The Charity Commission routinely rejects around 40% of new charity applications. Whilst this statistic may seem high, following discussions with those in the Charity Commission registration team, often the reason for the rejection is because the aspiring charity applicant has, in one way or another, not provided sufficient information to support its registration. For those unsuccessful charity applicants that have toiled over the application over many weeks and months and have provided every piece of useful information they can think of, how you may ask, can that not equate to having provided “sufficient information?”
Any rejection can be very disheartening and quite often, given the time already invested, it can make the whole registration process seem insurmountable. With this in mind and following years of successfully registering a plethora of different charities, we have gathered some useful tips to help pave the way for a speedier, and ultimately, successful charity registration.
1. Capturing and framing the planning process
We often describe the process of setting up a new charity like pitching for a business idea on Dragon’s Den, where instead of budding entrepreneurs bidding for investments from wealthy investors, the incoming charity trustees are pitching their new charity idea to the Charity Commission. With this pitch in mind, quite often it is not just a simple case of sending the Charity Commission everything you have, but rather, knowing what to send and how to present is what will set this pitch apart. In order to understand how best to present your pitch, it may be a good starting point to frame your gathered information around two key aspects of how: i) the aspiring charity’s activities are in line with its charitable purposes; and ii) it will satisfy the public benefit test. These two aspects will be closely examined by the Charity Commission given they help determine whether an aspiring charity is in fact a charity in law. There are different ways to capture this information in the application.
2. Check the constitution of similar charities and the Charity Commission’s example objects
Another area the Charity Commission will closely look at are the objects or ‘purpose wording’ of an aspiring charity. This is because having exclusively charitable objects is a key test that needs to be satisfied in order to qualify as a charity in England and Wales. As such, the wording of the objects clause needs to be clear and sufficient to describe the charity’s exclusively charitable purpose(s) for the public benefit. If your aspiring charity is carrying out similar charitable objectives as another registered charity, it may often be worth taking a look at the objects wording in the comparable charity’s constitution to help frame your own objects clause. Alternatively, you may also find it helpful to look at some example objects wording provided by the Charity Commission to provide a steer on how to phrase the charitable objects wording for your aspiring charity.
3. Relevant Charity Commission guidance
The Charity Commission has published bespoke guidance for each of the 13 relevant charitable objectives. These explain in more detail the legal meaning and application of these charitable objectives. They can also act as a helpful reference to check whether the current or proposed objectives and activities of the aspiring charity satisfies one or several charitable objectives. Some of the guidance also provide examples of activities which, whilst on the face of it, may seem charitable in nature, do not meet the specific legal requirement of a charity under the identified charitable purpose(s). You can review these examples against the aspiring charity’s own activities to assess whether they are in fact charitable in law.
Throughout the application, it would be useful to have in mind the broader governance topics set out in the Charity Commission’s “5-minute guides for charity trustees”. Depending on the type and complexity of the aspiring charity, any specific issues you have identified as relevant should be pre-emptively addressed or explained in the application, as it is likely they will be revisited and queried by the Charity Commission later in the application process.
4. Information on current and prospective funders
The Charity Commission will also want to know some information about who the current and future funders of the aspiring charity are or are likely to be. It is often a good idea to disclose in as much detail as possible on who your current funders are, including (where relevant) how their money has been spent to satisfy the charitable objectives for the public benefit. To ensure the aspiring charity will be financially sustainable following registration, it would also be useful to set out some information on the identity, or the possible identity, of its future funders, and whether it has made or will likely make any applications to a specific corporate or grant funder. By disclosing information in this way, the Charity Commission can gauge whether there are any conflicts of interest issues that require explaining or addressing. If there are any, which is often the case where any funding for the aspiring charity is coming from a company owned or controlled by an incoming trustee, it would be prudent to disclose and address this conflict in the initial application form.
5. Trustee minutes
At some stage of the application process, the Charity Commission will likely request to see minutes of the incoming trustees deliberating on a specific charity law point. This may, for instance, be required to explain the above-mentioned conflict of interest issue regarding funding, or when an incoming trustee wishes to employ their spouse as paid staff, or the Charity Commission may simply require this in order to see evidence of the planning process more broadly. Given this request is becoming more commonplace (and in some contexts mandatory), and given it is also likely that the incoming trustees would have met with one another to discuss the formation of the aspiring charity, it may be beneficial to document these discussions and to share this with the Charity Commission in the initial application form.
In our experience of preparing new charity applications, using the above tips can help navigate what can otherwise seem like a maze. The art of producing a good charity application comes from understanding how to frame the information you have and to explain this in a way that sufficiently answers all the relevant questions. This is also where our expertise comes in, as our team collectively have many decades of experience in setting up new charities, including ones that are complex in nature and have many lines of conflict that require addressing. We thoroughly understand this process and the requirements of the Charity Commission.
If you have found this article useful or would like any assistance with setting up a charity, please do contact our team of experts as we would love to hear from you.