Do I set up a charity or Business?

gumbie121

Dear All,

I have an idea which I would hope would raise a fair bit of money for cancer related charities/researchers/hospices.

I have read the information about setting up a charity which seems fairly straight forward. However, my stumbling block is the employment side.
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'Don’t forget that trustees cannot be paid for their role, nor can they be employed by the organisation of which they are a trustee.'
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For this idea to work, it would require a full time person to run the charity/business and I do have a family member in mind as they have the correct knowledge and resources to do the job.

Therefore, If I was to be the director/trustee would it be allowed to employ a family member to run the charity and take a wage.

Or, would it be better to set up a company, where money would be paid to the company for it to then be distributed to charity. like the company ' in my locker .co.uk' for example, who state that they take 25% of sales to run the business with the remainder going to charity.


Thanks in advanced for any help. I will endeavour to answer any further questions to ensure I get the best answers.

Brassedoff

You really need to draw up the "pro's & "cons" of the idea and operation.

The rules governing charities are reasonably strict, but it is far more tax efficient (the benefit) to be one.

Being a trustee and employing a family member is not an issue. I believe trustees can also earn a wage too, if not many of this London based mega charities would be well short of Lord A or Lady Z.

You will get a variety of advice on here. It would be best to consult a professional who will steer you down the right road, it's just too complex for a forum to run through and my meter chimes in soon

Savvy_Sue

My understanding is that at present there is some discussion about paying trustees to be trustees, but it hasn't happened yet (and many in the third sector think it would not be the way to go).

If your governing document allows it, then trustees can be paid for providing professional services, for example we've paid one of our trustees for some consultancy work.

However ...

if you look at the Charity Commission's website, and in particular details of enquiries they've made into charities where all is not as it should be, then it's often the case that families are involved: questionable decisions are made, no-one likes to say no, and funds aren't going where they should.

And also, setting up a charity isn't a trivial undertaking, and in the longer term you may have a more stable situation if you don't employ a family member - what if you fall out / they want to do something else / they fall ill etc?

My suggestion would be to set up a company and give generously to charity.

Brassedoff

Savvy_Sue wrote: »

My understanding is that at present there is some discussion about paying trustees to be trustees, but it hasn't happened yet (and many in the third sector think it would not be the way to go).

If your governing document allows it, then trustees can be paid for providing professional services, for example we've paid one of our trustees for some consultancy work.

However ...

if you look at the Charity Commission's website, and in particular details of enquiries they've made into charities where all is not as it should be, then it's often the case that families are involved: questionable decisions are made, no-one likes to say no, and funds aren't going where they should.

And also, setting up a charity isn't a trivial undertaking, and in the longer term you may have a more stable situation if you don't employ a family member - what if you fall out / they want to do something else / they fall ill etc?

My suggestion would be to set up a company and give generously to charity.

Sue your suggestion is neither tax efficient for the giver, charity as receiver & doner.

They are in-built mechanisms governing charities that allow major benefits. That's why they become charities. As for employing a trustee as a consultant, this is even more shadier than paying a trustee £120,000 to chair and represent it. At least that's open to scrutiny.

I am a bit baffled at the advice given.

If the OP is this confused, I suggest they go and see a charity & tax professional as all the advice I have read on here would now be confusing me.

CKhalvashi

Brassedoff wrote: »

Sue your suggestion is neither tax efficient for the giver, charity as receiver & doner.

They are in-built mechanisms governing charities that allow major benefits. That's why they become charities. As for employing a trustee as a consultant, this is even more shadier than paying a trustee £120,000 to chair and represent it. At least that's open to scrutiny.

I am a bit baffled at the advice given.

If the OP is this confused, I suggest they go and see a charity & tax professional as all the advice I have read on here would now be confusing me.

I can see the tax benefits here, however I do have to say that I see with the advice you've given.

Contracts for services are another possible area regarding the charity, but again, this needs to come under scrutiny for obvious reasons.

CK

Mistral001

I cannot understand this. There are several cancer charities out there doing a good job. Why would you want to set up your own charity?

Savvy_Sue

Mistral001 wrote: »

I cannot understand this. There are several cancer charities out there doing a good job. Why would you want to set up your own charity?

Not to mention the number of mergers there have been in recent years ...

gumbie121

Thank you for the replies. I am still investigating the best way to go, I have contacted the Charity commission to answer some questions.

I appreciate there are already companies doing a good job in raising money for charity, but they are raising money through their only ideas.

I feel that I have a great idea - are you suggesting I should just ring Cancer Research and tell them!

I would like to stand alone and have my own brand.

anamenottaken

gumbie121 wrote: »

Thank you for the replies. I am still investigating the best way to go, I have contacted the Charity commission to answer some questions.

I appreciate there are already companies doing a good job in raising money for charity, but they are raising money through their only ideas.

I feel that I have a great idea - are you suggesting I should just ring Cancer Research and tell them!

I would like to stand alone and have my own brand.

Depends whether your motivation to do whatever it is is chiefly for your own satisfaction or to help others.