Set up a charity

To set up a new charity, you must decide what sort of legal structure it will have.

There are three main types of charity structure:

• unincorporated association
• charitable company
• charitable trust

Your charity structure is defined by its governing document, the legal document that creates the charity and explains how it should be run. See create a governing document for your charity.

The type of structure you choose affects how your charity will operate, such as:

• who will run it and whether it will have a wider membership
• whether it can enter contracts or employ staff in its own name
• whether the trustees will be personally liable for what the charity does

Unincorporated association

Unincorporated associations can be easier to set up than other forms of charity. You may decide to use this structure if you are aiming to create a small charity with more than one charitable purpose.

Unincorporated associations do not have a separate legal identity, which means they can’t hold land or investments in their own name.

The charity trustees have personal legal responsibility for what the charity does. If you decide to set up this type of charity, it would be a good idea to seek legal advice about your liabilities.

Charitable company

A charitable company can own land and enter contracts in its own name.

Charitable companies also have limited liability for debts or lawsuits. This means that their company members are usually only liable for a limited amount of money that is set out in their governing document. See create a governing document for your charity.

Charity trustees will still be liable for losses due to fraud or intentional wrongdoing.

Charities that decide to be companies may:

• be large
• have employees
• enter commercial contracts
• own freehold or leasehold land, or other property

A charitable company must comply with the Companies Act 2006. Companies must register with the Charity Commission for Northern Ireland and with Companies House.

Charitable trust

Charitable trusts are usually set up with a specific sum of money and a group of people who become the trustees.

You might use this structure if your charity:

• will only make grants to individuals or organisations
• will be run by a small group of people
• will not have a membership
• will not employ staff or enter into contracts

Like unincorporated associations, charitable trusts don’t have a separate legal identity, which means they can’t hold land or investments in their own name. This means that the charity trustees share personal legal responsibility for the trust.

It may be valuable to seek legal advice when setting up your charity – see choose a solicitor for your business.