The practice of ‘charity’ is in no way a modern concept - it has been around for hundreds of years. In the Middle Ages charity was most associated with the church and the giving of alms to the poor. Medieval hospitals were also a popular form of charity – they provided shelter the poor, elderly and sick. It can be argued, however, that the foundations of modern charity can be found in the Charitable Uses Act of 1601, also known as the Statute of Elizabeth. This act was part of a general reordering of the system of public responsibilities for the poor. It contained a list of activities that the State deemed of a benefit to society and to which it wanted to encourage donations. This act changed ‘charity’ into something much more like the system we have today. Since then thousands of charities have been formed. The Victorian era, in particular, saw a large increase in the number of charitable organisations such as Barnado’s and the Salvation Army. This was mainly as a response to the restrictive nature of the Poor Law. Today there are over 180,000 registered charities in England and Wales.
What is a charity by today’s standards? In general a charitable organisation is one that is philanthropic and non-profit. The legal definition of a charity, however, depends on the country. According to the Charity Commission an organisation can be considered a charity if it is set up under the law of England and Wales and is set up for charitable purposes. There are hundreds of thousands of registered charities and even more small charities that do not have to register. The majority of charities in England and Wales have under £100,000 in annual income. Only a fairly small percentage of the total charities have over a million in annual income.
The ‘charitable purposes’ that define a charity in England and Wales cover a wide range of different principles. An organisation can be considered a charity if it is working towards the prevention/relief of poverty or if it is working towards relief for those in need (e.g. illness, disability, age). If an organisation is working towards the advancement of education, health, religion, environmental protection, communities, culture and heritage, equality or animal welfare it can also be considered a charity. Lastly, if an organisation is trying to promote the efficiency of the armed forces, the police, fire, ambulance and rescue services it can gain charity status.
In order to become a charity your organisation must have aims that are for the public benefit. Your aims will not be considered as ‘charitable’ if they are for the benefit of a specific individual or a person who is related or connected to the person who has set up the charity. If an organisation has aims which are considered illegal or overtly political it will not be allowed to become a charity. In general it is often advised that groups wanting to become charitable organisations should check whether there are any charities already registered that have the same aims. When choosing a name it should not be anything too similar to something that already exists.
If your charity has an income of over £5,000 per annum and is based in England or Wales, it will need to be registered with the Charity Commission. This can be done by application form through the Charity Commission website, who will judge whether your organisation is eligible for a charitable status. There are a large number of regulations for this procedure and it may be wise to get some legal advice from a law firm that deals with charity law. Many of these firms can help with forming a new organisation and the funding arrangements of this procedure.