The management committee/board must ensure that the organisation understands and complies with its own governing document.
When an organisation chooses its legal status, it takes on a particular set of rules that govern how the organisation will operate. This is called your ‘governing document’ but may be more commonly referred to as your constitution.
Your governing document provides essential information about your organisation including its:
- Purpose (objects)
- Activities it can be involved in
- Beneficiaries (who can benefit from your work)
- Geographic area you can work within
- Powers of the management committee
- Rules for running meetings
- Voting procedures
- Election of the management committee
- Election of office-bearers
- Financial requirements
- Winding down (closure)
Voluntary and community organisations have various choices as to which legal status they wish to adopt. These include the following:
With any of these first three options, the organisation may also apply to the Charity Commission for NI to become a charity.
Organisations planning to apply for charitable status should seek the advice of the Charity Commission for Northern Ireland to ensure the objects/purposes in the draft governing document are charitable in law (more on charitable purposes). Model documents are available on their website. Governing documents must be formally approved. This approval process generally requires the document to be:
- Adopted at a meeting e.g. General Meeting
- Signed by the Management Committee members (those in office when it is adopted) and
- Dated the day of the meeting at which it was agreed
It is essential that minutes of the meeting be recorded to show that the document has been formally agreed.
The Management Committee is then responsible for ensuring that the governing document is put into practice. If the organisation is a charity, it may need to take advice from the Charity Commission before making changes to its governing document.
As voluntary organisations grow and develop, employing staff and/or owning premises or other assets, it is common to change legal status from a voluntary association with a constitution, where the liability of the individual committee members is not limited i.e. someone taking a legal case against the organisation would, in effect, be taking the case against the committee members, to become a company limited by guarantee, with its own legal status as a company and the liability of the individual directors is limited to usually £1 if the organisation is wound up.
If the organisation derives substantial net income from trading, it may wish to become, or set up a separate, social enterprise, which will not have charitable status. See Charities, trading, tax and subsidiaries.