Type of Charity

Jersey law allows for the creation of various charitable structures including Unincorporated Associations, Incorporated Associations, Jersey Companies Limited By Guarantee, Jersey Charitable Trusts and Foundations. 

The Charities (Jersey) Law 2014 is now in force and all entities wishing to be described as a charity, and obtain exemption from tax in future, after the period of transition, will need to register as a charity under the law.  Further guidance can be obtained from the Jersey Charity Commissioner at https://charitycommissioner.je/for-charities/. We recommend you read the advice provided before deciding on your course of action.

Before setting up a charity there are a number of important things to think about. By way of example:

• Is a charity the best way forward?
  • You can fundraise for a particular cause without setting up a new charity.
  • There may be other ways to achieve your goals rather than setting up a new charity.
  • There may well be an existing charity with similar goals and objectives.
• Is there an existing charity set up for your chosen cause?
  • The Association of Jersey Charities holds a list of over 300 Jersey charities. There are over 1,000 recorded not-for-profit organisations in Jersey. 
  • There are over 180,000 Registered Charities in England and Wales. The list of charities can be reviewed at the Charity Commission. It is likely that there are a similar number of unregistered ones. 
  • It may be easier to set up a branch of an existing charity rather than set up a new one.
• Do you understand what is required in order to set up a charity in Jersey?
  • There are various entities types that can be utilised for charitable purposes.
  • Depending on what the charity will do depends on the type of entity that will be the right one to use.
  • There are various costs connected with the set-up of a charity.
• Do you understand all the requirements involved in running a charity?
  • Membership of The Association of Jersey Charities is necessary to be eligible to apply for grants from the Association, although the Association does have a limited fund available to non-members.
  • Various laws and rules govern how a charitable entity should be set up and be run.
  • All charities must be set up and run for specified charitable purposes and for the public benefit.  It is not a simple matter of raising money or doing good.
  • Do you have sufficient like-minded individuals to fill the roles involved with the administration of a charity?
  • Banking facilities would need to be set up and most retail banks in Jersey will offer bank accounts to charities.
  • If you think that setting up a charity in Jersey is the way forward, there is a non-exhaustive guide set out below and on other part of The Association of Jersey Charities’ website. Further advice and guidance should always be sought from a qualified lawyer, accountant and / or Chartered Secretary. 
    
     

                Unincorporated Association or 'Club'

 

The most basic form of entity to be used for charitable purposes is that of an Unincorporated Association (or ‘Club’).  It is a relatively inexpensive and easy to administer vehicle which could convert to a more substantial legal entity as the organisation grows.

An Unincorporated Association is an association of people (‘members’) having a common purpose.  It does not have a legal identity separate from that of its individual members which means that individual members are legally responsible for the acts and omissions of the organisation.  The relationship between the members is governed by the organisation’s constitution which sets out members’ obligations and responsibilities.

Suitable for organisations:

• that are relatively small in terms of assets and membership;
• wanting to be run with relative informality and minimum set up costs; or
• intending to carry out their work wholly or mainly through the voluntary effort and contributions of its members, principally for the benefit of its members.

Unsuitable for organisations:

• having substantial resources and / or employing staff*;
• intending to enter into substantial contracts with third parties*;
• intending to engage in charitable purposes which involve commercial risks*;
• which may wish to borrow money;
• which may wish to start a legal action; or
• intending to own or rent real estate (for a term of more than 9 years) or that hopes to benefit under wills of immoveable property.

*   n.b. these activities are possible for an Unincorporated Association but because the association does not have legal identity separate from that of its individual members, members personally carry the risk of entering into contracts, and are responsible personally for any debts of the Unincorporated Association.

Requirements:

• A constitutional document, a sample of which is available from the Association of Jersey Charities’ website Unincorporated Association Constitution.
• In order to qualify for membership of the Association of Jersey Charities, the Unincorporated Association must have a Management Committee (which should not be paid positions) consisting of at least 3 officers - a Chairman, Treasurer and Secretary, and have at least 10 members, which can include the officers of the Unincorporated Association.
• Annual accounts are to be made, but without the requirement to submit such accounts to any authority.  If the accounts are audited this must be done by an independent person appointed by the members.
• The Society may have a Patron.
• Obtaining trustee liability insurance to protect the financial position of the charity and its officers is strongly recommended.

Registration procedures:

• Once the relevant section of the Law has been brought into force registration of the charity will be required by submission of prescribed documentation and information to the Jersey Charity Commissioner.  An annual return detailing prescribed information is to be sent to the Commissioner each year.
• The Association of Jersey Charities annual membership fee for Unincorporated Associations is currently £15.
• To apply for Income Tax exemption on the basis of the charitable purposes of the organisation, the Association’s constitutional documentation must be submitted to the Comptroller of Taxes for his approval.
• An application must be made to the Jersey Financial Services Commission to register under the Non-Profit Organizations (Jersey) Law 2008.

You can download a template 'unincorporated association' constitution here

 

Incorporated Association

This is a legal entity incorporated under the Lois (1862 et 1963) sur les teneures en fidéicommis et l'incorporation d'associations (the “1862 Law”).  Unlike the Unincorporated Association it is a legal entity with an existence independent of its members.  The Incorporated Association is able to acquire and own immoveable property whether by sale contract, lease or by testamentary disposition (i.e. being left under a will). 

Otherwise, the Incorporated Association is run in a similar way to an incorporated association, having a membership and management committee or board of trustees (‘the governors’).  The governors have joint and several unlimited liability and liability indemnity insurance is therefore recommended.

The Incorporated Association is a relatively inexpensive and easy to administer vehicle and is the principal vehicle for a charity that intends to own or has the potential to inherit immoveable property. 

Suitable for organisations:

• Established to principally benefit their own members;
• wanting the ability to acquire and own immovable property in Jersey, either by donations, purchase, rental, or testamentary disposition; or
• wanting a legal identity separate from that from its members for example because of its intending to enter into substantial contracts or potentially wishing to borrow money.
• By way of example, all the so-called “housing trusts” in Jersey are associations incorporated under the 1862 Law.

Unsuitable for organisations:

• which have no intention of acquiring immoveable property; or
• having a purpose other than set out in Article 1 of the Law (see below).  However the Court in practice takes a wide construction of the word “bienfaisance” (philanthropy) so that a dog club for example has been incorporated as a société de bienfaisance.  It is uncertain whether an application for the incorporation of an association for conservation or ecological purposes would be successful as a strict interpretation of the 1862 Law might require the Court to refuse to grant an act of incorporation.  An alternative route to incorporation for organisations that the Court does not have jurisdiction to incorporate under the 1862 Law (e.g. for a religious or educational purpose) would be the passing an Act of the States sanctioned by Order of Her Majesty in Council. 

Requirements:

• Advice should be sought from a lawyer, an accountant, a Chartered Secretary and / or Jersey Business before creating an Unincorporated Association.
• To become incorporated under the 1862 Law, an association needs to have any of the following purposes: (i) any cause of public utility, which is generally interpreted as meaning anything which may be useful to the public (ii) the use and profit of commercial or industrial associations, societies for bienfaisance [philanthropy], fine arts or sports.  Bien-faisance has a wider meaning than the strict legal definition of charity, and can encompass activities which are philanthropic rather than charitable (iii) for service in Anglican worship or that of another religion or (iv) for the establishment of schools and other places of learning.
• A constitutional document, a sample of which is available from the Association of Jersey Charities’ website Incorporated Association.
• In order to qualify for membership of the Association of Jersey Charities, an Incorporated Association must have a Management Committee (which should not be paid positions) consisting of at least 3 officers - a Chairman, Treasurer and Secretary, and have at least 10 members, which can include the officers of the Incorporated Association.
• Annual accounts are to be made, but without the requirement to submit such accounts to any authority.  If the accounts are audited this must be done by an independent person appointed by the members.
• The Society may have a Patron.
• Obtaining trustee liability insurance to protect the financial position of the charity and its officers is strongly recommended.

Registration procedures:

• Once the relevant section of the Law has been brought into force registration of the charity will be required by submission of prescribed documentation and information to the Commissioner.  An annual return detailing prescribed information is to be sent to the Commissioner each year.
• An application will need to be made to the Judicial Greffe in accordance with the Law for the incorporation of the association.  A draft demande and declaration can be found on the Association of Jersey Charities website. The application must be submitted with these documents and draft constitution. The Court stamp fee is currently £60.
• Once the unincorporated association has been constituted a declaration is to be made to the Royal Court stating the name of a designated person representing the association, and in due course any replacement of that person.
• The constitution of the incorporated association may not be amended without the permission of the Court.
• The Association of Jersey Charities annual membership fee for Incorporated Associations is currently £15.
• To apply for Income Tax exemption on the basis of the charitable purposes of the organisation, the Association’s constitutional documentation is to be submitted to the Comptroller of Taxes for his approval.
• An application must be made to the Jersey Financial Services Commission to register under the Non-Profit Organizations (Jersey) Law 2008.

You can download a template 'incorporated association' constitution here

 

Company Limited by Guarantee

The use of a company limited by guarantee provides for legal separation and limitation of the liability of the members.  It may be that a company is included as part of the overall corporate structure of a charity.

Suitable for organisations:

• intending to undertake trading activities;
• employing paid staff;
• delivering charitable services under contractual agreements; or
• wanting to have legal identity and liability separate from that of its members.

Unsuitable for organisations:

• intending to own or rent for a term of more than 9 years Jersey real estate or that hopes to benefit under Wills of real estate;
• wanting to be run with relative informality and minimum set up costs; or
• having a wider membership which it is intended should vote on important decisions.

Requirements:

• Advice should be sought from a lawyer, an accountant, a Chartered Secretary and / or Jersey Business before incorporating a company.
• A company, limited by guarantee has founder members who guarantee to provide an agreed amount to pay for the liquidation of the company. The amount of the guarantee is recorded in the company’s Memorandum of Association and is usually £1.
• The constitutional documents of a company are its Memorandum and Articles of Association.
• A company is controlled by a board of Directors. The initial Director or Directors are appointed by the members. Thereafter the Directors may appoint additional Directors. Directors can be removed from office by the members in General meeting (or in writing, if provided for in its Articles). 
• In order to qualify for membership of the Association of Jersey Charities a company must have a minimum of three (3) Directors who should not be paid for performing this role.
• There are requirements to hold various documents at the Registered Office of the company (which must be in Jersey). These can be found detailed in the Companies (Jersey) Law 1991.
• Accounts are required to be produced on an Annual basis. Accounts should be submitted to the tax office, no taxation is due on income if exemption is granted. The requirement for audit can be disapplied in the company’s Articles of Association.
• A company limited by guarantee as a vehicle for a charity cannot distribute its surpluses to its members and can only use its assets to carry out its charitable purposes.
• A company limited by guarantee as a vehicle for a charity must operate in a way which is in the best interests of the charity.
• Obtaining trustee liability insurance to protect the financial position of the charity and its officers is strongly recommended.

Registration procedures:

• Once the relevant section of the Law has been brought into force registration of the charity will be required by submission of prescribed documentation and information to the Commissioner.  An annual return detailing prescribed information is to be sent to the Commissioner each year.
• Details in connection with the applications for the Registration of a Company can be found at The Jersey Financial Services Commission Registry.
• The Association of Jersey Charities’ annual membership fee for companies is currently £15.
• To apply for Income Tax exemption on the basis of the charitable purposes of the organisation, the company’s constitutional documentation must be submitted to the Comptroller of Taxes for his approval.
• An application must made to the Jersey Financial Services Commission to register under the Non-Profit Organizations (Jersey) Law 2008.
   

 

Charitable Trust

A Jersey trust is a vehicle frequently used for charities, both discretionary trusts with a class of beneficiaries and trusts having charitable purposes instead of beneficiaries.  Both are governed by the Trusts (Jersey) Law 1984 (the “Law”) and case law. 

The charitable purpose trust was first established by case law, and then enshrined in the Law, to ensure that the trust might not fail due to lack of certainty about the identity of the beneficiaries, and to provide for the compulsory appointment of an enforcer to ensure that the trustee performs its duties properly.  However in practice purposes trusts are used less frequently than the discretionary trust with a class of beneficiaries, as the constitutional vehicle for a charitable trust.

The Trustees have both joint and several unlimited liability and it is prudent therefore for charitable trusts to have trustee liability insurance in place.

Suitable where:

• an individual settlor is seeking to establish a tax efficient vehicle for charitable giving through a trust structure; and
• it is intended that the trust is to have either a clearly defined class of beneficiaries or is to be restricted to applying the whole of the trust property to charitable purposes.  “Charitable purposes” here may be broadly defined by reference for example to the meaning of “charitable” according to the laws of Jersey from time to time.  

Unsuitable where:

• it is intended that the trust will acquire, hold or dispose of immovable property in Jersey.

Requirements

• Advice should be sought from a lawyer, an accountant, a Chartered Secretary and / or Jersey Business before creating creating a Trust.
• The activity of a Charitable Trust is governed by its Trust Instrument.
• A Trust has one or more Settlors who provide the initial funds for the Trust. Once funds are Settled into a Trust they are held by Trustees to be used for the specified purposes or for the benefit of the specified beneficiaries.
• In order to qualify for membership of the Association of Jersey Charities the trust must have a minimum of three (3) trustees who should not be paid for fulfilling this role..
• For a charitable purpose trust, the trust instrument must provide for an Enforcer.
• A Board of Trustees which may act either by unanimous or majority vote.
• Accounts are required to be produced on an annual basis. Accounts should be submitted to the Comptroller for Taxes. 
• The requirement for audit can be included in the Trust Instrument but is not compulsory.
• Obtaining trustee liability insurance to protect the financial position of the charity and its officers is strongly recommended.

Registration procedures:

• Once the relevant section of the Law has been brought into force registration of the charitable trust will be required by submission of prescribed documentation and information to the Jersey Charity Commissioner.  An annual return detailing prescribed information is to be sent to the Commissioner each year.
• To apply for Income Tax exemption on the basis of the charitable purposes of the trust, the company’s constitutional documentation must be submitted to the Comptroller of Taxes for his approval.
• An application must be made to Jersey Financial Services Commission to register under the Non-Profit Organizations (Jersey) Law 2008.
• Membership fee for the Association of Jersey Charities, currently, £15 annually.  In order to qualify for membership of the Association of Jersey Charities a Trust must have a minimum of three (3) trustees.
   

Foundations

A Foundation is a legal entity that is a hybrid of a Trust and a Company. It is similar to a company in that it is governed by a council in accordance with its charter and regulations and is a body corporate, but is also like a trust in that a foundation must have one or more objects which may be a purpose (charitable or non-charitable) and/or be for the benefit of one or more beneficiaries.

There are costs associated with the establishment of a Foundation. The Foundation will exist for a period of one hundred years or shorter period as determined in the Foundation documentation.

Suitable where:

• a settlor is seeking to establish a tax efficient vehicle for charitable giving; and
• individual settlors wish to retain a level of overview and control of the management of their private wealth structure, whilst not retaining any direct ownership or interest.

Unsuitable for:

• an entity that intends to acquire, hold or dispose of immovable property in Jersey or engage in commercial trading that is not incidental to the attainment of its objects.

Requirements:

• Advice should be sought from a lawyer, accountant, a Chartered Secretary and / or Jersey Business before creating a Foundation.
• Charitable Foundations can be formed in Jersey under the Foundations (Jersey) Law 2009.
• A Charitable Foundation has the following:
• a Charter that complies with the requirements of the law;
• a name that is detailed in the Charter, there are restrictions on the name to be used;
• charitable objects;
• Council members, these may be included in the Charter;
• a “Qualified Member” amongst its Council members, i.e. someone who is registered with the Jersey Financial Services Commission (“JFSC”) to carry on trust company business.  This is an obligation with potentially significant financial cost.
• an initial endowment, funds to be used for the objects of the Foundation;
• details of what is to happen to any assets of the Foundation upon a winding up; and
• a Guardian, who cannot also be a member of the Council. The role of The Guardian is to ensure that the Council carries out the objects of the Foundation.
• In order to qualify for membership of the Association of Jersey Charities a foundation must have a minimum of three (3) Council members who should not be paid for fulfilling this role..
• Obtaining trustee liability insurance to protect the financial position of the charity and its officers is strongly recommended.

Registration:

• The Charter is to be filed with the Registrar and available for public inspection at the JFSC.
• Once the relevant section of the Charities (Jersey) 2014 has been brought into force registration of the charitable foundation will be required by submission of prescribed documentation and information to the Commissioner.  An annual return detailing prescribed information is to be sent to the Commissioner each year.
• To apply for Income Tax exemption on the basis of the charitable purposes of the trust, the company’s constitutional documentation must be submitted to the Comptroller of Taxes for his approval.
• An application must be made to the JFSC to register under the Non-Profit Organizations (Jersey) Law 2008.
• Membership fee for the Association of Jersey Charities, currently, £15 annually.  In order to qualify for membership of the Association of Jersey Charities a Trust must have a minimum of three (3) Council Members.

 

 

 

Glossary

Accounts – Historic records of the financial activities of an entity

Association of Jersey Charities – A representative body for Charities in Jersey, responsible for the distribution of the Jersey profits from the Channel Islands Lottery

Audit – Independent review of the Accounts and or Statutory Records of an entity

Auditor – A qualified individual who makes a living from providing an Audit

Beneficiary – Person or group of people who can benefit from the assets held in a Trust

Chairman – Person who head up the committee

Vice Chairman – Person who steps into the Chairman’s role at meetings if the Chairman is unavailable

Committee – Group of individuals who manage the affairs of an entity

Company – A separate legal entity with statutory rules to control its operation

Constitution – Set of rules for an organisation

Corporate Governance – The way in which companies and legal entities are governed, directed and controlled and to what purpose. It refers to how the entity is perceived by it Stakeholders

Director – A person who manages the affairs and activities of a Company

Donations – Amounts given by members of the community to the charity. These many be money or assets or services

Founders – The equivalent of the first/subscriber shareholders in the Company limited by Guarantee

Memorandum and Articles of Association – The set of rules for the control of a Company. The memorandum of association is the document that sets up the company and the articles of association is the document that sets out how the company is run, governed and owned.

Patron – A figurehead for the charity. This may be a well known member of the community or celebrity or member of the Royal family

The Royal Court – The highest Court in Jersey to which all disputes involving Charities are to be taken

Secretary – Person responsible for the administrative records of the entity. Works closely with the Chairman and the board of Directors or Trustees 

Settlor – Person who provides initial assets for the creation of a Trust

Shareholder – A person or entity that invests in and provides capital for a Company

Stakeholders – Wider group of people connected with the entity, shareholders, staff, local and national government, pressure groups, charities etc

Statutory Records – The papers of an entity that required to be kept by law

Treasurer – Person responsible for the financial records of the entity and preparing the Accounts

Trust – A separate legal entity where one person, The Settlor, gifts assets to a second, The Trustee, for the benefit of a third, The Beneficiary. Once assets are gifted to a Trust there is no further legal ownership or entitlement to the assets.

Trust Instrument – Written document that governs the activities of the Trust and the Trustees

Trustee – Person who looks after the assets settled into a Trust to ensure the purposes are achieved