Meeting the regulatory compliance can be hard to keep on top of, esp if people have never run anything similar before or have no background in running a company, book keeping or governance. If they fall foul, it may be unintentional - because they were swamped, they have full time jobs, haven't read all the small print, got side-tracked in chasing funding bids or were very absorbed in helping clients. These things can often happen when projects are started during a crisis or panic - like during Covid times. There are very many reasons why it often doesn't work.
When people see x thousand pounds potentially offered for various projects it can
entice people into mission drift and to start plotting how to secure it for their community. People often build whole company infrastructure around one random funding bid. I did this with a homeless charity in 2002. The paperwork and admin came to take up way more time than the services we were delivering - a pointless spiral.
More and more funders are looking to work with groups without charitable status. It can sometimes be best for new groups to work with existing bodies that already have infrastructure, so you don't need to create it yourself - partenering with a church, nursery, club, school, temple, network, non-profit etc.
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We started a local food bank in 2020 and some trustees wanted to become a charity so they could apply for national grants, but the work and officialdom it entailed would have been crushing, adding to being overloaded, broke and unstaffed from the start. In the end, the tail begins to wag the dog and the money becomes the aim rather than means, which is nearly always a disaster.
I've been helping out a dog rescue organisation for several years. They would like to be a charity and are trying to become one, but the paperwork involved is overwhelming for what is basically a family who spend all their time walking and feeding dogs and taking phone calls from people wanting to rehome their pets. They are not accountants and can't afford to employ one, so it isn't working out so far
Gardening on the edge of Exmoor, in Devon
“It's still magic even if you know how it's done.”
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“It's still magic even if you know how it's done.”