has anyone set up a small charity?

[chocoreturns]

I'm about to launch myself as a family and life coach full time, (well part time, but as my only source of income!) and I have a vision of doing this as a charity in the future - I'm confused as to when you 'become' a charity though. From the off or later on? The paperwork looks intimidating, has anyone done it who can offer me some encouragement?

Also, can you claim your usual WTC/CTC if you're starting a charity rather than being straight up sole trader? If I'm missing something blindingly obvious please feel free to point it out... thanks

who are the beneficiaries of your charity?
who are the unpaid trustees?
how would you make a living from a "charity" as if you control it you cannot extract money
why would your business qualify as a charity?

I loooked into it a few years ago. We had to show we had an income of £5K a year to register as a charity. We didn't. We attached ourselves to a larger charity instead.

Aren't 'your only source of income' and 'charity' mutually exclusive? Do you mean that in time you'd do a % of your work for free while still continuing to charge?

You can do unpaid/pro bono work through a company (and I believe there are tax bens to this but obv you'd need to check with an accountant) but you can't be a charity that also operates as a company.

Ahem, that would be the blindingly obvious thing I'm missing, haha. Ok so the charitable work obviously comes at a later date.

Although (excuse me for being a bit dim here) how does any charity get run if you can't pay a basic salary to the person running it full time? I have worked for charities for most of my professional life and clearly been paid a salary, so why can't you pay yourself a salary if you set one up?

I don't mean that I'd operate as a company as well, but that I'd set up the whole operation as a charity from the off. The people who would benefit are looked after children for the most part.

A small charity raises money to train, say, hearing dogs.
THe charity raises money
THe charity hires trainers.
Dogs are supplied to deaf people
But the trustees - who decide on things are by law, not allowed to take money from the charity.

employees and trustees MAY NOT be the same people

and the VAT laws on charities are very onerous

I think that should read "employees and trustees MUST NOT be the same people"

That's the key point - the people who are ulimately tresponsible for deciding what the charity does and how it does it are not allowed to take any income from the charity.

thank you! that makes sense.

sorry, yes, I am so used to caveating my words I forgot to be blunt on that one :-)

Any new enterprise (charity or not) has to be viable.

With a charity typically that means funding or earned income. So the question would be, who would fund the service? And Talkin suggests that funding could cover costs etc.

As you have mentioned there is lots of paperwork and process involved with setting up a charity. You also need to pass the public benefit test in order to be granted charitable status.

You could consider becoming a social enterprise, a non-profit business that reinvests profit into the business. There are a few different legal forms, Community Interest Companies being one. Social Enterprise UK is a membership body for the sector and has lots of info on their site.

The only funding route that might be worth looking at is support of enterprise/new businesses. However being new yourself might be a barrier.

Personally I'd get going as a for-profit and see where it takes you. A pro bono opp might come along that ticks your boxes.

Good luck

A trustee of a charity can become an employee of the charity in certain circumstances. The Articles of the charity must permit it and often the charity commission's authorisation is also required but it is not that unusual a situation - they are often the ideal person for that role.

could you name a charity that has done so?

just that e9 here www.charity-commission.gov.uk/library/guidance/cc11text.pdf makes it nigh on impossible for a small charity to do it

Section E advises on the provision of services which is separate from employment. Section G refers to the employee/trustee relationship. Yes, I am aware of trustees of charities who are also employed by the charity (all of whom are in receipt of express authority from the charity commission) & it would be improper for me to provide any further details. If the OP needs any further guidance on this point, the charity commission are excellent on advising on this point & can direct individuals to the relevant authority application form on their website. I'm sure all this is irrelevant anyway so I'll leave it at that!

In addition to the technical and legal aspects of setting up a charity, you also need to have a robust business model if your charity is going to be viable.

So LOTS of research about where the income would come from: grants / voluntary donations / contracts for services with local authorities? I have worked with a couple of counselling organisations that have established themselves as charities and it is incredibly difficult to source funding. Many grant providers will not fund counselling (and I guess that coaching might face similar difficulties). Many local authorites will only offer contacts for work where there are demonstrable outcomes and measurable benefits (and I guess that coaching might face similar difficulties in this regard).

One charity funds its services through 'voluntary donations' made by paying clients, but their business model only works because the counsellors give their time on a voluntary business and are not paid. I assume that this is not what you had in mind.

Another charity did manage to fundraise to be able to offer a service but they were instantly overwhelmed with clients and ended up with a 18month waiting list for their charitable service. And then when the grant ended they could not continue, so they had raised expectation amongst the client group which could not then be fulfilled.

I worked with one group of service providers (not counselling) and they added a small % to the price paid by their fee-paying clients, which was then transferred to a 'charitable foundation'. They could only do this because their reputation was extremely high and their fee-paying clients were willing to support the charitable aims of the foundation.

Running an effective charity is a tough business, and I do mean business

I'm a trustee of a couple of charities, and independent examiner of several others

they are businesses. pure and simple.