Two very different types of charity and why it matters
"Strength lies in differences, not in similarities" - Stephen Covey
This article is part of the Practical Guidance series. Find the list of posts here and the video playlist here.
If you prefer, you can watch/listen here.
It’s worth noting that there are two very different types of charities.
There are grant making trusts and service delivery charities.
A grant making trust is most often set up by an individual, family, or company. They invest either their personal wealth or business profits into stocks and shares, then they donate the profits of those investments to other charitable and not-for-profit causes.
Grant making trusts can be a tax efficient way for individuals and companies to distribute their excess profit.
They are also a popular choice to create a legacy; for example, in memory of someone who has died, either for the deceased's wealth to be reinvested, or as a way of capitalising on donations made in their memory.
Whatever the reason behind their existence, the purpose of a grant giving trust is to give money away.
In contrast, a service delivery charity is set up with a clear social aim; to do something, to deliver projects, programmes or services, to advocate for change, or to contribute towards growth in the third sector.
You can see how this goes full circle then; grant giving trusts give to service delivery charities, and service delivery charities take action on the causes that the grant giving trusts were set up to support and advance.
What is the purpose of your charity? Grant-making or service delivery?
Take some time to check you are clear on the purpose of the charity you intend to set up.
Rachel x
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