Registering as a charity

q2In February 2011 the founding group of the Camden Town Shed decided to form an association (similar to a club). As we had also agreed that we were going to operate for public benefit and not to distribute profits to members we found we adopted the “Small Charity Constitution” found on the Charity Commission website See http://www.charity-commission.gov.uk/Start_up_a_charity/default.aspx To complete this we needed to state the purpose of the association and who it was to benefit and accept the simple rules it contained. It only required three people to sign. We used one of the model clauses also found on the website to state the purpose clearly and succinctly and with the document signed the Shed was formed. A Small Charity is one whose annual income is less than £5000 and it is not registered with the Charity Commission. The management committee and the trustees can be the same people.

The main benefits of being a charity are that it confers status (helps with your credibility in fundraising), enables you to get tax relief on donated income and it reduces premises rates by 80%. If you decide not to register with the Charity Commission these benefits would need negotiating with each authority. Becoming a charity places some requirements on an organisation to provide accounts and a report but it does not mean that you cannot sell goods at a profit providing that such activities are in pursuit of the charity’s Objects and the income derived supports the charity. The Objects clause needs careful consideration.

Within a few months we had received more funds than £5000 and so we had to register with the Charity Commission. That required completing an application, answering some rigorous questions and making a trustee declaration. The key issue is to demonstrate that the proposed activities have a public benefit and that this benefit extends to a wide enough group or groups of people. The key part of our response on the question of public benefit was the following:-

“The aim of this organisation is to relieve distress derived from unemployment or enforced retirement at the end of our working lives. This distress can include loss of purpose and direction, loss of social interaction, loss of opportunity to exercise skills, loss of identity and status, and loss of control over your life. These and other factors eg. the effects of reduced income and ageing can lead to further health problems, including depression, reduced confidence, decline in abilities etc. Research indicates that this distress tends to be worse in men because men are less likely to have developed social relationships to the degree women usually do, and men are less likely to be able to have a validating domestic role which they can continue after retirement.”

The key part of our response in reply to the question whether the benefit was unreasonably restricted included the following:-

“The intended beneficiaries are people who have come to the end of their working lives either through retirement or redundancy and to whom this presents challenges. The beneficiaries qualify if they are no longer working and do not expect to work and have need of social interaction and practical and creative activity of their own choosing, which they are not able to obtain in other ways.” We did not make this gender-specific as we could not say that women would not be included in some way. We also had to show that people experiencing poverty would still be able to attend.

The Charity Commission website offers registering organisations support in the form of model Objects clauses which as they are already approved speed up the process. We thought of using one that fell under the Recreational Charities Act which focuses on leisure activities and is normally used for sports clubs. The Commission said this was not appropriate and so we did not use that category but adopted a clause which states our purpose as:

To promote social inclusion for the public benefit by preventing people from becoming socially excluded, relieving the needs of those people who are socially excluded and assisting them to integrate into society.

For the purpose of this clause ‘socially excluded’ means being excluded from society, or parts of society, as a result of one of more of the following factors: unemployment; financial hardship; youth or old age; ill health (physical or mental); substance abuse or dependency including alcohol and drugs; discrimination on the grounds of sex, race, disability, ethnic origin, religion, belief, creed, sexual orientation or gender re-assignment; poor educational or skills attainment; relationship and family breakdown; poor housing (that is housing that does not meet basic habitable standards; crime (either as a victim of crime or as an offender rehabilitating into society).

This was accepted by the Charity Commission and so may be a helpful precedent to other groups who want to register a shed as a charity although since 2014 a new legal format of Charitable Incorporated Organisation has been created which offers further benefit. Adopting the Small Charity Constitution is still a useful quick way to get started but as an association the committee officers bear some personal liability. With a CIO the organisation can be both registered as a charity and have the benefit of Incorporation whilst still only having to report to the Charity Commission and not Companies House.

NB. The above is simply the experience of the Camden Town Shed and is not intended to offer any legal advice to other groups.

The Westhill Men’s Shed in Aberdeen has also registered with the Charity Commissioners in Scotland. Their charitable purposes are:

The advancement of health.
The provision of recreational facilities and activities with the object of improving the quality of life of the participants.
The relief of those in need by reason of age, ill health, disability, financial hardship or other disadvantage.

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