Early years settings can benefit in numerous ways from having a charity set up by supporters to raise funds, says Mary Evans
Early years parents' associations are taking to heart the old saying 'charity begins at home' and forming themselves into charities, to take advantage of financial concessions such as tax-exempt giving. But many playgroups, nurseries and nursery schools, which have transformed their parents associations into charitable friends groups, have found the formation of their own charity has brought benefits beyond tax concessions.
According to a spokesman for the Charity Commission, which regulates all charities in England and Wales, the public is more likely to support appeals by charities because they know they are strictly monitored.
Jean Shaw, head teacher of the Tenterfield Nursery School in Welwyn, Hertfordshire, says the conversion of the school's parents body into the charity Friends of Tenterfield Nursery relieves the pressure for fundraising on the school staff and means they can buy more with the proceeds.
She says, 'As a charity they don't pay VAT. We also had a parent who wanted to make a large donation and as she was able to claim the tax back, she was able to give us more.'
'The Friends are wonderful. They raise about 3,000 a year and fund a rolling programme to replace equipment. We were very poorly off about three years ago and were struggling, and they kept us going.
'The children are only with us here for a year and the Friends helps their parents become actively involved and to get to know one another and us.'
An added advantage is that during the year's social events the staff have the opportunity to mix socially with the parents. This gives parents the confidence to raise minor issues informally with staff rather than having to make formal appointments.
Mandy Heslop, head teacher of the Wharf Nursery School in Godalming, Surrey, says Friends of the Wharf draws on a wider support base than a traditional parents' association, as it involves grandparents, childminders and parents of past pupils.
'It was formed in the summer of 1994 when a very dynamic mother got it off the ground,' she says. 'I don't think it would work if the school was trying to organise it. The way in which things are done and the extent of the activities vary from year to year with each different set of officers.
'The Friends have funded projects such as a new climbing frame with soft surface in the playground and a family room in the school. At the moment we haven't got any big spending projects so they are concentrating on the social side. It is wonderful for the staff not to have to take responsibility for fund-raising, and to see tangible proof of the support we have at any event.'
Benefits and limitations
Charities have the advantage that they:
- do not normally pay income/corporation tax, capital gains tax or stamp duty, and gifts to charities are free of inheritance tax
- pay no more than 20 per cent of normal business rates on buildings used to further their charitable purposes
- can get special VAT treatment
- can often raise funds from the public and grant-making trusts more easily than non-charitable bodies
- can give the public re-assurance they are monitored and advised by the Charity Commission.
However, there are restrictions on what charities can do and how they operate. Strict rules apply to their trading, and a charity must have exclusively charitable purposes. Political or campaigning activities are limited. Charity law imposes obligations to report finances.
Charitable purposes
An organisation's purposes, its objects or aims as set out in its governing document, must be exclusively charitable. Charitable purposes, which have to be for the public benefit, are defined as:
- the relief of financial hardship
- the advancement of education
- the advancement of religion
- certain other purposes for the benefit of the community.
The advancement of education is not limited to formal education. It includes:
- playgroups
- organisations that provide work-related training
- research institutions
- but not propagandist or political activities, nor the study of subjects with no educational value.
Appeals for funds
There are complex rules about fund-raising. Great care should be taken when asking the public for money.
- Appeal organisers cannot alter the purposes of an appeal to something that is inconsistent with the terms under which donors were invited to contribute.
- If you want to raise money for the general purposes of a charity, you must make this clear and avoid implying that the money is for a more specific purpose.
- If an appeal is for a specific purpose, such as paying for or restoring a building, it is prudent to state what will happen to the money if either not enough, or too much, is raised.
Charity trustees
All charities must have an identifiable body of trustees. Trustees are defined in law as 'the persons having the general control and management of the administration of a charity'. The duties and responsibilities of a charity trustee are wide-ranging and should be taken seriously. Anyone wanting to be a trustee must give the necessary time and effort to understanding and carrying out those responsibilities.
Governing document
The Charity Commission produces model forms of governing documents (free of charge). Some large national charities produce a standard governing document that can be used by associated groups.
There are three main types of governing document:
- Constitution or rules
- Trust deed
- Memorandum and Articles of Association.
How to apply
Fill in the form in the registration application pack, available from the Commission. All trustees have to complete a declaration form. The information provided is checked for accuracy. Where applicants propose to work directly with vulnerable beneficiaries, such as children and young people, the Commission may carry out checks with other Government departments and statutory bodies. You are also asked to submit any relevant information that may further explain how your group will meet its charitable aims.
After registration
There are ongoing duties and responsibilities for any charity. You must:
- keep your charity's accounts
- submit an Annual Return
- report changes to your governing document, such as changing the specified date of an Annual General Meeting
- report any changes to your details shown on the Register of Charities (for example, the correspondent's address)
- report if your charity no longer exists or operates.
Organisations for which a standard governing document has been agreed include a childminding association, Early Years Forum, out-of-school schemes, a home and school association (National Confederation of Parent Teacher Associations), Church of England voluntary aided schools, PATA (Playgroup and Toddler Association), a Pre-school Learning Alliance pre-school playgroup, the Alliance of Parents and Schools, and toy libraries.
- The Charity Registration Application Pack can be ordered direct from the Charity Commission's Registration Helpline on 0870 333 0123. Information and publications are also available via the internet on the site www.charity-commission.gov.uk
- Charities are separately regulated in Northern Ireland and Scotland. For information contact: Northern Ireland Department for Social Development, Castle Buildings, Stormont, Belfast BT4 3 PP (028 905 20504, fax 028 905 22799); or Scottish Charities Office, 25 Chambers Street, Edinburgh EH1 1LA (0131 226 2626, fax 0131 226 6912).
