How To Start A Not-For-Profit Consulting Business

At some point, most organisations need some kind of outside help. Even organisations like charities require some guidance, so they can function at their best and achieve their goals. 

However, charities are distinctively different from other kinds of businesses. For example, they won’t have the same goals as a profit driven business. Therefore, it doesn’t make sense to apply business principles to a charity organisation. 

For this reason, charity consultants exist. A charity consulting business can come in and share the same vision and purpose as their clients while providing a valuable service to society. 

If starting a charity consulting business is something you’ve been thinking about, then you’re in the right place. However, before you take that first leap – it’s important to start your charity consultancy business with the right legal protections in place.  

What Is A Charity Consultant?

A charity consultant is someone that gives advice to charity organisations. Their expertise is often aimed at helping these organisations achieve their full potential by making their systems, processes, management and communication more effective. 

How Do You Become A Charity Consultant?  

There’s no specific degree or linear career trajectory to make it as a charity consultant. In most cases, a charity consultant will have the relevant education and experience which has allowed them to gain an expert understanding of the charity industry. Due to this, they are able to help other charity organisations achieve their goals. If you’re thinking of becoming or hiring a charity consultant, it’s important to ensure the right knowledge and experience has been attained first.  

What Is The Difference Between a Fundraising Consultant and a Charity Consultant?

Often, a fundraising consultant and a charity consultant get mixed up. It’s understandable because they’re almost two sides of the same coin. A fundraising consultant will naturally focus exclusively on the fundraising aspect of running a charity business. However, a charity consultant generally offers advice on the different aspects of running a charity. This can include fundraising but also things like management, communication, finances, expansion and more. 

Every charity consultant will have their own areas they specialise in. As charity consulting covers a pretty broad range of services, we recommend deciding on the ones you wish to focus on and ensuring you properly communicate the scope of your services to your clients – that way there’s no misunderstandings.

How Do I Start A Charity Consulting Business?

The first step in starting your charity consulting business is getting your business registered. Every business in the UK needs to be registered. However, the registration process you go through will be determined by the legal structure you choose for your charity consulting business. 

There are three common types of legal structures that business owners tend to register their businesses as: 

• Sole trader
• Partnership
• Company 

Each of these have their own drawbacks and advantages. You’ll need to think about the time you’re willing to invest, the risks that are appropriate for you and your business’s goals before committing to one structure. It’s a pretty important choice, so here’s what you need to know about each legal structure. 

Sole Trader

When you register a charity consulting business as a sole trader, you’ll find the process to be relatively simple and quick. To register as a sole trader, you just need to get a Unique Taxpayer Reference (UTR), which can be done online by visiting the HM Revenue and Customs (HMRC) website. Next, you’ll need to register a business name – but only if you’re using a name other than your personal one. Once that’s all done, you’ll be all set to run your charity consulting business as a sole trader. 

However, the disadvantage of being a sole trader is that your business is personally attached to you. Without any kind of legal separation between you and your charity consulting business, there’s very limited legal protection. You’ll be liable for the whole business which can be detrimental if something goes wrong. Furthermore, a sole trader business structure can put limitations on your business if you plan on growing and expanding it in the future. If your charity consulting business is a serious business venture, then a sole trader structure isn’t recommended. 

Partnership 

A partnership is somewhat similar to a sole trader structure, in terms of the registration process and legal protection. With partners, every single one will need to attain a UTR and register a business name if needed. 

In a partnership, all partners will be personally liable for the charity consulting business as well. In this case, we always advise taking the additional step of securing the rules of the partnership with the appropriate legal documents, such as a Partnership Agreement. 

Company 

If your charity consulting business is a serious business endeavour with long-term goals, then setting up as a company is recommended. Even though registering a company is a little more time consuming and complex, you ultimately end up with something that is a legal entity on its own. This means, the company isn’t legally attached to you personally as it’s able to earn a profit, have debt, own property and more. As a result, you’ll have less liability and  more legal protection. 

Often, people get intimidated by the process of registering a company as it requires compliance with Companies House rules and regulations. Moreover, running a company means you’ll have to keep up with a few ongoing obligations such as annual fees and reporting duties. However, a legal expert can make this process much easier. They can help sort out things like your shareholders, directors and company governance while making sure you understand your legal duties when running a charity consulting company. Overall, a company structure is able to provide much better legal protection and set’s your business up for its potential growth in the future, which is always worth the extra effort. 

You can read more about business legal structures here. 

Are There Any Laws That Will Impact My Charity Consultancy?  

When starting your charity consulting business, it’s not just the regulations around registration you need to think about. There’s also going to be other laws your business will need to follow. The specific regulations will depend on your business operations and even where you live (i.e local council laws) so it’s essential that you do your due diligence and find out what laws your business needs to comply with. 

We know this can be a lot to try and keep up with – which is why it’s a good idea to chat with a Regulatory Compliance expert. They can tell you about the necessary regulations your charity consulting business needs to look out and provide guidance on how to abide by them.  

A few regulations that might impact your business include: 

• Data and Privacy Laws 
• Employment Regulations
• UK Consumer Law  

Get in touch with one of our legal experts today for more information. 

Do I Need Any Legal Agreements For A Charity Consultancy?  

Yes, getting your business set up the right way and ensuring it’s legally compliant is a great start. However, having legal agreements in place can keep your business protected for a long time to come. 

Contracts and other legal documents aren’t just a boring formality. Rather, they provide much needed clarity, professionalism, solutions, risk management, enforceability and security. Contracts are an essential part of running your charity consulting business, so it’s best to invest in some good ones. A few legal agreements you might think about getting for your charity consulting business include: 

• Consultancy Agreement
• Privacy Policy 
• Website Terms and Conditions 
• Employment Agreement 
• Shareholders Agreement 

Our legal experts can help determine what agreements your charity consulting business will need and cater them to suit your specific needs. 

Next Steps 

A charity consulting business can be an exciting venture, however it’s crucial to invest in the right legal instruments and abide by the correct legal processes. This way, you will be able to give your business a strong start. 

• Charity consultants help organisations, especially charities, improve their systems, processes, management and communication for better effectiveness
• There’s no specific degree or career path for becoming a charity consultant; relevant education and experience in the industry are crucial
• Charity consultants differ from fundraising consultants, as they provide advice on various aspects beyond fundraising, such as management, communication, finances, and expansion
• To start a charity consulting business, the first step is business registration, with three common legal structures: sole trader, partnership and company
• Various laws, including data and privacy laws, employment regulations and UK Consumer Law, may impact charity consultancy businesses, necessitating compliance and understanding 
• Legal agreements like Consultancy Agreement, Privacy Policy, Website Terms and Conditions, Employment Agreement, and Shareholders Agreement are essential for a charity consulting business to provide clarity, professionalism, risk management, and security 

If you would like a consultation on starting a charity consulting business, you can reach us at 08081347754 or [email protected] for a free, no-obligations chat.

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