There are rules that all charities have to follow:
- A charity’s aims have to fall into categories that the law says are charitable. These are things like preventing or relieving poverty, or advancing the arts, culture, heritage or science.
- It has to be established exclusively for what is known as public benefit (see below). That means its only purpose must be charitable.
- Charities can’t make profits. All the money they raise has to go towards achieving their aims. A charity can’t have owners or shareholders who benefit from it.
Charities have to state what their charitable objectives are in order to be registered with the Charity Commission, and then explain how they are meeting them in their annual reports, which are publicly available. You can read more about how charities make themselves accountable in the accountability and transparency section.
To be a charity, an organisation has to:
- Be of benefit
It has to do positive things, and if there are negative side-effects or consequences, these must be outweighed by its positive work.
- Benefit the public
This doesn’t have to mean all of the public. It could mean everyone in a geographic area, or everyone with a specific characteristic, such as people with cancer, or who work in teaching.
It’s up to the Charity Commission to decide whether an organisation passes the public benefit test. It does this on the basis of its guidance, and by looking at case law.
Read more: The Charity Commission: Public benefit: an overview
Please note that this section of the website refers to the law in England and Wales. There are slight differences in charity law elsewhere in the UK.