Creating one’s own charity seems to be undergoing a bit of a revival of late. Not since the heady days of the 19 ^th Century have so many of the world’s super rich flocked to create a foundation baring their own name. Back then it was the likes of Andrew Carnegie and Joseph Rowntree, today it is Microsoft founder Bill Gates and his wife Martha, as well Scottish tycoon Tom Hunter, and actresses including as Angelina Jolie and Goldie Hawn.

Creating an eponymous charity is not an ego trip. Far from it. Setting up a charity gives the creator the power to dictate the terms of how their gift will be put to good use. Tom Hunter for example has established the Hunter Foundation with a remit to help with projects tackling poverty in both his native Scotland, and Africa. While Angelina Jolie and partner Brad Pitt’s Jolie-Pitt Foundation was established to help humanitarian causes around the globe.

Short or long term?

Before deciding on what course of action to take, it is important to consider whether you want to be involved in a project intensively and long term. If you do not, you might find that organising a one off, or annual, fund raising event, such as a lunch, suits better. If this is the case the organisation, set to benefit from your efforts will have experts on hand to guide you through every aspect planning the event.

Alternatively if you just want to select a cause to be the recipient of your donations each year there are a number of ways of doing this. To find out more about formulating a giving strategy click here.

Why bother?

Of course, while it is possible to help fund the work of your favourite cause long term without setting up a charitable body, there are tax advantages to organising your good work from within a charitable structure, which will mean that more of your money goes to helping your chosen project.

Specifically, registered charities are exempt from tax on their income (other than certain types of trading income) which is used for their charitable purposes, and they are not liable to capital gains tax on gains arising on the disposal of assets. In addition charities are entitled to relief from business rates on premises they occur and which are used for charitable purposes. Your charity may also qualify or relief from VAT (value added tax).

First things first

The first thing to do is to look at the registers of existing charities which can be found at the Charities Commission, or the Office of the Scottish Charity Regulator, in Scotland. This is because it is worth checking that an existing charity does not already spend its time and efforts in the exact same field you are considering funding through your planned charity.

“You will have to prove your charity is of public benefit… a legally defined set of criteria which dictate how a charity can demonstrate its work is benefiting a community as a whole.”

The recent example of Warren Buffet is case in point. He donated $30 billion to the Bill and Martha Gates Foundation, instead of setting up his own because it already funded projects he was interested in helping. Of course Gates and Buffet are friends, so the latter could be reasonably comfortable that his money would be used how he expected. For those who can not be so reassured, and want to press on with creating their own charity then the next step is to check it fits into one of the predefined categories listed under the Charities Act.

The categories are pretty wide and include everything from the advancement of religion through healthcare, education and national heritage.

Defining good works

Next you will have to prove your charity is of public benefit. It is not enough merely to declare that it will be working to tackle poverty in inner cities or inoculate children against Measles in Mozambique. “Public Benefit” in this instance is a legally defined set of criteria which dictate how a charity can demonstrate its work is benefiting a community as a whole, and not just a few individuals within it.

A full set of guidelines for establishing public benefit are on the Charity Commission’s website, but it should be noted that one thing which will immediately disqualify an application, is if there is any intention to use money from the charity to advance a political party.

Again there is help available when it comes to describing what good work your charity will do, and how it will be run. A list of example objectives is available on the Charity Commission’s website, or alternatively your professional adviser will be able to offer guidance.

What’s in a name?

Next you will have to come up with a name for your charity. This might not be as straightforward as it at first appears. Naming a charity can be a tricky business, and perhaps explains the proliferation of charities baring their founder’s name. A charity will be sent away to rethink its name choice if the one proposed on the application form is too similar to that of an existing charity. Equally if the Registrar thinks the name will mislead, or could potentially mislead the public, as to what the charity’s work will entail the name will be rejected. Likewise the Registrar will turn down any name likely to cause offence.

For further information please visit:

Office of the Scottish Charity Registrar: 01382 220446 www.oscr.org.uk

Charity Commission: 0845 300 0218 www.charitycommission.gov.uk

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For more information on the philanthropic services Coutts offers, please visit www.coutts.com/philanthropy

By Lindsey Rogerson