sector as you can be beneficial. Although you won’t be in direct competition with other charities (because the more successful charities in operation the better), analysing the way other charities operate, what they do well and what you think could be improved could be very beneficial to ensuring the success of your charity.

Your brand and your unique selling point (USP)

Creating your brand is a key way to ensure your charity stands out and is recognisable to the public. Branding can help you to focus your target audience, attract donations and concentrate your marketing and advertising strategies. Some ways you can create your brand are by focusing on your charity’s visual identity, considering the section of the public that will benefit from your charity and creating a brand story. Your USP can also be part of your brand and can help your charity stand out. Consider what makes your charity special and how this fits into what defines your business.

Your marketing and advertising strategies

Marketing and advertising are especially important when you first open your charity business. Your marketing strategy needs to be effective and budget friendly. Consider your target customers and the best way to reach them.

Some ways you can market and advertise your business are:

  • Build a functional and attractive website.
  • Focus on multi-strategy advertising (e.g. TV, radio, online, leaflets).
  • Conduct industry research to target donors.

 

Your equipment requirements

Consult the list above to determine your equipment requirements. The equipment you purchase from the above list will depend on the type of charity you are setting up, the size of your business and your budget. Once you have determined what equipment you require, you can then calculate the initial costs of purchasing this equipment.

Your employee and volunteer requirements

As your charity grows, you will likely need to work with volunteers and hire employees to fulfil various roles in your business and increase your fundraising. Hire employees based on the size and needs of your business. Remember your employee and volunteer requirements can change as your charity grows.

Your start-up costs and running costs

Consult the list above to help you calculate the approximate costs of setting up and running your charity. Determine what equipment you need and the amount of equipment, as well as the cost of your premises, to help you determine your start-up costs and what your initial investment requirements will be. You can then calculate whether you can finance your business yourself. Determining your start-up costs and running costs can also help you to create a budget and predict when you will begin to generate a positive income.

Financing your business

Consult the list of start-up costs and running costs above to determine what capital you will require. Can you finance your charity yourself or will you need to source outside investment?

If you require investment, you could consider:

  • Investments and donations from individuals and corporations.
  • A government grant.
  • Venture capital.
  • Financing your business yourself.

 

Your strategy for growth

Your strategy for growth is the actions you will take to realise your goals for expansion and any potential challenges your charity could face and how you will avoid or overcome them. This can help to make your charity more successful.

Potential challenges could include:

  • Difficulties raising awareness of your charity.
  • The time-consuming nature of fundraising events.
  • High expenditure.
  • A high volunteer turnover rate.

 

Some potential strategies for growth include:

  • Expand your advertising and marketing and focus on your target donors.
  • Use multi-strategy advertising.
  • Partner with businesses and corporations.

 

Your business summary

Your business plan should include a detailed overview of your charity, including the type of charity you are setting up, your typical donors, the section of the public who will benefit from your charity, your staffing, volunteer and equipment requirements and your business goals.

Your business goals

Your business goals or objectives are an essential part of creating your business plan. Your business objectives highlight the targets and goals of your charity business and help you to create a one-year, three-year and five-year business plan.

Your business objectives should be SMART:

  • S = Specific
  • M = Measurable
  • A = Achievable
  • R = Realistic
  • T = Time-bound

 

Check you have complied with all legal requirements

Consult the list of legal requirements above to check you have complied with all requirements and regulations and that all your paperwork is accurate. Failure to comply with legal requirements could have a detrimental effect on your charity or could result in a fine, the forced closure of your charity or, in serious cases, prosecution.

 

Download our business plan

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