Running a charity isn’t just about doing good, it’s about doing it well. Charities must balance purpose with accountability, making sure every pound raised and spent is handled transparently and in line with their legal obligations.
Here’s a simple overview of what’s involved in running a charity successfully and staying compliant.
Getting started
Every charity should be set up with a clear purpose and structure. You must operate as a registered charity. There are different charitable structures available, and these can impact on what disclosures and filings are required.
Managing the money
Charities must keep proper records of all income, donations, and spending. A dedicated bank account should be opened in the charity’s name and used for all transactions. Good bookkeeping isn’t just best practice, it’s a legal requirement and essential for transparency with trustees, donors, and regulators. We would advise using an online bookkeeping system such as Xero.
Governance and oversight
The trustees are ultimately responsible for the charity’s finances and compliance. They must make sure funds are used only for charitable purposes, annual accounts are approved and filed on time, and proper financial controls are in place. Many charities also appoint a CEO or manager to handle daily operations, but accountability always rests with the board.
Accounting and reporting
Every charity must prepare annual accounts and, in most cases, file them with the Charity Commission. If your charity is also a company, accounts must also be filed at Companies House. The level of detail required depends on the charity’s size and structure. Smaller charities can use simplified reporting formats, while larger ones follow full accounting standards.
People and payroll
If your charity employs staff, you’ll need to register for PAYE with HMRC, provide payslips, and report through Real Time Information each month. Volunteers don’t create payroll obligations, but it’s important to distinguish between paid and unpaid roles clearly.
Tax and VAT
Most charities don’t pay Corporation Tax on income used for charitable purposes, but some trading activities can be taxable.
If the charity’s taxable income exceeds £90,000 in any 12-month period, it must register for VAT.
Voluntary registration can also be worthwhile in some cases — for example, if your charity regularly incurs VAT on costs connected to a business trading activity.
Insurance and risk
Appropriate insurance helps protect trustees, staff, volunteers, and the charity’s reputation. Common types include employers’ liability, public liability, and professional indemnity. It’s good practice to review your cover annually.
Transparency and communication
All official charity communications i.e., letters, invoices, websites, and emails, must clearly show the charity’s name, registered number, and address. Being open and consistent helps maintain public confidence and compliance.
If you would like to discuss this in more detail, please feel free to contact us or book a free online meeting.
