An International Perspective: Establishing a Charity in England

An International Perspective: Establishing a Charity in England

England, and in particular London, is an established centre for international investment.

Did you know, however, that England is increasingly being seen as a favourable location for overseas philanthropists and organisations to base their charitable activities?

Whilst we in England may often be frustrated by the red tape and regulation surrounding running a charity, there are many reasons why there is international interest in establishing a charity here.

Benefits of establishing a Charity in England

  • Stability and security;
  • A reasonably flexible regulatory regime;
  • Tax advantages;
  • Prestige;
  • Links to the social investment market.

It is not possible, however, for an overseas person or body to choose England as the location of the charity without putting in place the correct framework for the organisation.

In order for a charity to be registered in England it must ‘subject to the control of the High Court in the exercise of its jurisdiction with respect to charities’ (s.1(1)(b) of the Charities Act 2011). This is, of course, in addition to meeting more general criteria in relation to purpose, public benefit and income.

The Charity Commission provides us with some guidance on the ‘jurisdiction’ point:

“That means that the court must have the power to make decisions about the administration and purposes of your organisation as a charity.

Your organisation cannot be a charity in England and Wales if it is subject to another country’s jurisdiction, including Scotland, Northern Ireland, the Isle of Man or the Channel Islands.”

The question is, how can you tell your organisation falls within the High Court’s charity law jurisdiction?  Usually, your organisation will fall into this category if:

  • Your governing document adopts the law of England and Wales to govern it;
  • Most of your trustees live in England and Wales;
  • Most of your organisation’s property is in England and Wales;
  • Your organisation’s centre of administration is in England and Wales.

In relation to CIO’s, there is a specific requirement (s.205(2)(b) Charities Act 2011) that the charity has its ‘principle office’ in England.

There is little relevant guidance in the decided cases of the Courts or indeed in the decisions of the Charity Commission in relation to charities which are controlled or operated, to a significant extent, from another country.

In terms of practical guidance, it is a good idea to put in place a suitable governing document in addition to registration by the Charity Commission in England.

You may only register your charity with the Commission if you first ensure:

  1. Your charity has an office in England, with an administrator to deal with matters such as the filing of annual returns and accounts, and to address all regulatory enquiries and issues. This appointment may be on a part-time basis;
  2. Your charity has at least two trustees that at the point of registration are based in England. We do not consider that the majority of trustees will need to be English-based going forwards, provided that other features are in place;
  3. The charity’s principle bank account is in England.

Of course, setting up the framework is just the start!