To be or not to be

Charitable status is not a structure in itself. It is an “add on” to be considered after an arts organisation has incorporated or constituted itself as an unincorporated association. The proposed Charitable Incorporated Organisation will make becoming a charitable company a one-step option. The Independent Theatre Council’s advice, however, is likely to still be: stop and think before you register as a charity.

Gaining charitable status is not automatic for a not-for-profit arts organisation. The Charity Commission assesses every application rigorously. You will have to demonstrate that your organisation’s work has both artistic merit and public benefit. You will be asked for considerable detail on how the public will find out about your work, whether your pricing structures make you accessible to all, whether you use venues that accommodate the disabled and what you provide in the way of education and outreach work. If your organisation focuses on the work of one playwright, one choreographer, etc., the Commission will want confirmation that the ‘private’ benefit to that individual is not so significant that it outweighs the public benefit of the work. Oh, and you must have at least £5,000 in your bank account.
You also need volunteer trustees who will rarely, if ever, work for you. A good independent board can provide valuable challenge and support but it can take time to be sure that potential trustees understand your artistic vision. The current turmoil at the Royal Institution (one of the UK’s oldest scientific research organisations) shows how destabilising it can be when the board and chief executive of an organisation do not see eye to eye. And that’s not all, there are restrictions on political activity, complex rules about trading and special accounting requirements; and your trustees must report to the Commission every year on the public benefit of your work.
So, what are the benefits?
Tax: Charities get a wide range of tax breaks, including exemption from corporation tax and some VAT exemptions. They also benefit from tax relief on donations including Gift Aid, covenants, payroll giving, sponsorship and bequests.
Business Rates: Charities get at least 80% business rate relief and up to 100% at your local authority’s discretion.
Funding: Charitable organisations that fund the arts can usually only donate to registered charities, so charitable status can open up new funding streams.
Status: Charitable status is an indicator to the world at large that an organisation ‘does good’, that its work is of artistic merit and that it provides public benefit.
Focus: An unexpected benefit for some applicants is the opportunity the process offers to look at their work objectively. Red Earth Theatre recently jumped through the registration hoops successfully and commented, “The process has been helpful in many ways we didn’t expect, such as working for pin-sharp clarity in how we describe ourselves and what we do. This in turn has impacted on our communications strategy and will improve the message we give out.”