What are the alternatives to setting up a charity?

Applies in: England and Wales — and only partly. This is the least complete page in the hub and it says so at the top rather than at the bottom. The community interest company is covered in full in CIC or charity?. Every other alternative named here is a gap: no Scottish or Northern Irish position has been established for any of them, and several of the England and Wales points are unestablished too. Where this page has nothing, it says so and names what would close the gap.

Alternatives to a charity, as the regulator lists them

This is the choice you make when you decide whether to start a charity. Before choosing any form, check for similar charities that may already do the work.

The Charity Commission’s grant-making guidance opens with a list. For founders weighing the alternatives, it is the most useful single sentence there is, because the regulator names the field:

the following organisations are not charities: Community Interest Companies (CICs), co-operatives, for-profit companies, public sector bodies, some social enterprises, some community benefit societies, organisations with political purposes.

Look at “some” in front of social enterprises and community benefit societies. Those two types sit on both sides of the line. Where a given body falls depends on its own constitution, not on the label.

One result of being on that list is established, and it applies to all of them, not only to CICs. A charity may fund a non-charity, but the grant:

• must be restricted
• needs more due diligence than a grant to a charity
• must not give rise to more than incidental personal benefit

A charity with the same or narrower purposes may get an unrestricted grant. That imbalance is why non-charities are usually offered project money and rarely core funding. See Legally yes. A charity may make grants to organisations that are not charities, expressly including CICs, provided the funded work carries out the funding charity's own purposes. Grants to non-charities MUST be restricted, require more due diligence, and must not give rise to more than incidental personal benefit. In practice funder policy varies: some major funders exclude CICs outright..

Community amateur sports club (CASC)

A community amateur sports club (CASC) is a sports club registered with HMRC. It gets set tax exemptions and business rates relief in return for meeting conditions in law. It cannot be a charity while it is registered.

The detail of the regime is [no fact — not established] here, and this guide will not guess at it. That covers what qualifies, how registration with HMRC works, what tax reliefs follow, and how it compares with charitable status for a sports body.

Two things touching CASCs are established, and they are worth having:

• A registered CASC gets mandatory business rate relief. The relief in Local Government Finance Act 1988 Sch.4ZA para.2 has two limbs. The first is a charity or trustees for a charity using the property wholly or mainly for charitable purposes. The second is a registered CASC. So on rates, a CASC sits with charities and not with CICs. See Mandatory charitable rate relief applies only where the ratepayer is a charity or trustees for a charity and the property is wholly or mainly used for charitable purposes, or the ratepayer is a registered CASC. A CIC qualifies under neither limb. A CIC may still be given DISCRETIONARY relief by the billing authority as a non-profit or voluntary organisation., which records the comparison. This is England and Wales only. Scotland and Northern Ireland have separate rating rules that are not established here.
• CASC status and charitable status are alternatives, not a sequence. That much follows from the way the reliefs are built. But the detail of the choice is [no fact — not established]. That includes whether a club can hold both, and what happens if it wants to switch.

Community benefit society, co-operative and registered society

These are the forms most often suggested to community groups, and the research on them is thin to the point of absence. All of these are [no fact — not established]:

• what a community benefit society is
• how it registers with the Financial Conduct Authority
• whether and when it can be a charity
• what an asset lock means for it
• community shares
• the exempt-charity position of some registered societies

Three points are established. All are about moving between forms rather than about the forms themselves:

• A registered society can convert into a CIO by a statutory process like the charitable company route, under Charities Act 2011 s.229.
• A CIC can become a registered society under s.56 of the 2004 Act. That is one of only three ways out of the CIC form. See Once a company is a CIC the only exits are dissolution, or conversion to a charity or CIO. 'This means that once a company is a CIC it cannot become an ordinary company.'.
• Converting a registered society to a CIC costs the same as forming a CIC by post.

If nothing else appears here, that is a gap in this site. It does not mean these forms are unusual or unsuitable.

Staying unincorporated, and staying unregistered

The most common alternative to setting up a charity is not setting up anything new at all. Two things about it are well established.

In England and Wales you can be a charity without being a registered charity. A body is a charity if it meets the legal definition.

Registration is a separate duty that applies above £5,000 of gross income. So a small unincorporated group with exclusively charitable purposes already is a charity. It has the duties that go with that, but it is not on the register.

Whether it has a right to be registered if it asks is unresolved — see the discussion at Do you have to register?. This does not work in Scotland, where registration is what makes you a charity. Nor does it work in Northern Ireland, where every charity must register.

Charitable tax status does not require registration in every case. HMRC recognition for tax purposes is a separate application to a separate body.

A body that must register with a charity regulator must do that first. The two run one after the other, not side by side. But an excepted or exempt body may apply to HMRC directly. The tax substance belongs to the tax hub.

The cost of staying unincorporated falls on the trustees in person. It is the reason most groups end up incorporating. The options are set out in legal structures compared.

Trustees of a trust or an unincorporated association sign contracts and hold property in their own names. Their indemnity comes out of the charity’s funds only, which is worth nothing when the fund is empty. Neither form can hold property, employ staff or contract in its own name. See .

What to do about it

Your purposes may be exclusively charitable, with the money coming from donations, legacies, Gift Aid and charity-only funders. If so, the alternatives will cost you more than they save.

Some of that may be untrue. You may have a non-charitable purpose, a founder who needs to be paid to run it, or investors who need a return. Then one of the alternatives is probably right. The CIC is the one this site can document fully for now.

Next: Decide whether to start a charity. That step ends in a recorded decision. It names the alternatives you considered and why you rejected them. A funder or a future board will ask for exactly that record.