Myth busting: Being a registered charity makes you a legal entity
Published: 16 August 2022
When we’re out and about, we often hear myths about what charities and Charities Services can and can’t do. Our Myth Busting series is a regular feature where we address some misconceptions and bust some myths!
This month, we are looking at the myth that being a registered charity makes you a legal entity. The truth is, to count as a “legal entity” a registered charity needs to be an incorporated charitable trust, incorporated society or an incorporated company.
The process of “incorporation” is what creates the legal entity. When a registered charity becomes incorporated, it will have its own separate legal status from the officers who run it. As a result, the charity will take on most obligations and liabilities instead of its individual officers.
On the other hand, a registered charity can also be unincorporated, for example, it could be an unincorporated trust or an unincorporated society. Neither of these are “legal entities”. This means the charity does not have a separate legal status from its officers, and as such, the officers themselves will take on most obligations and liabilities.
Depending on the needs of your organisation there are some advantages that come with incorporating your organisation to create a legal entity. A legal entity can enter into contracts, borrow money or apply for grants only available to legal entities.
The process of incorporation is administered by the Companies Office(external link) and you can find more information on their website.
If you need more information about legal entities watch our webinar – Societies, trusts, companies – which structure is right for your charity(external link) or read our blog What to be or not to be – incorporated societies and charitable trusts. (external link)