Setting up a Voluntary Organisation
So, you have decided to start a community project. You have a clear idea of what you want to do, how you are going to do it and who is going to benefit.
What happens next?
This resource sheet describes some of the structures you might use to support and run your project and the different circumstances you might use them in. The flow chart at the end offers a simple visual guide to deciding what kind of organisational structure you might want and the table summarises the key factors for each.
- If it’s a simple project, which doesn’t involve spending or receiving money or put you in a position of responsibility or care over other people, you could just do it.
The residents of Some Street want to clean up their local park. They decide to organise a monthly Sunday clean up. They ask residents to come, bringing binbags and gloves. They tell the Council who help out with hi vis vests and an extra collection of the bin bags at the end of each session.
As the sessions become more popular, they set up a Whatsapp group to coordinate dates and times and start to call themselves Some Street Saviours.
But they have no formal organisation so no bank account and no assets of their own.
- If the project becomes a bit more complex, you could consider linking up with an existing organisation, becoming a project within their organisation. They can hold any funds and take care of legal issues. You might want to have a written agreement with them about your relationship.
Some Street Saviours decide they want to go further than simply cleaning up the park. Now they want to enhance their environment with a tree planting project.
But to do that, they need to buy trees and spades. They think it would be sensible to have public liability insurance in case the spade slips and hurts someone.
The delighted council offer a small grant to cover these expenses. But they have to meet the council’s grant requirements including a bank account with two signatories.
So the Saviours approach Our Town Community Association who are a registered charity running the park pavilion. They agree to hold the grant in a restricted fund and establish that the Saviours will be covered by their insurance.
- If the project becomes more complex – for example you raise more funds to be spent over a longer period of time; you run several projects; or you take on staff, you might feel you need to set up your own organisation. This will allow you, for example, to have a bank account and control your own finances. But it will also mean that the people in charge will now be responsible. At this stage, you will need to start thinking about what kind of organisation you need.
The Saviours decide they want to run some fun days in their park. They plan to sell cakes on the litter picking days to raise money for the fun days. Since the money will come in bit by bit, they think it will be easier if they have their own bank account. There are now 30 regular saviours and they think its important the members continue to feel very involved.
They set up an unincorporated voluntary organisation. They have a simple constitution which sets out their aims and provides for a committee of five elected annually from the membership. The constitution gives them the power to raise funds and spend it on projects associated with improving the park.
- If the organisation starts taking on responsibilities – for example employing staff or taking on contracts with other organisations – the leadership may want some legal protection so if things go wrong, they are not personally liable. This reduces the risk that, for example, creditors might pursue them individually for any debts.
Some Street Saviours moved on from planting trees to also cultivating flowers in their park. The displays were so wonderful that the council put them in touch with a local college who asked them to run a therapeutic horticultural course in the park.
Now the Saviours have a contract with the college. They have employed a course leader and some course assistants. They buy in seeds and compost on a regular basis. They are responsible for the welfare of some very vulnerable people.
The management committee decided they needed more protection. They had heard, for example, about groups who had faced employment disputes with their staff which had led to serious financial problems.
So they set up a company limited by guarantee. The management committee are still elected by the membership but now the committee are directors of the company and all transactions take place in the name of the company. The company does not make a profit; any surplus is reinvested in its activities but if it makes a trading profit, it now has to pay tax. It has to submit accounts to company’s house; if it is late, there is a fine.
The council have more confidence in the Saviours and give them a contract to run fun days in all the city’s parks.
- You may need to think about whether you want to become a charity. If you set up a charity, you will have to comply with the requirements of the Charity Commission. This means having at least three trustees who run the charity, submitting approved accounts in a fuller form than is required from a company each year and ensuring that the way the charity is run meets the charity commission’s standards of “governance”. It must have objectives which are “charitable” and benefit people who do not run the charity. A charity can be a company and a charity which means it has to meet the requirements of company’s house and the charity commission or it can become a charitable incorporated organisation with the limited liability benefits of a company but only answerable to the charity commission. Charitable Incorporated Organisations may or may not have a membership.