Regulation with Rosie: planning

The Charity Commission's Rosie Chapman on finding the right 'business' model.

We've all felt like square pegs in round holes from time to time - from learning a new skill to starting a new job. Either these feelings fade with time, or they don't, in which case it's probably a good idea to review your options.

But finding out where you fit if you're a third sector organisation is something that really should be done at the start. Given the sheer diversity of the sector, it's inevitable that charitable status is not the only option for organisations, and often it's not even the best one.

Definitions of what's considered charitable continue to grow, reflecting society's advances in areas such as diversity and good race relations.

And there are practical and reputational advantages to being a charity.

But it can prove restrictive. It can, for example, hinder organisations that want to generate wealth creation with a positive social impact or be a mutual benefit society. For an organisation with these aims, which may be partly charitable, other models can provide a better fit. For individuals who want to run a business for community benefit, community interest companies can be the right option, and this structure isn't available to charities.

There are structures for charities that offer flexibility, and the new Charities Act promises the creation of charitable incorporated organisations for those that want incorporation and are clearly exclusively charitable.

The ugly sisters cut off bits of their feet to try and fit inside a shoe; good-cause organisations should avoid doing the equivalent to make themselves look like charities. The activities and ethos they discard could be the very things that gave them their reason to exist, and mission drift is a dangerous thing for any operation.

There are plenty of options out there, and the best fit isn't always becoming a charity.

- Rosie Chapman is executive director of policy and effectiveness at the commission.

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