Starting a not-for-profit organisation is a great way to support a cause, help your community, or create social impact. Unlike businesses that aim to make a profit, not-for-profits reinvest their income back into their mission instead of benefiting individuals financially.
In this guide, we’ll explain what a not-for-profit organisation is, explore different company structures, and walk you through the steps to set one up in the UK. Whether you’re starting a charity, community group, or social enterprise, we’ll help you understand the process and get your organisation up and running smoothly.
What is a non-profit organisation?
A non-profit organisation, also known as a not-for-profit, is created to support a particular purpose or cause. This is instead of making a profit for its members or owners. Any income made is put back into the organisation to further its goals
Non-profit organisations cover a wide range of purposes, including:
Charities help and support those in need
Social enterprises working to solve social or environmental issues
Community groups helping the local area
Clubs or associations for hobbies or cultural activities
💡Editor's insight: “You should know that non-profits don’t distribute profits to individuals such as shareholders or owners. But they should still have enough money to cover growth and expenses. These organisations need to report their finances, pay taxes in some cases and follow legal rules.”
Types of non-profit company structures explained
Choosing the right non-profit structure is a crucial step when setting up your organisation. It determines how you operate, your legal responsibilities, and whether you qualify for benefits like charitable status or tax relief. Below are the most common non-profit structures in the UK, along with their key features and best uses.
1. Unincorporated association
What it is: A simple, informal structure for small groups, community projects, and clubs that work together for a shared purpose.
Key features:
Easy to set up with minimal paperwork - no formal registration required.
Flexible structure that allows members to run the organisation how they choose.
Limitations:
No legal identity - the group itself can’t enter contracts or own property.
Unlimited liability - members may be personally responsible for debts or legal issues.
💡 Best for: Small, local groups that don’t need formal protection or large financial backing.
2. Charitable incorporated organisation (CIO)
What it is: A legal structure designed specifically for charities, offering the benefits of a limited company without the need to register with Companies House.
Key features:
Limited liability - trustees and members are not personally responsible for debts.
Simpler reporting requirements than a standard charity or company.
Regulated by the Charity Commission rather than Companies House.
💡 Best for: Medium to large charities looking for a formal structure with legal protection.
3. Company limited by guarantee (CLG)
What it is: A legal company structure often used by non-profits, charities, and social enterprises where members agree to contribute a small amount (e.g. £1) if the organisation closes.
Key features:
Has a separate legal identity - can enter contracts, own assets, and employ staff.
Must register with Companies House and follow reporting rules.
No shareholders or profit distribution - all income is reinvested in the organisation.
💡 Best for: Larger non-profits, grant-funded organisations, or those working on contracts.
4. Community interest company (CIC)
What it is: A business structure for organisations that aim to benefit the community while generating income. Unlike charities, CICs can trade and make a profit, but profits must mostly be reinvested into their mission.
Key features:
Social purpose is legally protected - CICs must prove they work for community benefit.
Easier to set up and run than a charity - fewer reporting obligations.
Can receive investment and funding, but may not qualify for charitable tax reliefs.
💡 Best for: Social enterprises and businesses that prioritise community or environmental impact.
5. Charitable trust
What it is: A structure used to manage funds or assets for a charitable cause, rather than running activities like a company.
Key features:
Run by trustees who oversee the management of funds.
Useful for holding and distributing grants, donations, or investments.
Requires registration with the Charity Commission if income exceeds £5,000 a year.
💡 Best for: Organisations focused on managing large funds or providing grants rather than running services.
Step-by-step: How to set up a not for profit
Setting up a non-profit requires planning and staying within legal requirements. Here’s how to get started:
Step 1: Define your mission
You need a clear purpose for your organisation. You should consider who it will serve, and how it will achieve its goals. A well-defined mission is essential for getting support and securing funding.
Step 2: Choose a structure
Select the legal structure for your organisation. This decision should be based on the size, activities, and goals. For example, a small community group may opt for an unincorporated association, while a larger charity might register as a CIO.
Step 3: Draft a governing document
Create a document that outlines the rules and structure of the business (e.g. a trust deed, or a memorandum and articles of association) that outlines:
Your organisation’s name and purpose
Rules for meetings and decision-making
Roles and responsibilities of members or trustees
Financial Policies
Step 4: Appoint trustees or directors
Appoint at least two trustees or directors (the exact number depends on the structure). These individuals will be responsible for managing the organisation.
Step 5: Register your organisation
Depending on the structure you’ve chosen, you may need to register your organisation:
CIOs and charities: Register with the Charity Commission if your income exceeds £5,000.
CLGs and CICs: Register with Companies House. CICs must also submit a community interest statement.
Step 6: Register with HMRC
If you plan to claim tax relief, such as Gift Aid, you’ll need to register your non-profit with HMRC.
Step 7: Open a bank account
Set up a bank account in the organisation’s name. Most banks offer accounts for non-profits, often with reduced fees.
Step 8: Develop a funding plan
Identify sources of income, such as grants, donations, or membership fees. Many non-profits also generate money through trading activities, provided it's within their purpose.
Do you need to register a non-profit?
Whether you need to register your non-profit depends on its structure, size, and activities. Some smaller organisations may not need formal registration, while others - such as charities and social enterprises - must register with specific regulatory bodies.
Here’s a breakdown of when registration is required:
Structure | Registration required? | Where to register? | Additional notes |
|---|---|---|---|
Unincorporated associations & small non-profits | ❌ No registration required (if small & low income) | May need to register with HMRC for tax purposes | No legal status - members may be personally liable for debts |
Charities (over £5,000 income) | ✅ Yes | Charity Commission | All charities must register if income exceeds £5,000 |
CIO | ✅ Yes | Charity Commission | CIOs must register, regardless of income |
CLG | ✅ Yes | Companies House | Has a separate legal identity - must comply with company law |
CIC | ✅ Yes | Companies House & CIC Regulator | Must pass a ‘community interest test’ to operate |
💡 Expert Insight: “Many people get confused about whether they need to register their non-profit or charity. The key rule is that charities and CIOs must register with the Charity Commission if their income is over £5,000, while CLGs and CICs must always register with Companies House. If you’re unsure, getting advice early can help avoid mistakes.”
How do you register?
With the Charity Commission
To register a charity, you’ll need to:
Complete an online application.
Submit your governing document, details of trustees, and financial plans.
Provide evidence that your organisation meets the legal definition of a charity (i.e., it benefits the public).
With Companies House
For CLGs or CICs, you’ll need to:
File an application form (IN01) and pay a registration fee.
Submit your articles of association and, for CICs, a community interest statement.
FAQs
How much does it cost to set up a non-profit in the UK?
Setting up costs vary depending on the structure:
Unincorporated associations: Minimal or no cost.
CLGs: Companies House registration fees start at £50.
CIOs and charities: Registration with the Charity Commission is free.
CICs: Registration fees are £65, plus additional costs for legal advice if needed.
Do non-profit organisations get taxed in the UK?
Non-profits are not automatically exempt from tax. Charities can claim tax relief on income used for charitable purposes. CICs and CLGs must pay tax on profits unless eligible for relief.
Why would someone set up a not for profit?
People set up non-profits to:
Address social or environmental issues
Benefit local communities
Create opportunities for education, recreation, or support
Secure funding or donations that require a formal status
Final thoughts
Setting up a not-for-profit organisation takes careful planning, but getting it right from the start will help you make a real impact. Choosing the right structure, ensuring you’re legally compliant, and registering when needed are key steps to building a strong foundation for your cause.
Take the time to define your mission and create a clear governing document to guide your organisation’s work. Whether you’re starting a small community group or a large charity, the right legal support can make the process smoother and stress-free.
References
Tax relief when you donate to a charity by Gov.UK
Charities and tax by Gov.UK
Register a private or public company (IN01) by Gov.UK
Disclaimer: This article only provides general information and does not constitute professional advice. For any specific questions, consult a qualified accountant or business advisor. Bear in mind that tax rules can change and will differ based on your circumstances.
