How to Become a Charity

Whether it’s raising funds to help cancer patients, encouraging disabled gamers to play Fortnite or saving exotic species of animals, charities do amazing things for people and planet. But they can’t do it without your support.

To qualify as a charity, an organisation must have exclusively charitable aims and cannot carry out non-charitable activities. So it’s time to jump through some hoops.

What is a charity?

A charity is an organization whose primary objectives are philanthropy and social well-being. It may support a wide range of issues and causes, from animal rights and environmental concerns to community development and the relief of poverty.

A charitable organization must comply with all relevant laws in its jurisdiction, including those relating to fundraising, recordkeeping and reporting. It must also abide by the requirements set out in its organizing documents (e.g., articles of incorporation) and the requirements for tax exemption set out in IRS Publication 557.

A charity must have a clear aim and keep members and the general public informed of its activities, outlook and goals. This will allow members and the general public to make an informed decision about whether to support the organization financially. A charity should also ensure that its trustees have limited liability, which is typically provided for by setting up a charitable company rather than an unincorporated association. This can be beneficial as it will protect trustees from personal liability for actions and decisions made on behalf of the charity.

Why do you want to start a charity?

It is vital to identify a cause that aligns with your passion and the need. Once you’ve identified this, narrow down the focus to ensure your charity can achieve its aims. You will need to explain this in your aims statement and report annually on how you are meeting your charitable objectives.

A charity’s aims have to fall into the categories that the law defines as “charitable.” These include things like preventing or relieving poverty, advancing health, education and the arts, heritage and science. It also has to be established exclusively for what is known as public benefit. This means that the charity can’t make profits, nor can its members or shareholders benefit from the activities of the charity.

Once you have identified the purpose of your charity, it is important to select a name that is clear and descriptive. Be sure to search your state’s database of nonprofit organizations before selecting a name so that you can be confident it is not already in use. The next step is completing your organization’s organizing documents and filing for tax-exempt status with the IRS.

What is your mission statement?

A charity’s mission statement is the foundation for all operational decisions. The mission explains your charity’s fundamental purpose and how it differs from other similar charities. It also provides a template for how to communicate your cause to volunteers, donors and staff.

A good mission statement answers the why, who and how questions that are central to your charity’s vision. It also describes your unique contribution to society and what sets you apart from other charitable organizations. For example, Invisible Children’s mission is to end violent conflict affecting families in Central Africa through locally-led solutions.

The best way to come up with a great mission statement is to gather the people who are most passionate about your charity and get them talking about how it’s made a difference in their lives and the world around them. Once you have all of the responses jotted down, you can start putting them together into a mission statement. The final mission statement should be short, easy to understand and capture the emotions of your target audience. It should also avoid buzzwords and jargon.

What type of charity do you want to start?

When starting a charity organization you need to start by figuring out your "why". This doesn't have to be some grand global vision but rather what drives you to start the charity in the first place. It will help guide you in your preparations for getting your organizing documents together, applying to the IRS to get tax exempt status and recruiting a board of directors.

You'll also need to decide what type of charity you want to be. A charity can be a trust, corporation or association and must be established exclusively for what's called public benefit. Its aims must be of benefit to the public as a whole or to a significant section of it - for example, preventing poverty, relieving suffering or advancing education, culture, heritage or science.

Once you've decided on a legal structure, you need to choose a name and check that it isn't already taken by another charity in your area. Then you need to prepare your mission statement and set out your vision for the future of the charity.

How do you get started?

There are a few key steps that must be taken to get started with a charity. First, determine a need in your community that you are passionate about meeting. Next, find trustees to form the board of your new charity. These individuals should be knowledgeable about the legal requirements of charities and have an interest in your cause. Consider hiring a lawyer to help you draft the organization's organizing documents.

During this process, you should also apply for an Employer Identification Number (EIN). Once your charity is registered, you can begin raising money and serving the needs of your community.

To raise the most money, your charity should have a strong brand identity and donor-friendly website. You should also make a concerted effort to enlist volunteers. These individuals will not only help you to expand your programs, but they will also serve as ambassadors for your charity. And lastly, be sure to follow the Charity Commission's guidelines for fundraising. This will ensure that you are not jeopardizing your tax-exempt status. You can learn more about fundraising regulations in our free grant writing guides.