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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Have you set up a non profit?

60 replies

nonprofitorgs · 13/07/2025 14:10

I am thinking of setting up a non profit the aim of which would be to provide specific resources free or base cost (informative website and books), and I believe there would be public benefit so would qualify as a charity. A lot of work would be required to set up the resources and I would like to be paid for this and also to be able to pay for expertise and services, and payment would come from grants/donations and this would all be set up with transparency. Has anyone done anything similar and if so which structure did you use? I am thinking that a charity with trustees might be inflexible and the admin element might become very time consuming and I am wondering if a company limited by guarantee might be more straightforward? But could that be seen as sufficiently not-for-profit to enable grants to be given?

Thanks!

OP posts:
EsmeNoteSpelling · 13/07/2025 14:17

Yes, I have. I’m not a governance expert but believe if you use any company (limited by shares / guarantee) structure you will need an asset lock to be eligible for any grants (which btw are hard to get and getting harder…)

Have you looked at CICs - community interest companies? They sit between companies and charities and are used a lot for this kind of thing.

spannasaurus · 13/07/2025 14:23

If you were to set up a charity and became a trustee of the charity it would not be possible for you to be paid for your time or services as trustees cannot receive payment.

If you set up a charity and did not become a trustee then you would have no control over the charity and the trustees could decide your services were no longer required

R0llingOverTumble · 13/07/2025 14:32

I saw one on Dragons Den where books & educational resources were free

No idea how they did it !

OldLondonDad · 13/07/2025 14:40

Why setup a new charity? It just fragments efforts to help people further.

Unless it truly is something unique or otherwise unavailable in your area, is there an existing charity you can work with?

nonprofitorgs · 13/07/2025 15:41

EsmeNoteSpelling · 13/07/2025 14:17

Yes, I have. I’m not a governance expert but believe if you use any company (limited by shares / guarantee) structure you will need an asset lock to be eligible for any grants (which btw are hard to get and getting harder…)

Have you looked at CICs - community interest companies? They sit between companies and charities and are used a lot for this kind of thing.

Thanks for this, re asset blocks, exactly what I needed to know.

I think the CICs are for local rather than national causes and if so wouldn't be suitable.

OP posts:
nonprofitorgs · 13/07/2025 15:47

OldLondonDad · 13/07/2025 14:40

Why setup a new charity? It just fragments efforts to help people further.

Unless it truly is something unique or otherwise unavailable in your area, is there an existing charity you can work with?

I can't find anything which does what I am wanting to do. There is a charity whose name relates to a similar thing, but I have spoken to them and they said that although their name might lead one to think differently, in fact the things they are permitted to do under their objectives are very limited.

OP posts:
nonprofitorgs · 13/07/2025 15:49

spannasaurus · 13/07/2025 14:23

If you were to set up a charity and became a trustee of the charity it would not be possible for you to be paid for your time or services as trustees cannot receive payment.

If you set up a charity and did not become a trustee then you would have no control over the charity and the trustees could decide your services were no longer required

This is my worry! Thank you

OP posts:
spannasaurus · 13/07/2025 15:54

One point that many people overlook in not for profit companies is that if the company makes a profit then it will be subject to tax.

Only registered charities have a tax exemption.

EsmeNoteSpelling · 13/07/2025 16:40

I work with a number of CICs that operate nationally - the ‘community’ can be a community of interest rather than a geographic one. I’d say it’s definitely worth a look.

www.gov.uk/government/publications/community-interest-companies-how-to-form-a-cic/community-interest-companies-guidance-chapters

DumbbellIdiot · 13/07/2025 16:45

spannasaurus · 13/07/2025 15:54

One point that many people overlook in not for profit companies is that if the company makes a profit then it will be subject to tax.

Only registered charities have a tax exemption.

Not if the company was limited by guarantee.

spannasaurus · 13/07/2025 16:56

DumbbellIdiot · 13/07/2025 16:45

Not if the company was limited by guarantee.

A company limited by guarantee is treated exactly the same as a company limited by shares for all purposes. The only difference between the two is members giving a guarantee vs members owning shares.

spannasaurus · 13/07/2025 17:02

Quote the but where is says companies limited by guarantee aren't subject to corporation tax.

You won't be able to because that's incorrect.

I'm an accountant.

nonprofitorgs · 13/07/2025 17:19

EsmeNoteSpelling · 13/07/2025 16:40

I work with a number of CICs that operate nationally - the ‘community’ can be a community of interest rather than a geographic one. I’d say it’s definitely worth a look.

www.gov.uk/government/publications/community-interest-companies-how-to-form-a-cic/community-interest-companies-guidance-chapters

Edited

Okay, many thanks!

OP posts:
CaptainSevenofNine · 13/07/2025 17:45

CICs often find it harder to raise funds. Especially via trusts and foundations.

also where are you based? Different laws in Scotland.

cakeisallyouneed · 13/07/2025 17:49

Also look in CIOs as an alternative to a charity. They have less liabilities for the trustees. There’s lots of helpful resources on the charities commission website.
Also you can be a paid member of staff as well as trustee. As long as it’s declared on your annual reports and as a conflict of interest. You would not be able to be part of any conversations on pay, staff etc. For smaller charities set up by an individual, it does happen. Again charities commission can advise.

OchreSwan · 13/07/2025 17:50

Going to echo what others have said but as a charity professional I would strongly strongly advise against doing this. The fundraising landscape is absolutely brutal at the moment and unless you already have access to significant numbers of people and trusts who you know will fund you, you will have a very hard time raising enough money to make this viable.

You will have significantly more success if you try reaching out to existing charities with established fundraising frameworks to see if this is something that can be offered.

It’s slightly unclear to me exactly what the idea is and who the target beneficiaries are, but I’d be quite surprised if someone isn’t already doing something like this unless it’s a very very niche topic.

venusandmars · 13/07/2025 18:05

To set up an organisational structure that can apply for grants you really need to be more than one person. And certainly more than one person who wants to be financially rewarded for their efforts.

Not intending to be harsh, but if you look at the rules for any grant giving body you will se how challenging it can be.

Do you have a group of other like-minded people who share your values and ambitions? Is there a defnined and explicit community 'need' for what you intend to offer?

nonprofitorgs · 14/07/2025 15:25

OchreSwan · 13/07/2025 17:50

Going to echo what others have said but as a charity professional I would strongly strongly advise against doing this. The fundraising landscape is absolutely brutal at the moment and unless you already have access to significant numbers of people and trusts who you know will fund you, you will have a very hard time raising enough money to make this viable.

You will have significantly more success if you try reaching out to existing charities with established fundraising frameworks to see if this is something that can be offered.

It’s slightly unclear to me exactly what the idea is and who the target beneficiaries are, but I’d be quite surprised if someone isn’t already doing something like this unless it’s a very very niche topic.

Could you explain a bit more about what you mean here, and what sort of professional you are, or perhaps PM me? Because in relation to some areas, there is a lot of funding available. Not in relation to my area necessarily, but I am slightly confused about your post as some areas are receiving huge amounts. What do you mean by "the fundraising landscape" - which areas are you talking about?

Also I am not sure why you would advise against it so strongly, as there is no risk or liability for me going into this - it can go as quickly or as slowly as funds allow - so i am confused by your very forceful advice against it.

I don't think there are any bodies doing what I would like to do, as I said upthread. I have either spoken to them or looked at their websites.

OP posts:
nonprofitorgs · 14/07/2025 15:27

venusandmars · 13/07/2025 18:05

To set up an organisational structure that can apply for grants you really need to be more than one person. And certainly more than one person who wants to be financially rewarded for their efforts.

Not intending to be harsh, but if you look at the rules for any grant giving body you will se how challenging it can be.

Do you have a group of other like-minded people who share your values and ambitions? Is there a defnined and explicit community 'need' for what you intend to offer?

There is a need and there are likeminded people who think there is a need but I don't know them personally.

You can be as harsh as you like, it is very useful - can you give an example of what you are talking about in relation to "challenging" and "more than one person who wants to be paid" - are you able to link anything? Thank you very much

OP posts:
venusandmars · 14/07/2025 16:53

Sorry, I wasn't clear in my post. To set up an organisation that can apply for grants the majority of the 'officers' or organisers or management board should be people who are unpaid. To establish a charity you usually need 3 unpaid officials - including a chair and a treasurer. If you wanted to be paid you would have to be 'employed' or commissioned by the board to undertake the work that they (as Trustees) deemed necessary. You could not be part of that decision. You cannot be the sole organiser, and be paid for your efforts. If you were doing that you would effectively be a self employed business (albeit with a beneficial social aim). And as a business you would not be eligible for most grants.

A charity or CIO needs a strong and clear governing document setting out the demonstrated need for your services / product (real hard evidence, much more than 'other likeminded people who thinkg there is a need'), and clarity about how you meet that public need, in a way that is not met by other organisations. You need clear systems of governance - how decisions are made, who is accountable. You need an annual report and accounts. You need to set up banking arrangements. Please do not underestimate how much work this all takes - none of which you can be paid for.

By 'challenging' I mean for example that there are many, many more organisations seeking funds than there are bodies who offer grants, it is the most competative time I've ever known, and you will be up against professionals who have years of experience and make grant applications as part of their career. Most grant giving bodies have quite narrow specifications e.g. people living in a specific area, or of a certain age, or within a specific index of deprivation. Researching grant opportunities and gathering the required information is a vast job in itself (unpaid). There may be stringent requirements around your (agreed and published) policies on diversity and inclusion. You will have to know how you will monitor and measure the impact of your work - how many people benefit, what change you are expecting, how you will know it has happend. This is more about outcomes than outputs. Four thousand people receiving a book or other information means nothing if there is no subsequent and measurable impact or change.

There are often quite long times lags - deadlines for the grant giving commitees to meet etc.

If you don't personally know anyone else who supports your aim then I honestly can't see how you can get this idea off the ground. Do you have strong connections with the 'community of need'?

In your opening post you say "a charity with trustees might be inflexible and the admin element might become very time consuming". The requirement around these (which is not so different from a CIO) is not intended to result in inflexibility, rather the rules and sstructures are there to protect everyone who makes a charitable donationor bequeaths money to a trust, and to ensure that money is being spent wisely, appropriately, and that there is accountability.

Having been on all sides of the equation - an employee of a national charity, a Trustee, a business owner, someone who established a CIO, on the committee of a major grant giving organisation - I agree with @OchreSwan and strongly advise you against trying to do this at the moment.

To be more positive, perhaps start by developing strong links with the people who might benefit from your initiative. Find ways of getting in touch with others who share your views on the need for this, and find out how your values align. You cannot do this on your own.

I'd suggest you also look at the charity commision website and this https://www.gov.uk/setting-up-charity If you, and others, are going to go down this route, you really need to understand what you are getting yourself into, how much (unpaid) time it will take, and how difficulty it might be to get funding.

Then (as a group) you need to spend time researching the possible funding opportunities specific to your defined aims.

Set up a charity

To start a charity you need trustees, to choose a business structure, decide suitable charitable purposes and you may have to register with the Charity Commission.

https://www.gov.uk/setting-up-charity

OchreSwan · 14/07/2025 18:26

nonprofitorgs · 14/07/2025 15:25

Could you explain a bit more about what you mean here, and what sort of professional you are, or perhaps PM me? Because in relation to some areas, there is a lot of funding available. Not in relation to my area necessarily, but I am slightly confused about your post as some areas are receiving huge amounts. What do you mean by "the fundraising landscape" - which areas are you talking about?

Also I am not sure why you would advise against it so strongly, as there is no risk or liability for me going into this - it can go as quickly or as slowly as funds allow - so i am confused by your very forceful advice against it.

I don't think there are any bodies doing what I would like to do, as I said upthread. I have either spoken to them or looked at their websites.

Edited

Apologies if I have come across as harsh in my post. I am a professional charity fundraiser and as @venusandmarshas said, this is an unbelievably difficult time to be fundraising for charitable causes, pretty much regardless of the specific area you are working in.

Grant-making trusts are getting thousands of applications from established charities with a proven track record of success and impact, for funds which may only have £10,000 to distribute in total. Of course it’s not completely impossible, and it might be that you’ve landed on a really excellent idea which isn’t already being served. And of course, someone does have to be successful with these funding rounds. But it doesn’t change the fact that to be in with a real chance of success you will almost certainly need to have pre-existing relationships with funders who are willing to take a chance on you.

@venusandmarshas done an excellent job of going into the finer details and I agree with everything they say.

Rainbowsandmiracles · 15/07/2025 19:38

So I am founder of multiple charitable organisations (all of which are still running I tend to get them to operational stage and pass the baton), have been employed by the sector, a consultant and have a degree in charity and social enterprise management. Have a look on the charity commission website the guidance is above if you are a small unincorporated charity it is very difficult to fund a wage legally. You can as a trustee of a CIO but you will need permission from the charity commission to do this and a minimum of 2 other trustees who would not be personally gaining. You could register as a charity limited by guarantee but have similar restrictions. A CIC is fair more flexible and would allow you to take a wage immediately but grants and fundraising are harder with this legal structure. A kickstarter/crowdfunding arrangement might work for you.

As many posters have said it is hard to fundraise at the moment - more people than ever are relying on charities so there is more competition for grant funding with lots of grants being contracts in every thing but name. If you have funders in mind reach out to them and see what they say. Another area you are going to struggle with is you haven’t got a track record or annual accounts and whilst this may not be an issue for some funders most will want your most recent annual accounts.

If you are set on the charitable route rather than a CIC (and some CICs are massive global organisations but you will need to show the regulator that you have a community benefit) then working with another organisation could be a better bet but I suspect many would view it as you trying to trade off their name to be paid - I’m sorry if that is a harsh view but I know I am approached for that regularly and sometimes we say yes and will enter into an agreement with them if there’s enough benefits to those we are supporting but more often than not it’s a no because we end up holding all of the risk.

taxguru · 15/07/2025 19:42

That very webpage you linked confirms that a Limited by guarantee is liable to corporation tax in the same way as a normal limited company....

"Yes. Limited by guarantee companies are subject to have the same taxation requirements as regular private companies limited by shares. For example, any profits the company makes will be subject to Corporation Tax. Further, should any dividends be declared, then the dividends will be taxed for the individual(s) receiving those dividends at the relevant dividend tax rate."

Rainbowsandmiracles · 15/07/2025 19:51

taxguru · 15/07/2025 19:42

That very webpage you linked confirms that a Limited by guarantee is liable to corporation tax in the same way as a normal limited company....

"Yes. Limited by guarantee companies are subject to have the same taxation requirements as regular private companies limited by shares. For example, any profits the company makes will be subject to Corporation Tax. Further, should any dividends be declared, then the dividends will be taxed for the individual(s) receiving those dividends at the relevant dividend tax rate."

That’s a company limited by guarantee not a charity limited by guarantee - a charity limited by guarantee wouldn’t have share holders and dividends and as they hold dual registration with the charity commission would benefit from the same exemptions eg not paying corporation tax on grants donations etc they would also benefit from not having to pay it on primary purpose trading providing all profit is reinvested

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