Once you have decided to set up a group/ organisation to make your ideas a reality you need to decide what form this group should take. This is important as it affects how the group is seen in the eyes of the law.
You will need to decide whether the group should be incorporated or remain unincorporated.
If you are incorporated the group / organisation will have its own legal identity under then eyes of the law.
This means that if the group enters into contracts agreements etc, the contract is with the group and not the individuals who make up the management committee.
As a trustee or director of an incorporated organisation you are, by law, not personally liable for any debts / legal disputes incurred by the organisation if you (trustees / directors), have not acted recklessly, have acted in good faith and in the best interests of the organisation.
If the group / organisation is unincorporated then the organisation is not recognised as a legal entity under the law which means that any contracts /agreements entered into by the organisation’s management committee is done by them as a collection of individuals and they become personally liable for the delivery of any contracts /agreements that the organisation enters into.
All not-for-profit organisations set up with charitable objectives which have an annual income of over £5,000 must register with the Charities Commission. This is irrespective as to whether they are incorporated or not.
Deciding on which legal structure to adopt is an important decision. Very small organisations who do not plan to enter any contracts and who do not plan to take on employees often remain unincorporated, whilst because of the potential risks involved in employing staff and entering into contracts, most other organisations would look to become constituted in order to provide limited liability protection to its board members.
Whether a group is incorporated or not it will need to have a written constitution which states what the organisation is set up to do and how decisions are made within the organisation.
Decisions around legal structures can have a far-reaching impact on the success nor otherwise of an organisation. We would always recommend that you speak to one of our development team at One Walsall on 01922 619840 or contact us at firstname.lastname@example.org for further support. Additional on line information can be found on the following website links NCVO and GOV.uk