Setting up a philanthropic fund

robrooo · 6 December 2013 at 12:40PM

I would like to set-up a fund for the benefit of others in a certain section of society, but I am unsure what organisational and legal structure I should be looking at. I am somewhat familiar with running small Ltd Co's, but not trusts, CICs, charities, etc, and am not sure which is appropriate for this venture.

At the moment I think a trust is the closest match, but am unsure of the implications.

Some background:

The purpose of the fund would be to grant monetary awards to those who match certain qualifying criteria.

There would be 3 types of grants:
1. For those in urgent and dire need - individuals and families.
2. Support for those undertaking education - individuals.
3. Funding for longer term projects - could be small enterprises, individuals, businesses or other organisations, possibly charities.

All beneficiaries would be in the UK. None of them would be related to me in any way.

The reason I would like to set-up a new fund rather than donating to existing charities or non-profit organisations is that none of them specifically target the particular people I would like to help.

Initially, and in the short-term, the fund would be small, with less than £10k to distribute annually, and would be funded from my own salaried (i.e. post-tax) income.

In the long term I would like to put in place investments which can generate an income for the fund to distribute, and also possibly accept donations from the public.

I would like the fund to be tax efficient, to maximise the amounts available for distribution.

If a trust is the best option, can a sole settlor also be the sole trustee? Can you even have just one trustee? Can a trust accept third party donations? (All the trust info on the HMRC site seems to be aimed at family trusts that benefit your own relations). If/when the fund grows I would look at adding other trustees and hope that the fund would continue after my death.

If a charity is more appropriate, what are the overheads of running one?

If a CIC, can this be tax efficient?

Anyone have any insight as to where I should start with this?

Slight aside: my ultimate aim is to create a non-profit credit union so that money could lent responsibly and at a low interest rates to the people I am targetting, and savers/investors could get a small return. Apparently I need about 15 people and £100k to do this though, at which point the fund described above would become the charitable division of a parent organisation that would include the credit union.

Thanks in advance,
Rob

gb12345 · 6 December 2013 at 2:32PM

You need professional advice, not the opinion of random people on an internet forum.

The only one of your questions I can answer is

Anyone have any insight as to where I should start with this?

Contact a solicitor and an accountant.

paddyrg · 6 December 2013 at 2:57PM

Agreed with the above, it's important to get the foundations right and take specific (and insured) legal and financial advice - including whether you can structure this to come out of your gross income and make your £10k closer to £14k.

robrooo · 6 December 2013 at 3:10PM

Yes, you're right, I do need very specific advice...happily I have found a solicitor who specialises in such matters, and I already have an accountant for my other businesses.
Cheers.

sleepymans · 6 December 2013 at 4:17PM

http://www.charitycommission.gov.uk/ would be a good place to look.

National Council for Voluntary Organisations may also be a source of help and there will probably be a community voluntary organisation in the locality where you (or your proposed work) are based.

But there are so very many small charitable and philanthropic organisations already in existence, all having running costs and all chasing income, trustees and volunteers, that if it were me I would make huge efforts to find an existing group to join forces (and share overheads) with first.