In August, the commission ruled that the organisation, which sets up street associations in which neighbours organise local events and help each other with daily tasks, should not be registered as a charity.
Martin Graham, the founder of Uturn UK and a former speechwriter for John Major during his time as Prime Minister, appealed against the commission’s decision at a charity tribunal hearing in January.
He said the organisation’s objectives, to advance citizenship and community development and to promote the Christian faith, were charitable.
In the tribunal’s decision document, published last week, the judge Jonathan Holbrook says Uturn UK was not set up for "exclusively charitable purposes".
The document says that, although Uturn UK’s vision was for street associations to encourage civic responsibility and volunteering, which would be a charitable activity, the organisation had no way of ensuring that the groups lived up to these expectations.
"There can be no guarantee that the activities of street associations will be restricted to activities that are exclusively charitable – they might, for example, provide services to individuals that confer a private benefit," it says.
The document says Kenneth Dibble, head of legal services at the Charity Commission, told the hearing that "labelling a purpose in a way which gives it the appearance of being charitable is insufficient unless it can also be demonstrated that the activities of the company will in fact be undertaken for charitable purposes, and that the company is incapable of undertaking non-charitable activities."
Graham told Third Sector: "The reason for rejecting us as a charity was that we don't have control over the communities we are helping to set up. But doing so would contradict the spirit of community development.
"We want communities to set their own agenda, and it would be inappropriate to try to control them. I don't think charity law has caught up with the needs of community development."
Graham said he did not know what Uturn UK's next step would be. "I'm still keen for it to be a charity, and I think morally it ought to be," he said.
At the hearing, Graham criticised the regulator’s approach to registering new organisations as charities, saying it had set a "very stiff test" by requiring proof of the outcomes of street associations.
According to Uturn UK’s promotional materials, a street association aims to bring together about 70 homes, comprising about 200 people, to create a "micro-community in which everyone knows everyone, people belong, help others and have fun together".