Have you set up a non profit?

[nonprofitorgs]

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!

A "charity limited by guarantee" is simply a company limited by guarantee that has charitable status .

It's the charitable status that gives tax exemptions not the limited by guarantee. The poster was responding to a claim that companies limited by guarantee don't pay corporation tax.

Just agreeing with the comments about getting grants. The 30 year old charity I work for is closing in a couple of months. Lots of projects are disappearing, small charities are closing or being swallowed up by larger charities.

The situation in the third sector is not good atm, and it doesn't look like it will improve in the near future.

But you could check with your local voluntary sector council to see if they could offer advice.

@OchreSwan @venusandmars
Really appreciate your input. Please don't worry about being negative!

Firstly if I went with the company limited by guarantee route with the asset block this is in fact a really straightforward structure, and the articles of association etc are straightforward to produce and the requirements for numbers of people are straightforward too. My idea is very straightforward and no one is providing it at the moment and so would be very clear to anyone reviewing it who knows about the area (and I can give lost of information about why it is needed). None of this would be very timeconsuming for me to set up.

Doing the resources ie doing the actual work involved would be very timeconsuming however, research is needed and i would need to liaise with various people. I would be the only person who would do it because I understand the area and no one else has ever tried to do it so there aren't people out there who could be employed to do it. I would want to be paid for this work.

Secondly what I am still confused about is why you think grants will be dependent on there being lots and lots of people involved and lots of people doing volungary work and unpaid work - because none of this is a legal requirement - are you saying that people who give grants require this absolutely and across the board? A bit cheeky of me perhaps as I haven't googled it, but can you link one of these documents which sets out all these requirements?

Someone has suggested crowdfunding - is it difficult to get support in this way too at the moment in your experience?

I was being cynical when I said there is a lot of money swishing around for some issues - for example if you look at funders of certain agenda driven/minority interest groups you will see billions being given - this is public knowledge. Sadly my idea is not agenda driven and not about minority interest groups! So it is not really relevant to this thread, I was just commenting.

I appreciate and agree with all your advice. Last time I looked, corporation tax was not a significant amount. There won't be much profit as such as all money coming in will be used and accounted for in a transparent way and no dividends obviously. So I am not too worried about this. Am I being realistic?

In terms of being transparent, many professions use time sheets and I was considering publishing these so that people could see exactly where money was going. I might be being naive here though and creating a rod for my own back.

Really appreciate all the amazing advice here.

I've been involved in charities and fundraising for 15 years. I agree with other comments that funding is much harder to get now than ever before. It's been really disheartening seeing funding criteria getting ever tighter, funding pots shrinking and the number of people applying going through the roof. With landfill trust funding paused (not sure if that's just in Scotland) that's put even more pressure on.

Running a charity is a huge amount of work and new guidelines have come in recently adding even more layers of complication. I assume from your comments that you haven't ever been involved in charity governance? Just making sure a charity is complaint with all the various laws is a job in itself.

Also - when government announcements about funding are made it often sounds huge. But by the time it's divided up across regions it's often not. For example there was a 2.6billion pound fund I applied to for a charity recently. That had been divided up between all the UK councils. Our area just got £200k. Charities and local businesses could apply for up to £20k and I expect hundreds will apply, and the vast majority won't get anything.

I would find another suitable organisation that might be willing to take on your idea. Volunteer with them for a while to help you develop your understanding of the charity landscape and you can get to know one another. If it feels right, you could suggest a collaborative grant application, with agreement that you would take on the running of the activity if successful.

A lot of grants specifically will not cover salaries, and you would need to do the grant finding and take the lead on the application without being paid for your time.

But even so, a lot of charities are struggling to fund their existing services so I am not sure how enthusiastic they would be.

I cannot emphasise how tough it is at present to start something from scratch on your own and get paid a wage to do it. Sorry to be another negative voice.

company limited by guarantee is a straightforward structure. charities have a different structure from limited companies and are subject to different rules, and governance is a lot more complicated and admin heavy.

in relation to your other posts, your comments about grant applications are useful thank you. costs in relation to my idea are comparatively insignificant compared to the organisation(s) you fundraise for though, from the sounds of it.

I have read the whole thread. If you are just a straightforward Ltd company you'd have very little access to grant funding (possibly small amounts of start-up business funding). If you are a Ltd company which registers as a charity you'll have all the same hoops to jump through. A CIC is slightly less onerous in terms of governance but has a lot of the same sorts of requirements for trustees etc.

Also worth noting that some of the biggest grants are now asking for min 1-2 years of charitable accounts before you can even apply, because so many new charities are failing currently.

sorry, i edited my reply after you saw it! I took out the bit about not reading the thread, apologies.

Re limited companies, other posters have explained that you incorporate an asset block in order to be able to access funding.

I am now completely clear in relation to structure. But the comments on fundraising are interesting and this is all new to me. In relation to "biggest grants" what do you mean? Who are they and what areas do they cover? How do you apply?

I think your best option would be to sign up for some free courses via your local businesses gateway or charity support organisation. That will help you learn more about different options.

Having an asset block doesn't mean that funders will view you in the same way as a charity particularly as that asset block can be easily removed if you're the only member/director of the company.

You are essentially asking funders to pay you a salary for doing something that is of interest to you. That is hard to get funding for.

Have you already done any work on the project that could be shown to potential funders?

I am chair of a small hospital charity. All our trustees are volunteers and I can only describe it as hard work.
We don’t usually depend on grants but did so during COVID when our main source of income dried up and demand increased hugely.
We obtained some funds, some practical support but it was a huge effort from everyone.
It would be great for you to observe one round of audit to show you how regulations work and how difficult it is to account in detail for all your actions.
I too feel if you could piggy back onto another organisation, learn the ropes and try and provide the service under their auspices, that might achieve your aims with less pain.

A bit cheeky of me perhaps as I haven't googled it, but can you link one of these documents which sets out all these requirements? You really need to do your own research on this! No-one reading this thread has any idea what you are trying to do in your 'unique' idea. Grant funding tends to be really specific, there's no point linking to a grant giving body that is not related to you area.

However, for example, the National Lottery Awards for All programme which has some of the widest criteria I know of, are clear that you need 2 Board Members and that they do not fund sole traders or individuals. Their criteria are here: https://www.tnlcommunityfund.org.uk/funding/programmes/national-lottery-awards-for-all-england#section-2 www.tnlcommunityfund.org.uk/funding/programmes/national-lottery-awards-for-all-england#section-2]]]] You also need a separate bank account. However unless someone is already willing to pay for your work towards this particular cause, then you won't have any trading history or transactions.

I cannot think of any organisation that would give funding to someone in your position - unless you're thinking of something like a government contract to provide a product or service that they have already prioritised and have set aside cash for (e.g. PPE during covid). Then you would be in competition with other commercial providers.

Crowd funding needs a massive base of supporters, and usually extensive media support in the popular press. e,g, Oxfam and Glanstonbury combined to give free tickets to lucky winners / donors and raised £1m for the Turkey/Syria eqrthquake disaster fund; the disappearance and death of a 14 year old in Belfast raised £180,000. I'm guessing you're not in that league in terms of publicity.

You seem certain that you have a unique concept, that has never been done before, and also that you are the ONLY individual who can do this work. I don't want to appear negative, but that seems rather unlikely.

Anyway, I'm not in a position to offer any further advice. Good luck with whatever you decide to do.

Just going to focus specifically on your questions about funding here. As others have said already on the thread, by setting up as a company limited by guarantee with an asset block you will be locking yourself out of many (perhaps even the vast majority) of grant making organisations. Generally speaking these organisations specify that they only support registered charities, and sometimes CICs/exempt charities and other similar structures.

It’s not so much that the funders want there to be loads of volunteers and staff involved in the organisations they fund, and perhaps more that traditional charities structures with trustees/volunteers offer some assurances/

1. That the money will definitely be used for the stated charitable purposes (legal obligation of the trustees of a charity with serious repercussions if they don’t abide by that).
2. That there is definitely a need and interest in the service you are providing beyond your own personal interest. It’s much more convincing to say ‘this board of 8 trustees are willing to volunteer their time and take on legal liability because they also believe it’s an important cause’ than it is to say ‘I think this is important but I don’t want any other people involved, now please pay my salary.’

Charities are governed by a rigid set of regulations to ensure that funds are definitely used for public benefit, and so there’s a reason that funders are more likely to support organisations where they know that they are beholden to the Charity Commission.

None of us here will have a comprehensive knowledge of all of the funders in the U.K. at the moment, so we cannot definitively say that there is no one who will fund you. What we can say is that based on our experience of the sector, you will find it very tricky to find funding without:

1. a governance structure like a charity or CIC
2. evidence that you will be able to succeed in your aims (I.e. through previous years of annual returns and evidence of your own personal success in this area)
3. very clear evidence of the public benefit of the work you are planning on doing, include evidence that there is a distinct need from your beneficiary communities for the service you hope to provide.

Most funders in the U.K. at the moment are overrun with demand for support and it would take something extraordinary special for them to choose to fund a start-up charity over an existing charity who’s work they can already witness, if that makes sense.

Every charity will have different guidelines so there isn’t really a document to direct you to, but I’d recommend looking at the websites of some of the bigger ones like Garfield Weston to get an idea of the strict nature of their criteria (and actually, GW are known for being not particularly strict but I think you would still struggle to gain funding from them, just one example).

I’m not a community or crowdfunding specialist, but it is certainly a route you could look at. A few questions it might be worth thinking about for this:

1. Who is going to support your crowdfunder? Do you have any existing communities who will believe in your cause and will have the capacity to support?
2. How does crowdfunding work in the long term? If you succeed via one initial campaign, what will you do when that funding runs out?
3. How will you actually collect donations? Will you use one of the big platforms like JustGiving and is that compatible with your planned company structure?

I’ve no idea how feasible or not crowdfunding would be for you, but again suggest you may struggle without an existing pool of warm potential supporters.

GW won't fund charities with less than one year annual accounts. They also won't fund specific posts.

@venusandmars you posted saying that I wouldn't get funding and when I asked what you meant you said you had no idea because my idea was "unique" so I had to do my own research (I didn't say it was "unique" I said that no one else was doing it and there was a need) so you can possibly see my confusion, especially as I hadn't asked about how to get funding in my OP I was only asking about structures.

But in any event thanks for your input and thanks for linking the lottery site.

Sorry if I missed this but what is "GW"?

@OchreSwan thanks for your long post.

Okay, so what you say here is in slight conflict with the advice given by another poster upthread.

You are essentially asking funders to pay you a salary for doing something that is of interest to you.

No that definitely isn't the case.

It may not actually be the case but can you see that it might be how potential founders might view you.

@venusandmars

You seem certain that you have a unique concept, that has never been done before, and also that you are the ONLY individual who can do this work. I don't want to appear negative, but that seems rather unlikely.

I think this is a bit harsh and unnecessary.

What I said was that there was a need for resources which do not currently exist. Obviously I know that because I have already spent time looking and doing research. I have also contacted charities already to find out who was doing what.

So either I do the work having already spent a fair bit of time on it already, or I look for someone else to do it and spend time trying to find someone who has also done research and knows what needs to be done....

Or I do it for free which will take a lot longer and I think there is an immediate need and it would make a lot of difference to people's lives.

Fundraising is hard, and I may or may not find funding from someone who agrees it is a worthwhile project. i agree.

No, it will be abundantly clear that it will be about putting together resources and providing them free of charge or base cost.

So you don't want to be paid for this work?