I've been approached on several occasions about setting up a new charity for a client. It can be for several reasons:

• A family tragedy
• An inheritance for someone who doesn't need the money and wants to help others
• A celebrity who want to use their wealth to give back to the community
• A lottery winner
• A community project etc etc.

All of which are perfectly valid reasons but the first thing I ask them is do they understand what it entails? They have the resources, they want those resources to do some good and they want to do it as quickly as possible but let's consider what is involved.

1. A charity needs to be set up- currently this is taking a minimum of 1.5 to 3 months and often longer if you don't complete the application properly.
2. It needs a constitution that sets out it's objectives. Is it to be run by trustees only or is it to be a membership run organisation? Does it fit one or more of the 13 charitable purposes? Does it meet public benefit criteria?
3. It needs trustees. This is not a one man band. It needs a minimum of three people and often more who are going to be responsible not just for the long term strategy of the charity but to supervise it's day to day activities; all on a voluntary basis.At least two of them ought to be independent of the founders to prevent conflicts of interest.
4. It has rules and regulations to deal with. Not just it's constitution but also charity legislation and other applicable legislation e.g Employment, Health and Safety, Tax, Safeguarding etc. It needs appropriate policies and procedures
5. You need to set up a bank account which with many banks opting out of the charity market place can be a nightmare.
6. You need a business plan which demonstrates how the charity will be funded, not just initially but on an ongoing basis and how that money will be spent.
7. You need to consider risk and how that will be mitigated.
8. Are you going to run the charity yourself or are you going to employ someone to do it for you?

...and so on, the list is endless.......

This is not to say that it should not be done but you need to consider if there is a better way. Is there an existing charity that may achieve what you want to achieve by working with them and by use of restricted funds direct the usage of the money to meet your aims?

For more details on this aspect see my article the use of restricted funds for charities.

However, in some instances a new charity will be the right course of action but it needs to be thought through. It is not something that should ever be done on a whim but with good planning can be done successfully and the generousity of the founders will live on long after they are gone.