Charitable Organizations in the United Kingdom - Term Paper Example

CHARITABLE ORGANIZATIONS and Section # of EXECUTIVE SUMMARY Charitable organizations work for the purpose of doing charitable work. The United Kingdom has around 200,000 charitable organizations, which is a very large number. They are divided in such a way which distributes them between three different regulatory bodies. The advantages of a charitable organization in United Kingdom are that their earnings are tax exempted, so that they can serve charitable purposes better. Moreover, fund raising takes place very efficiently if the organization is established. Then the employees do not have to worry about reaching targets as to profits. They just have to manage funds. Lastly, the intangible benefits are immense when it comes to serving in a charitable organization. As for the disadvantages, employee retention and recruitment is a matter of concern as the salary is low and commitment needed is high. Lastly, when charities are newly established, fund raising is a major issue as people doubt their credibility. INTRODUCTION Charitable organizations are those companies who are working for the sole purpose of doing something good for the society. The organization has charity-oriented factors as its aims and objectives as opposed to a normal company, whose major aim is to maximize its profits. There can be many types of charitable organizations, namely trusts, foundations and associates which are working as unincorporated (Petit-Zaman, 2006). A company might start off with charitable purposes or might become a charitable organization after some time passes after its establishment. There is a difference between a charitable organization and not-for-profit organizations. Charitable organizations are a subset of not-for-profit organizations. Not-for-profit organizations are those which are incorporated as an organization. They have a separate legal entity. They are neither working for purely charitable purposes nor for profit maximization. For example, a college could be a not-for-profit organization as its aim is to provide quality education to its students. Yet it is not working for charity or profits. Often, charities are seen doing activities which should be the job of the state, such as elderly health care or helping children with diseases which are expensive to cure. It is actually the responsibility of the state to fulfill these traditional duties, to work for the welfare of the citizens of the state. But often the state is ignorant of these duties and that is when these charitable organizations step in and do some good work. CHARITIES IN UNITED KINGDOM The United Kingdom has a total number of 200,000 charitable organizations (UK Tax). This is a huge quantity and the graph is rising as the sector of charity is rapidly growing and accelerating. Many of these charities are established as limited liability companies so that the owners, i.e. the trustees, are not liable to pay more than their share of investment in the company and so that this factor results in the establishment of more charitable organizations. Charitable organizations are finding new ways to cater to the humanity. The various charitable organizations are basically registered with three regulatory bodies, namely the Charity Commission, the Office of the Scottish Charity Regulator and the Inland Revenue. These regulatory bodies are essential to supervise and take care of the activities that these charitable organizations are indulging in. these bodies make sure that these charities do not misuse the money that they collect from the general public for charitable purposes. These charities also have to report its activities to the government. This makes the government fully aware of whether these organizations are fulfilling their purposes or not, as their collections are tax free. This reporting aims to see whether any fraud is being done by an organization opened by the name of charity but eating up money for personal purposes. If a fraud is detected, the license of the charitable organization is cancelled. This reporting is done on an annual basis, as is the case of profit corporate organizations. Moreover, the government can also have a significant influence on what it wants the charitable organization to do specifically. The government might want to channel the energies of a particular charitable organization towards the collection of funds for the cancer patients. It can ask the organization to make this their next agenda or so. ADVANTAGES The biggest advantage to all charitable organizations it that the profits which they earn are tax exempted (Charitable Organizations, 2003). Normal organizations which are working for profits have not just single, but double taxation. Their profits are first taxed as a company and then on the individual stockholders level. Compared to this, it is a very big advantage to the charities that their profits ultimately are equivalent to being disposable for them. They can use their total amount of profits for charitable purposes or to pay employee salaries. This tax exemption increases the amount of available funds to the charity so that they can better serve charitable purposes. The next major advantage is that when a charitable organization is established enough, it can be really easy for it to collect funds. As much as the credibility of the organization increases, it even happens that the employees do not have to persuade the general masses to donate. The public themselves comes and donates money as they know that the money donated will be used for good purposes and will not be misused by the charity. Moreover, they do not have any targets to achieve as such because it is a not-for-profit organization. They simply have to manage their funds so that they are able to survive as a charitable organization and can contribute to humanity whenever they have a specific agenda to fulfill. They have a no profit and no loss factor during their business dealings. Therefore, the crucial factor of achieving targets is eliminated and can be a source of good generation of employment for charitable organizations. Furthermore, it all comes down to the humanity being served when a charitable organization comes into being. Thousands of charitable organizations are in action. That would mean that majority of the needy must be having their needs fulfilled if each charity is true to their words and is really working and being successful at their purpose. There are a lot of "ifs" involved, but the basic aim of the charity is the betterment of the society and it results in general goodness for everyone. The financial and tangible benefits for all might be low but the intangible benefits are high (Petit-Zaman, 2006). The satisfaction that an employee gets after collecting sufficient funds for a child with TB will be way higher than an employee who works in a profit organization and who has just met his sales targets for the year. DISADVANTAGES The biggest disadvantage that any charitable organization faces is at the time when it is established. At these initial stages, the heights at which people doubt the intentions are at the highest altitude possible. The general public has no idea what the organization stands for, what are its mission, exactly what kind of charity does it aim to do, where will the money go which is being collected. These and a million more questions arise in the minds of the person who is being asked to contribute to charity. A charitable organization basically works in a way in which the charity's members make a specific aim for example to contribute money to a particular earthquake relief fund and then they collect money from the general public and channelize it towards this fund. The charitable organization is acting as the intermediary in this whole process where the needy receive the money from those who have it in excess. (Aspatore, 2006) When it has been newly established and when members of the charitable organization are making these collections, people will highly be suspicious of their intentions primarily because they have never heard of the name of the organization. The masses do not know whether their hard earned money will actually go to the purpose which is being stated. There is a credibility gap. This is another major problem in charitable organizations. It is difficult to recruit and then maintain employees who are committed. In the case of charitable societies and committees, there are members who have to work just part time. They do not need to dedicate themselves full time to these charities. But in the case of charitable organizations, it needs employees who are ready to work full time. The problem here is that employees might not be paid that much as will be the employee of a profit organization. This is because charitable organizations purpose is for the good of the humanity and in that case increasing the pay of employees would mean that it could otherwise use this money in doing charitable work. Therefore, employees are not paid much and yet are expected to do a lot. The employees' job is to persuade the general masses to donate money to good causes. This needs a high level of patience as people will scrutinize you, criticize you, question you and even doubt your intentions. It needs a lot of perseverance and commitment. But finding all this on a relatively low pay scale than the profit organizations is a difficult task. There should be high congruence between the values of the organization - serving the humanity - and the values of the employee. Only then the employee is likely to survive and have high motivation and high job satisfaction. A very important role here is played by the leader of the charitable organization. He has to keep a check on all of his employees and check their level of commitment and drive the team spirit all the time. (Aspatore, 2006) WELFARE STATE AND CHARITY'S INFLUENCE ON THEM Welfare state is a concept whereby the government is responsible to provide the citizens with their basic rights. The state is taking care of the welfare of its residents by providing for elderly care or showing the pathway to the jobless. When these charities are formed, they are assuming the job of the welfare state. Therefore, their effect could be damaging as well as helpful to the cause of welfare state. They can be damaging in the sense that they are projecting the fact that the welfare state and that is the government is not assuming their responsibilities fully. And when, at times, the charities are following the scope and agenda provided by the Government and when they are being supervised by the state themselves, it is helping the Government do their task of providing welfare to the citizens. Therefore, the concept of welfare state can be thoroughly exploited by the citizens, where they show total dependency on the state. Even if they can do a particular thing themselves, they would expect the state to help. So when the charity steps in, the citizens might not feel they have a right on it rather they would feel obliged to it, decreasing the amount of dependency and misuse of the welfare state. CONCLUSION Charities are a very important part of our society since they support the needy, be it young or old, able or disabled, weak or strong. Without charities income distribution would be highly uneven which in turn acts as a threat to the state. The welfare scenario in Britain is bright with over 200,000 charities conducting social work. Due to their not-for-profit motives, they work out well and due to their public care motto, the government of Britain also supports them to provide better services for the needy. Although welfare organizations are caught up in their problems like credibility issues, keeping the workforce committed and conducting their business ethically, the right motives do bring out the right results. Helping out others really satisfies people's needs while giving them self-satisfaction and keeping their hopes alive to cast a shining future for themselves and for their nation. Works Cited 1. Aspatore Books Staff (2006) Leadership Strategies for Charitable Organizations and Foundations. 2. Aspatore Books Staff. (2006) Strategies for Maximizing the Budget for Charitable Organizations 3. Charitable Organizations [Internet]. Available from http://www.aph.gov.au/library/pubs/bd/2003-04/04bd164.pdf [Accessed 18 February 2008] 4. Petit - Zaman, Sophie (2006) How to be an Even Better Chair 5. UK Tax. [Internet] Available from http://www.hmrc.gov.uk/charities/donors/gift-aid.htm [Accessed 18 February 2008] Read More