What is a charity?
Charities are not-for-profit organisations that undertake activities that contribute to society. In England and Wales charities with annual incomes over £5,000 are required to register with the Charity Commission. Since April 2008 charities have had to prove ‘public benefit’ to the Charity Commission. 'Public benefit' is the legal requirement that every organisation set up for one or more charitable aims must be able to demonstrate that its aims are for the public benefit if it is to be recognised, and registered, as a charity in England and Wales.
Small charities and some religious organisations do not have to register and are called "excepted charities". Some specific types of larger charities are also not required to register because they are regulated by agencies other than the Charity Commission. These charities include universities and are called "exempt charities".
Charities that were ‘excepted’, and some that were ‘exempt’ from registration before the Charities Act 2006 - opens new browser window was passed, will have to register if their gross annual income exceeds £100,000 starting in January 2009.
Other types of organisation also undertake activities that contribute to society. These include voluntary and community organisations and social and community enterprises.
GuideStar UK will extend its coverage to include all organisations that have been set up to undertake activities that contribute to society.
What do charities do?
The origin of formally constituted charities in England and Wales can be traced back to Elizabethan times. In 1601 three specific categories of charitable activities were identified: the relief of poverty, the advancement of education and the advancement of religion. Over the past 400 years the scope of activities recognised as charitable has expanded and have been recently defined in the Charities Act 2006 to include:
the prevention or relief of poverty;
the advancement of education;
the advancement of religion;
the advancement of health or the saving of lives;
the advancement of citizenship or community development;
the advancement of the arts, culture, heritage or science;
the advancement of amateur sport;
the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity;
the advancement of environmental protection or improvement;
the relief of those in need, by reason of youth, age, ill-health, disability, financial hardship or other disadvantage;
the advancement of animal welfare;
the promotion of the efficiency of the armed forces of the Crown or of the police, fire and rescue services or ambulance services;
other purposes currently recognised as charitable and any new charitable purposes which are similar to another charitable purpose.
In addition to these charity categories it is important to recognise the services that charities provide, who their beneficiaries are and where they operate. In broad terms charities perform three services:
they provide help
they represent or campaign
they provide resources such as grants or volunteer help
Charities have three main types of beneficiary group:
individuals - including the elderly, children etc
institutions - including hospitals, schools etc
the environment - including the conservation of land, animals etc
The area of benefit of charities extends from individual local communities to regions, countries, continents and, in some cases, worldwide.
How many charities are there?
GuideStar UK holds information on the 169,000 registered main charities in England and Wales. All these charities are required to make annual returns to the Charity Commission. All those with annual incomes over £10,000 are required to file annual reports and financial statements. Approximately 60,000 registered main charities file such documents. From April 2009 the threshold for submission of annual reports and financial statements is planned to increase to £25,000.
We do not hold information on the 22,000 subsidiary charities that are recorded on the Charity Commission's Public Register of Charities but are not required to complete annual returns nor file annual reports and financial statements.
Who works for charities?
The work of charities is undertaken by both volunteer and paid staff. Many of the larger charities use a combination of volunteer and paid workers. However, the vast majority of charities are run solely by volunteers.
Trustees are a special form of volunteer - it is these people who are legally responsible for the work of the charity. Other volunteers contribute to the work of charities by directly helping people and by fundraising, campaigning, and undertaking administration.
Find out about volunteering for a charity.
How much money do charities spend each year?
It is estimated that registered charities in England and Wales spend £36 billion each year. Most of this money is spent on charitable activities, including on grants to individuals or other charities. However, charities also have to spend money in order to generate the funds they need. These income generating activities include fundraising initiatives, running trading subsidiaries and charity shops, and the management of investment assets.
Where do they get this money from?
Charities receive funding from five main sources:
Donations and gifts from individuals - including legacies / charitable bequests
Grants from charitable trusts and companies
Fees for delivering services - including Government contracts
Income from the investment assets such as shares that charities hold
Profits from trading subsidiaries and charity shops
Find out about giving to a charity.