How are charities regulated, and what can a charity actually do?
Through a registration and oversight regime requiring that an organisation exists for recognised charitable purposes and for the public benefit — and that second requirement is doing more work than most people assume.
What makes something a charity, and both tests must be met:
A purpose within the recognised list — including the prevention or relief of poverty, education, religion, health, community development, arts and heritage, amateur sport, human rights, environmental protection, animal welfare, and the relief of those in need.
Public benefit, which must be identifiable, must benefit the public or a sufficient section of it, and must not be unduly restricted — including by ability to pay. This is the test that has produced sustained argument, particularly about fee-charging institutions.
What the regulator does: maintains the register, provides guidance, investigates concerns, can issue directions, remove or appoint trustees, and open statutory inquiries. It does not run charities, and it is not a complaints body about services.
What trustees are responsible for. They hold legal duties: acting in the charity's interests and within its purposes, managing resources responsibly, acting with reasonable care and skill, and ensuring compliance. Trustees are generally unpaid — payment requires express authority — and they can be personally liable in limited circumstances.
What charities may and may not do politically. This is widely misunderstood:
Campaigning and political activity are permitted where they support the charity's purposes.
A charity may not exist for a political purpose, and may not support a political party.
Election periods carry additional restrictions.
On money:
"Non-profit" does not mean no income or no salaries. Charities employ staff, pay market-related wages, generate trading income and hold reserves. Surpluses must be applied to the purposes rather than distributed.
Administration costs are not waste. The ratio of spending on "overheads" is a poor measure of effectiveness and has been widely criticised as a metric, since it penalises investment in capability.
Fundraising is separately regulated, including rules on pressure and vulnerable donors.
General information, not legal advice.