What is a charity?
Please note this section is UNDER REVIEW. For up to date information visit the Charity Commission for Northern Ireland and see NICVA’s advice note on Charitable Status.
Not all voluntary organisations, however worthy their activities, are charities. For an organisation to be a charity it must be set up for purposes that the law regards as exclusively charitable. Charitable status brings both benefits and restrictions. Management committees should consider all the relevant facts before deciding whether to apply for charitable status.
Benefits and restrictions of charitable status
Registration and regulation of charities
Charity Law Reform
Changes are underway to the regime for regulating charities in Northern Ireland, under The Charities Act (Northern Ireland) 2008.
The new Charities Act provides for the establishment of a Charity Commission for Northern Ireland. The Commission came into being in June 2009, as a Non-Departmental Public Body sponsored by the Department for Social Development. It will be responsible for the regulation of charities in Northern Ireland and for promoting best practice in the management and governance of the charitable sector.
The Act also provides for the establishment of a register of charities in Northern Ireland. This and other measures will be implemented in stages.
Useful links
- Further information on the provisions of this new Act and updates on new developments will be added to the Changes to Charity Law section.
- The Charity Commission for Northern Ireland
- NICVA have a dedicated charity law reform page with all the latest developments and a briefing paper on the Act.
Charitable purposes
When your charitable purpose changes
Charitable organisations may find that their aims and activities change or expand over time. If your organisation makes any alterations to its objects (i.e. the purpose for which the organisation has been set up) this could affect your charitable status. Therefore, it is best to seek advice before making changes to your organisation's governing document.
There are currently four categories of purpose that the law recognises as charitable. These are:
- the relief of poverty;
- the advancement of education;
- the advancement of religion; and
- other purposes beneficial to the community.
It is proposed that the current four categories of charitable purposes be extended to 14 charitable purposes. Any such changes to charity law will be widely publicised once in place and details of new developments are included in the Changes to Charity Law section.
To find out more go to www.dsdni.gov.uk under the Voluntary & Community Unit section, or contact the Governance and Charity Advice Service at NICVA on tel: 028 9087 7777 or email cas@nicva.org
In order to obtain charitable recognition, your organisation's main purpose must generally fit within one of the categories above. Your charitable purpose will impact upon the type of activities that your organisation can undertake.
More on charitable purposes and activities
Benefits and restrictions of charitable status
Being a charity is not a legal structure, it is an overlay to your organisation or group. As such, it brings additional benefits, but also carries the responsibilities associated with charity law and restricts the type of activities that you are able to undertake as a charity. It is important that Management Committees are fully aware of these and understand the relevant processes for registration and regulation of charities in Northern Ireland.
The benefits of being a charity include tax exemptions and recognition that the organisation's work is for the benefit of others.
Note:
If your group or organisation has charitable recognition, your governing document provides essential information on the charitable purposes and activities that your organisation can undertake.
However, charities are only permitted to undertake certain types of activities. This may place restrictions on your organisation and its work. Activities and purposes not recognised as charitable include:
- certain political, campaigning and pressure group activities;
- large scale permanent trading; and
- arrangements where individuals running the organisation benefit personally.
In general, charities must not seek to persuade members of the public to vote for or against a candidate or political party. But charities can seek to change or retain a particular policy or laws at home or abroad, provided that it is directly related to the charity's work and designed to further its objects.
Registration and regulation of charities
The regime for registration and regulation of charities in Northern Ireland is set to change significantly as the new Charities Act takes effect. The information below describes the arrangements currently in effect and will be updated as the new provisions are introduced.
Becoming a Charity
Whether or not an organisation is a charity is purely a question of fact and depends on whether its purposes are exclusively charitable in law.
However, formal recognition is necessary if a charity is to benefit from tax and other concessions. In Northern Ireland, groups and organisations write to HM Revenue and Customs (HMRC) for charity recognition. If successful, your organisation receives a letter with a reference code, which recognises your activities as charitable under law and grants certain tax benefits.
Before you apply, your group or organisation will need to clarify:
- the need to set up a group (if you are just starting out);
- the type of activities you will carry out; and
- written rules for the organisation (e.g. constitution).
Charity law is complex, therefore, it is recommended that you seek information and advice prior to becoming a charity. Before applying to HMRC, it is worthwhile to check that your purposes and activities are charitable. You can do so by:
- contacting the Governance and Charity Advice Service at NICVA on telephone 028 9087 7777, email cas@nivca.org or website: www.nicva.org; or
- submitting a draft governing document (e.g. constitution) to HM Revenue & Customs for feedback. For details go to www.hmrc.gov.uk/
More on applying for charitable status
Evidence of charitable status
A charity will often (though not always) have evidence of being recognised as a charity. This evidence may include:
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charity registration (e.g. charities in Northern Ireland that are UK wide may be registered with the Charity Commission in England and have a charity reference number); or
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charitable recognition (e.g. in receipt of a letter issued by HM Revenue & Customs giving a reference code that recognises groups/organisations in Northern Ireland as having charitable purposes, which also grants certain tax benefits).
Info sheet: Charitable Purposes and Activities
Regulation of Charities
It is often assumed that the system of charity regulation and administration is the same throughout the UK and Ireland. This is not the case. One system covers England and Wales and is operated by the Charity Commission, while a different system operates in Northern Ireland and a different system again in Scotland and in the Republic of Ireland.
The Department for Social Development (DSD) is the charity authority for Northern Ireland. It has responsibility for policy and most of the legislation relating to charities in Northern Ireland. It operates a Charities Branch within the Voluntary & Community Unit that has a primary function of:
- giving consent to the disposal of property by charity trustees;
- making schemes to, for example, change the objects of a moribund charity (i.e. on the verge of becoming obsolete); and
- giving informal advice to Management Committees of charities and their solicitors.
The DSD has no statutory role in the setting up of new charities and does not advise on the wording of governing documents.
Relevant legislation for Northern Ireland includes:
- Charities Act (Northern Ireland) 2008 (see notes above);
- Charities Act (Northern Ireland) 1964;
- Charities (Northern Ireland) Order 1987;
- Trustee Act (Northern Ireland) 1958;
- House-to-House Charitable Collections Act (NI) 1952; and
- Trustee Act (Northern Ireland) 2001.
In the future the new Charity Commission for Northern Ireland (established in June 2009) will oversee the registering and regulation of charities.
More on Charitable Status
More on Charity Legislation
Non-Charitable Organisations
Many voluntary organisations and community groups are not-for-profit but are not a recognised charity. Even so, their aims and purposes may still be considered philanthropic or benevolent. This means that, in law, it is not charitable, although it is run along the same lines as a charity including:
- it is set up and run on similar lines to a charity;
- the majority of its objects (purposes) and activities are either charitable in law or close to being so;
- it does not permit anyone to make a profit from being associated with it; and
- its purposes are not political.
Some organisations in this situation refer to themselves as a "non-registered charity", although this is not technically correct. It is always best to be clear about whether or not you are a charity.
