Unincorporated Charitable Association
Setting Up UK Unregistered Charities
What Are Unincorporated Charitable Associations?
Unincorporated charitable associations are small-scale, non-registered charities, clubs, or community groups that operate without formal registration with the Charity Commission or other regulatory bodies. Although not officially registered, they are entirely legal, easy to set up, and can still open bank accounts, raise funds, and apply for grants. An estimated 100,000 such associations exist in the UK, making up about a quarter of the charity sector.
What Are Unincorporated Charitable Associations?
Unincorporated charitable associations are small-scale, non-registered charities, clubs, or community groups that operate without formal registration with the Charity Commission or other regulatory bodies. Although not officially registered, they are entirely legal, easy to set up, and can still open bank accounts, raise funds, and apply for grants. An estimated 100,000 such associations exist in the UK, making up about a quarter of the charity sector.
Steps to Establish an Unincorporated Association
Setting up an unincorporated charitable association is quick and cost-free. You’ll need:
A Name: Choose a name relevant to your cause, ensuring it’s not already in use.
A Constitution: This document outlines your purpose and operations. You can use templates from the Charity Commission.
Trustees: A minimum of three trustees, aged at least 16, are required. At least two trustees must be independent if others are related or have business ties.
Opening a Bank Account
Although some banks require charities to be registered, unincorporated associations can open accounts by providing their constitution and trustee details. Having a dedicated account in your association’s name is essential for receiving grants.
Fundraising Without Being a Registered Charity
Unincorporated associations can engage in fundraising as long as their activities are open to eligible members of the public and not for personal gain. They cannot claim to be a registered charity but may qualify for Gift Aid through HMRC registration.
Grant Opportunities for Unregistered Groups
Funding opportunities for unincorporated associations often appear under terms like “community group” or “grassroots organization.” While some grants are restricted to registered charities, many options remain available, such as the National Lottery’s “Awards for All” program.
Limitations of Unincorporated Charitable Associations
Liability Risks: Unlike incorporated entities, these associations lack limited liability. Trustees or members are personally responsible for any debts or legal issues, which could arise from contracts, leases, or high-risk activities.
Income Threshold: If annual income exceeds £5,000, registration with the Charity Commission becomes mandatory.
Asset Ownership: Associations cannot own property or other assets in their name; these are held by trustees or representatives. Consider insurance to mitigate risks, especially for activities like employing staff or organizing events.
When to Opt for an Unincorporated Association
This model suits groups that:
- Want to start quickly with minimal bureaucracy.
- Expect to remain small, with annual income below £5,000.
- Are not ready for formal registration.
- Do not plan to enter into complex contracts or agreements. If liability is a concern, establishing a private company limited by guarantee may be a better option.
How to Draft Your Constitution
Your constitution must outline your group’s purpose and operational structure. The Charity Commission provides templates for small charities. When drafting, consider:
Purpose: What will your group achieve?
Beneficiaries: Who will benefit from your activities?
Geographical Scope: Where will you operate?
Activities: How will you deliver your objectives (e.g., grants, services, advocacy)?
For example: “The relief of poverty in [location] through grants and services to individuals and organizations working toward this aim.”
Keep it concise and aligned with one or more of the 13 charitable purposes defined by UK charity law.
Resources to Support Your Unincorporated Association
Numerous free tools and services are available to assist unregistered charities, including:
Grant Search Tools: Use online directories to identify funding opportunities for small groups.
Pro Bono Support: Access advice and resources from organizations offering free or discounted services.
Templates and Policies: Download ready-to-use templates for policies, governance, and grant applications.
Common Questions About Unincorporated Associations
Are they legal?
Yes, as long as they comply with charity laws and serve a public benefit.
Do they pay taxes?
Charities can claim exemptions on most income if used for charitable purposes.
Who owns their assets?
Assets are owned by trustees or representatives, not the association itself.
Do they need to register?
Registration is required only if annual income exceeds £5,000.
By following these steps and guidelines, you can establish and effectively manage an unincorporated charitable association to achieve your community or charitable goals. If you’re unsure about any aspect, consider seeking professional advice or using free resources available online.