Michelle Ferris, Head of Charities and Care, explains the benefits and drawbacks of seeking charitable status as a care provider.
Once a more common choice of set-up, the number of charitable entities in the care sector has fallen away in recent years. Analysis published last year by NPC, a charity think tank1, estimated that only 14% of providers and 10% of care beds in the sector were run by charitable organisations. Going forward with an increased focus on community and an ethical and green agenda, it is possible that charities will form a larger part of the sector than they do currently. So what are the pros and cons of being a charity within the care sector?
Whilst the tax advantages of charitable registration can be considerable, there is a lot that often needs to be sacrificed in exchange. The asset lock is pretty unpalatable for most individuals running an established business (why would you want to give away everything you've worked hard to build up?), but for new entrants into the market, or those looking to add additional locations or structures, there are some real positives to be considered through charitable registration.
When considering if a charitable entity might be for you, my advice would always be to look within yourself and find your motivation for wanting to be in the care sector. If it is profit driven, then a charity probably isn't for you. But if you are looking to drive greater purpose and community engagement through your operations, then a charity could be a good solution.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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