Further Information on Charitable Status

Further Information on Charitable Status

Restrictions on Charities

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;
• 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.

More on charitable activities.

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.

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 the Inland Revenue 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.

The application process requires that you apply in writing to the Inland Revenue, but before you do this, 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;
• 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 the Inland Revenue, it is worthwhile to check that your purposes and activities are charitable. You can do so by:

1. contacting the Charity Advice Unit at NICVA on telephone 028 9087 7777, email cas@nivca.org or website: www.nicva.org;
   
   
2. submitting a draft governing document (e.g. constitution) to the Inland Revenue for feedback. For details go to www.inlandrevenue.gov.uk/charities.

More on applying for charitable status


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);
  
• 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) 1964.
• Charities (Northern Ireland) Order 1987.
• Trustee Act (Northern Ireland) 1958.
• House-to-House Charitable Collections Act (NI) 1952.
• Trustee Act (Northern Ireland) 2001.

In the future a Charity Commission for Northern Ireland will be established, which will oversee the registering and regulation of charities.

More on Charitable Status
More on charity legislation

Charity Law Reform

The Department for Social Development (DSD) in Northern Ireland has proposed changes to charity law and its administration system for Northern Ireland. Key areas under consideration include:

• expanding the definition of charitable purposes in law;
• increasing accountability and transparency;
• setting up a registration system for charities in Northern Ireland;
• providing support and guidance to charities in Northern Ireland.

A review of charity law is also underway in England and Wales, and in the Republic of Ireland. These reviews are likely to bring changes for the community and voluntary sector.

To find out more on changes to charity law, view the following websites:
www.nicva.org - NI Council for Voluntary Action
www.dsdni.gov.uk – Department for Social Development.

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.

More on governing documents

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.