Why charities matter – and what makes a charity?

This article forms part of the series “Understanding Charities: A Practical Guide for Trustees and the Public”. The series is being published following the introduction of the Charities Act 2026. Its purpose is to help readers better understand charities, the role of trustees and the governance arrangements that help maintain public trust and confidence in the charitable sector. 

By Jose Julio Pisharello 

Charities are an important part of community life in Gibraltar. They support people facing illness or hardship, advance education and health, promote sport and culture, protect animals and the environment, support young and older people and contribute in many other ways to the wellbeing of our community. 

Their contribution is not measured only in money. Charities also bring together thousands of hours of voluntary effort, professional expertise, fundraising and community involvement. Behind every successful charity are people prepared to donate, volunteer, serve as trustees or otherwise support a cause they believe in. 

But what actually makes an organisation a charity? And why does charitable status bring with it particular responsibilities? 

WHAT MAKES AN ORGANISATION A CHARITY? 

A worthwhile cause does not, by itself, make an organisation which promotes such a cause a charity. 

Under Gibraltar's charity law, for an organisation to be eligible to be registered as a charity, it must have exclusively charitable purposes and those purposes must be for the public benefit. These are fundamental requirements and lie at the heart of what charitable status means. 

A charity's purposes describe what it exists to achieve. They should be clearly set out in its governing document and must fall within the charitable purposes recognised by law. 

Those purposes cover a wide range of activities. They include, for example, the prevention or relief of poverty; advancement of education, health, religion, citizenship or community development; arts, culture, heritage and science; amateur sport; environmental protection; animal welfare; and helping people in need because of age, ill-health, disability or financial hardship. 

The range is deliberately broad, reflecting the many different ways in which charities can benefit society. 

Having a recognised charitable purpose, however, is only part of the test. The purpose must also provide a public benefit. 

In simple terms, there must be a real and identifiable benefit, and that benefit must be available to the public generally or to a sufficient section of the public. A charity cannot exist principally to provide private advantages to particular individuals or a closed group. Any private benefit must be incidental to achieving the charitable purpose. 

This combination of charitable purpose and public benefit is fundamental to understanding what distinguishes a charity from many other organisations. 

CHARITABLE STATUS BRINGS RESPONSIBILITY 

Charitable status requires more than simply showing good intentions or undertaking worthwhile activities. 

Once an organisation is established as a charity, those responsible for it must ensure that it continues to pursue its charitable purposes and that its resources are used to further them. 

That responsibility rests principally with the charity's trustees. The term “trustee” is used throughout this series to describe those who have overall responsibility for the governance of a charity. Depending on how a charity is constituted, they may also be known, for example, as directors in the case of a charity constituted as a company. 

Trustees are responsible for the control and management of the administration of the charity. They must act in its best interests, follow its governing document, use charitable property only for the charity's purposes and ensure that the organisation is properly administered. 

Trustees act collectively. Although day-to-day responsibilities may be delegated to employees, volunteers or others, ultimate responsibility for the charity remains with the trustees. 

The important point for now is that becoming a trustee is not simply an honorary position. Trusteeship carries real responsibilities for the stewardship of an organisation established to serve a charitable purpose. 

THE ROLE OF THE CHARITY COMMISSION 

The Charity Commission is the independent regulator of charities in Gibraltar. 

Its functions include maintaining the public register of charities, determining applications for charitable status and overseeing compliance with the legal framework. In doing so, the Commission seeks to ensure that registered charities operate exclusively for charitable purposes and for the public benefit. 

Its role is not only regulatory. The Commission also supports trustees by providing guidance to help them understand and meet their responsibilities. 

This combination of oversight and support is particularly important as Gibraltar's charitable sector adapts to the modernised framework introduced by the Charities Act 2026. 

WHY PUBLIC TRUST MATTERS 

There is a common thread running through all of this: public trust and confidence. 

Charities depend heavily on the willingness of people to support them. Donors need confidence that their money will be used properly, while volunteers want to know that the time they give is making a worthwhile contribution. Beneficiaries should be able to trust that charities will act responsibly, and the wider public needs confidence that organisations enjoying charitable status genuinely operate for charitable purposes and public benefit. 

Good governance, responsible trusteeship, transparency and accountability are therefore not simply regulatory requirements. They help protect the relationship of trust between a charity and the community it serves. 

That theme will run throughout this series. 

Over the coming weeks we will explore what trustees actually do, their essential legal duties, good governance, managing charity money and risk, safeguarding, transparency and accountability, independent scrutiny and the importance of recruiting and retaining effective trustees. 

The objective is a practical one: to help both trustees and the wider public understand how well-run charities should operate and why good governance ultimately helps charities achieve more for the causes and communities they exist to serve. 

TRUSTEE QUESTION OF THE WEEK 

What is the difference between a charity and a voluntary organisation? 

Many voluntary organisations undertake valuable work for their communities and may operate on a not-for-profit basis, but that does not necessarily make them charities. 

For example, a club or group of local residents might come together voluntarily to organise social activities or improve amenities for their members. The organisation may be entirely not-for-profit and make a positive contribution to community life, but it would not necessarily qualify as a charity because its activities may not be exclusively charitable or satisfy the wider public benefit requirement. 

By contrast, an organisation established to support people facing hardship because of illness, disability, age or difficult personal circumstances, with its activities and resources directed towards providing that benefit to the public or a sufficient section of the public, may satisfy the requirements for charitable status. 

The distinction is therefore not whether an organisation does “good work”, or whether those involved are volunteers. A charity must satisfy the legal requirements for charitable status: it must be establishedexclusively for charitable purposes recognised by law and those purposes must be for the public benefit. Charitable status also brings legal responsibilities for trustees and regulatory oversight by the Charity Commission. 

KEY TAKEAWAY 

Charities play a vital role in our community, but charitable status also carries responsibilities. At its heart is a simple principle: charities exist to deliver public benefit, and maintaining public trust is essential to their ability to do so. 

Looking Ahead 

Next week, we will look more closely at the people entrusted with these responsibilities: charity trustees. What do trustees actually do, what decisions are they expected to make, and why does effective trusteeship matter? 

About the Author  Jose Julio Pisharello is a member of the Gibraltar Charity Commission and has written this series with the aim of helping readers better understand charities, trustee responsibilities and good governance.