Is your charitable status fit for purpose? - Step 1 Structure


Is your charitable status fit for purpose? 
Step 1 - Structure

Most churches or mission initiatives that are just starting out have little or no experience of being a charity and so turn to the latest information as they set themselves up. However organisations that have been around for many years but not periodically reviewed their status and documentation may find their arrangements are not really be fit for purpose – or even legal.

Over the next few months we will be considering a number of issues to do with charitable status. This month we look at a couple of misconceptions and the general structure of charities.

There are three charity regulators in the UK.

  • Charity Commission (covering England and Wales)
  • Office of the Scottish Charity Regulator (OSCR)
  • Charity Commission for Northern Ireland

Although there are many similarities in the requirements across the UK it is very important to check the details with as they apply in your country.

There are two common misconceptions that we come across:

“We don’t need to register because we come under Rural Ministries” – this is not the case although there are a few ‘umbrella’ bodies (mainly denominations) which have this status – see ‘Exempted charities’ below.

“We are exempt as we are a registered place of worship” – it is the building that is registered and not the working funds and operation of the fellowship so you may still need to register as a charity.

There are a number of types of charity in England and Wales – these are:

Registered unincorporated charity – this is the traditional type of charity that has been around for many years and adopted by many churches. Under this structure the trustees are fully liable for their decisions. Remember that anyone who is part of the decision making body is a trustee and this could include ordinary church members – see our earlier article on the liabilities of elders and deacons.

Charitable company (limited by guarantee) – this is mainly for large charities with trading arms such as Oxfam and unlikely to be applicable to many rural churches and initiatives. These have the same general structure as a company with a level of financial protection for the trustees.

Charitable incorporated organisation (CIO) – this is a fairly new type of charity structure designed for smaller organisations but which still offers a number of benefits of being incorporated such as increased protection for trustees. This is becoming the structure of choice amongst new church charities and those reviewing their status.

Excepted charity - these are churches that are linked to other bodies such as the Church of England, the Baptist Union, or the Federation of Evangelical Churches (FIEC) a full list of bodies can be found here. However this exemption only applies to churches whose annual gross income does not exceed £100,000.

Unregistered charity - A charity with an annual income of less that £5,000 (around £100/week) does not need to register

It should be noted that the £100,000 threshold for exempted churches is likely to be removed in the next major review so it could be worth getting ready now.

In Scotland all charities including churches must register with the OSCR regardless of their annual income levels.

In Northern Ireland the charity registration system is still being established and existing organisations have been ‘called’ to register over the last two years. If you have not yet been ‘called’ then you should check with the CCNI immediately.

Having decided to register as a charity (or change your status) the main question for most churches is whether to become a Registered Unincorporated Charity – or a Charitable Incorporated Organisation – we will have a closer look at the differences next month - click here