How to Set up a Charity Organisation
Charity organizations, referred to as the Third Sector, play a significant role in the national economy of the country and more importantly, its role in engaging people through social development. In these difficult times, more and more people are moving towards the charity sector. This change is due to demographic trends, technology, societal changes, changes in work pattern and also, the lack of employment opportunities in the private or public sector. The aim of all charity organizations is to bring social changes by well thought development initiatives and interventions for the benefit of the civil society. Demand for the Third Sector is on the rise. But the big question is: how to set up a charity organization?
What you'll need:
Name of the organization
Selecting the main role holders: Chairperson, Company Secretary and Company Treasurer
Developing the constitution
Establishing the venue of the charity
Developing the PURPOSE of the charity organization to be inserted in the constitution
Opening a bank account
Name of the organization Deciding on the name is extremely important. It is just not another name. The name should reflect the personality of the organization; say something of the purpose or mission of the organization, its obligation to society and a name is well accepted by the community it serves. However the name should be unique, not previously used. The Charity Commission is known to have rejected applications because the name has been used previously.it is therefore prudent to decide on a few names and consult the Charity Commission for their approval and consent.
Selecting the main role holders: Chairperson, Company Secretary and Company Treasurer This step is of paramount importance because all charities operate on a team based approach. The strategic leadership will be provided by: • The Chairperson • Company Secretary • Company Treasurer Later the team may need to be expanded. But for the time being, these key pofficers will provide the leadership. • Suitably qualified, experienced and proven leadership skills with well developed communication and interpersonal skill would be a must for the Chairperson. And also, it would be desirable if the Chairperson has knowledge of the legislative framework of the charity sector. The next key person is the Company Secretary. This person should have some sort of legal exposure, good administrative skills and knowledge, good and well developed people management and managerial skills and good knowledge of human resources. This person will organize meetings, give notices to the members, Organize the Annual General Meeting, Liaise with external bodies, and make sure, all activities comply with the constitution and best practice of the current regulations. The last key player at the initial stages of inception and formation would be the Company Treasurer. This person would look after the finances of the charity organization by developing income and expense forms, invoices and dealing with accounts and expenditure such as rent, out of pocket expenses to volunteers, and making payments to the office holders according to agreements, constitution and best practice. Often, the funders would like to see the income and expense documents and ideally the Annual Return. The Company Treasurer will be responsible to deal with HMRC (Her Majesty’s Revenue and Customs), Cutting unnecessary expenses and controlling the purchasing section of the organization. It is also worth mentioning that any person who is declared bankrupt, is not eligible to hold any of the above roles. Bankruptcy, criminal convictions, etc should be checked at the interview and declaration stage. So, what skills are the leadership required for all the key members? • People who can lead holistically • Can demonstrate understanding of the legal framework • Have good managerial skills • Have good ethical values • Well accepted and respected by the community • Well connected within the community • Must have a long term vision • Be committed • Good interpersonal and well developed communications skills These are just a few examples of good leadership. One of the main reasons that charity organizations encounter difficulties during the planning and launch stages is because of lack of leadership. Leadership is the most important element, therefore its importance cannot be stressed too highly. Leadership is critical to the achievement of high performance, no matter what your business or area of responsibility. It is difficult to quantify an answer as to what leadership is: Leadership may mean: • Providing direction and achieving goals. • Being a facilitator. • Inspiring the best performance out of all members of the team. • Competent planning and motivation, taking risks and making decisions, not being afraid to face challenges and changes. • Having a clear focus, communication it to others and giving them the space to develop. • Bringing people together to achieve a common purpose.
Holding the first Extraordinary Meeting. Generally speaking, there are two types of meeting: The AGM (Annual General Meeting) This is normally held once a year with the members and trustees. All other meetings are referred to as EGM’s (Extraordinary General Meetings) or SGM’s (Special General Meetings). These can be held at any time. All meetings must have agendas and the participants must be notified in advance. The first meeting should ideally cover areas like the name, deciding who will be the chairperson, company secretary and company treasurer. The constitution and the purpose of the charity organization should also be discussed and formalised at this time. All meetings need to be accurately minuted and signed by the Company Secretary. It is imperative that the minutes of the meetings must be properly recorded.
A constitution must be developed and adopted. The charity commission is there to provide help with the formation of the constitution. It is a fundamental document where all the rules and regulations of good governance will be stated to be signed by all the above mentioned key players and must be followed in all of the charities activities. It covers rules related to membership, election, meetings, selection of trustees, termination of members and trustees, winding up, how to deal with charity assets, and most importantly, what should be the key purposes and aims of the organization. The constitution is to be signed off by the key players of the charity organization and dated and kept in a secured place. It is a legal document and all the members, and the management team must be familiar with the clauses of the constitution. It should be noted that these processes are not an exact science and there will times when amendments will be required and new clauses will need to be added. However amendments and additions will have to be adopted in a constitutional manner according to the agreed precepts of the agreed constitution. Each of the amendments and additions will have to be endorsed by the management team to confirm agreement and adoption of the changes. Any such changes must be notified to the Charity Commission in a timely manner, as part of good practice of governance. It should be noted that this again depends on the size of the organization.
Deciding where the office should be This is the physical office space. it need not be expensive and glamorous. A space which is simple would be adequate. It is of paramount importance that due consideration is paid to health and safety, not only for the staff and members, but also for visitors. The office space need not be venue for the working of the charity and its aims, it can simply be the place of administration. The actual centre of operations for the charity will definitely require Public Liability Insurance. Location is important for the purpose of raising funds and projecting the most visible image for the organisation. The venue should ideally match the demographic, for example, if the purpose is to help people with employment, the charity should be based where high unemployment is noticeable. Attention should be paid to ensuring that the venue matches the stated aims of the charity. If there will be a large footfall, then the building needs to reflect that purpose. There should be adequate access for both able bodied and disabled visitors, and there should be provision for the correct amount of facilities.
Establishing the Purpose and Relevance of the Charity This should be taken very seriously. It is a route to disaster to formulate a charity for a futile purpose. It has to engage the public interest in order to garner both financial and practical support. Its Raison d’être should be thoroughly discussed because, once the purpose has been established and inserted in the constitution and submitted to the charity commission, it is difficult to amend the articles of constitution. There are ways, but is not that straight forward. It is better to avoid the pitfalls prior to launch. Purpose is about the intention of the charity organization, what it intends to do, and who will benefit from its activities. It is a statement of intent. The wording must be well thoughtout. The statement should not be overly wordy, but should be clearly written and a bold statement should suffice. It is best to avoid political issues. Funders are reluctant to deal with politically motivated charity organizations. In short, the purpose should be: • Realistic • Specific • Achievable • Measurable The statement should be written in such a manner that it is clear who will benefit from the charities activities. This group of people are called the beneficiaries. The statement must be based on the needs of the community. Ideally the wording should be formed to reflect the needs of the community it serves.
A bank account needs to be opened, and ideally, there should be two signatories. To open a bank account, most banks would like to see the constitution and see evidence of the probity and suitiblility of the two signatories.
Indication of a start date would be appropriate at this stage. A start date will give a sense of direction and should not be over ambitious.
Important and Legal Documents: • Public Liability Insurance, where the activities will take place • Employee Liability Insurance, if the charity has employees • Health and Safety Policy according to the Health and Safety Act 1974 • Equal Opportunities Policy • Policies related to Inclusion and Diversity • Policies related to training and development • Organization structure • Membership form • Invoices • Timesheets • Income and expense forms • A suitably qualified accountant. • Some funding authorities also want to see any policy related to the preservation of the environment Health and Safety, public liability and equal opportunities documentation should be available and accessible at all times.
stationery and tools: This stage is not a must but good practice. • Letter head • Stamp with the name of the organization • Slogan • Logo • Computer • Filing System • Website • A small brochure or flyers which will include: Lists of activities and the purposes for communication to all the members and management team. This will ensure that everybody is singing from the same hymn sheet, and will give a clear understanding of the values and aspirations of the organisation. It is imperative that the corporate literature and information relating to the organisation are written in a clear and succinct style to ensure the maximum understanding of all parties. All the above mentioned factors are basically marketing tools aimed at attracting the attention of funders, members and to serve the community according to the purpose of the charities aims and precepts. These are also, available to the public. Therefore, wording must be constructed with due consideration. Misleading words and messages will not be taken lightly, not only may potential funding be affected, but legal issues may arise with devastating consequences. Therefore careful drafting is imperative. Potential funders will want to see a website an internet presence is vital in modern business communication, and is a cost effective tool for the promulgation of the charity. The website will convey a message to public about: who is in charge, what the organization is about, how was it born, introducing the key members of the organization, current work and current funding, and future plans, et cetera. Just a note about a slogan, this is not strictly necessary, some organizations have a slogan, some do not. The purpose is simple: it is a statement for people to see what the organization is about from the perspective of mission. It is a bold statement for the public to see and also for the members of the organization to gain a greater understanding of what the organization aims to achieve. The slogan should be short, and pithy, it should be memorable. It should reflect the nature of the charity in one short sentence. The same is true of a log. Although not strictly necessary, it is a wonderful tool for branding, there are few organisations today who do not harness the benefits of a unique and captivating logo.
By now, you should be in a position to set a launch date. By launch I mean the start of activities, raising funds, and attract membership Publicising the charity to potential funders. By following the steps in this essay, you will ensure that your charity organization is formed on sound footings and has strong foundations. Above all it is imperative to follow each stage carefully and clearly, attention to detail now will avoid heartache in the future. It should be remembered; we are dealing with the public. The days of copy and paste or cut and paste seem to be over. Authenticity is becoming more important than ever. Misleading statements, misleading activities, ethically wrong activities, activities not mentioned in the constitution, receiving funds and not delivering, using funds for making profit, misusing funds and assets belonging to the charity, making decisions without consultation, etc are all dangerous issues and it will simply invite trouble. For this reason, it is always advisable to work within the legislative framework (charities Act 1993), best practice prescribed by the Charity Commission, making sure, and working towards the purpose in a legitimate manner. A well run charity not only has the potential to attract funding but also, attract the members of the community and most important, can serve the community in a constructive manner.
Always be methodical
Be Clear in your objectives