Closing the charity
What are the reasons to complete a charity?
1. A merger with another charity.
2. The original purpose has been met or no longer exists.
3. Losing funds or funding.
4. Not enough members.
5. Become a company or charitable incorporated organization (CIO), which means creating a separate charity
First, you must close the original charity to change its status to become a company or CIO and complete the closure form.
In that situation, you must inform the Charity commission for them to remove your charity from their register.
Before you close your charity
Think about the effective use of the charity’s remaining funds by transferring them to another charity with the same purpose. In other words, you might find a community foundation or a charity that offers the same value offer to continue to run your trust in line with its objectives.
Ensure whether you have leftover restricted funds linked to the other charities.
When you decide to close your charity, ensure that you clear all your debts and liabilities before spending the balance on your charity’s purposes.
The leftover grant money:
Check if there is an agreement with the grant funder and what you must do with that leftover money.
Money from fundraising appeals that haven’t reached their target – if so, check the commission’s guidance on failed requests to see if you need to return any donations to donors
Depending on your charity’s structure, you must follow the correct procedure for closing it.
Close an unincorporated association or trust
Your governing document should contain a section with details about closing the charity, as most governing documents allow you to complete the charity.
If your charity has trustees and members, the governing document should say about calling a meeting of the members to agree on the charity’s closure.
You can use the commission’s online charity closure form unless your charity has massive funding and assets worth a lot.
If your governing document doesn’t say how to wind up, if your charity doesn’t have a permanent endowment, you can either:
- Use all its remaining assets for your purposes
- Give its remaining assets to another charity with similar purposes
Land and property
If your charity owns the property, you may need to sell it before you close. You should follow any rules in your governing document, and you must read the commission’s guidelines about it.
Alternatively, your non-company charity may be able to transfer land or property it owns to another charity.
Once you have spent the permanent endowment and disposed of any property, you can complete the closure form.
Close a charitable company
You must make sure your charity is removed from the Companies House register before removing it from the charity register.
A charitable company has an automatic right to expend all its assets on its purposes. You can tell the commission that you have wound it up by completing the closure form.
Your responsibilities after your charity have closed
After your charity is wound up, the trustees must arrange for its accounting books and records (including cash books, invoices, and receipts) to be kept for either:
- At least three years after the year they were made (for a charitable company or CIO)
- At least six years after the year they were made (for unincorporated associations and trusts)
- The former charity trustees remained responsible for their decisions while in office.
Close your charity first
Read:
· Your charity’s governing document for the dissolution process
· The guide on closing a charity for what you must do
· The guide on merging with another charity if you closed your charity to merge with another
Information you need
It would help if you had the following:
- Value of your charity’s remaining assets – and what happened to them when you closed the charity
- Reason for the closure – recorded in the minutes of the meeting when the trustees decided to close
- The registered number of the new charitable company if your charity has become a charitable company
- The registered number of the charity getting your charity’s remaining property if you’ve transferred it
How long does it take
Your charity will be removed from the register within 15 working days.
Check the register to see if your charity has been removed.
