Charities—choosing a charity structure
Charities—choosing a charity structure

The following Private Client practice note provides comprehensive and up to date legal information covering:

  • Charities—choosing a charity structure
  • Incorporated v unincorporated
  • Trusts
  • Associations
  • Company limited by guarantee
  • Company limited by shares
  • Charitable incorporated organisations
  • Choosing a charitable format

There are currently a number of structures that are appropriate for a charitable institution to adopt, the most common being:

  1. a trust

  2. an unincoporated association

  3. a company limited by guarantee

  4. a charitable incorporated organisation

Additional forms consist of:

  1. a company incorporated by Royal Charter

  2. a statutory corporation

  3. a company limited by shares

  4. an industrial and provident association

  5. a friendly society

  6. community interest company

It is likely that in time the new charitable incorporated organisation (CIO) introduced by the Part 11 of the Charities Act 2006 (CA 2006) will replace the company limited by guarantee as a choice as it has the advantages of this format but is only regulated by the Charity Commission (CC).

When deciding on the format of the charity the CC have a helpful guide: Charity types: how to choose a structure.

Incorporated v unincorporated

It is important to recognise that there are significant differences between incorporated and unincorporated organisations.

The main points in respect of incorporated institutions is that:

  1. they have a legal entity separate from that of their members or its controllers

  2. this separate legal identity allows the incorporated institution to:

    1. own property in its own name

    2. enter into agreements with third parties

    3. incur liabilities for which its members have no responsibility

These organisations would be all those charitable options, save for trusts and associations.

On the other hand, unincorporated institutions:

  1. cannot own property directly

  2. can only

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