Choosing a legal structure
When you set up a new group or organisation, it is usually useful to agree a particular legal structure for your organisation. This is the way that you stop being just a collection of individuals, and become a group of people working together within an agreed set of boundaries and for an agreed set of aims. Even if your group is fairly informal, you will find that you need to agree some kind of legal structure if you want to open a bank account and/or apply for funding. Your agreed legal structure will govern who, in the eyes of the law, is responsible for the activities of your organisation, and different legal structures come with different legal responsibilities.
There is a wide range of structures open to groups and organisations which are active in the community. People frequently refer to such organisations as ‘not-for-profit’ or ‘non profit-making’ organisations. While these may be handy informal descriptions, these terms have no legal meaning in Britain and do not refer to any particular legal structure.
First things first
Before setting out on deciding on and committing to any particular legal structure, it is worth thinking about what kind of group you imagine you will be, as this may affect the order you do things in. For example, if you are planning to set up a small organisation to run arts projects in the community, you will want to give some thought to the aims and structure of the group before you invite others to join you, so that you can be clear about what you are asking them to do.
On the other hand, if you need to respond quickly to a proposal from the council that will affect your area, the first thing you’ll need to do is get as many people as possible together, so that they can all contribute their ideas and energy. Getting absorbed in worrying about legal structure could slow you down and may not be necessary, at least in the short term.
Don’t get bogged down
Remember, there is no right or wrong way to run a group – how formal your group will be depends on the wishes of the people involved and the aims and function of the group. Many groups change their structure as they develop, so there’s no need to get bogged down in legal documents before you’ve even got off the ground. Nevertheless, it’s worth giving the structure of your group some thought, to make sure you have a set up that meets the needs of your group.
We have a range of information pages to help you find the right legal structure for your group, and to advise you about how to go about setting up different types of organisation. You may find it useful to start with our RouteMap, an online flowchart that uses information about your group to suggest possible legal structures.
First steps when thinking about starting a new group, and links to further information.
A guide to the key responsibilities of an organisation’s management committee, trustees or other governing body.
RouteMap is an online flowchart for any not-for profit group or organisation looking for guidance in choosing a legal structure. There are questions to answer, leading to some advice on the structure which seems most appropriate for the way you want to run your group.
In this sheet we look at legal structures which are suitable for community organisations, ranging from small neighbourhood groups run by local people to larger voluntary agencies with staff. It explains four types of structure available, and the pros and cons of these different options.
A brief guide to legal structures for not-for-profit organisations.
Information to help your community organisation understand whether it is or could be a charity, whether it should register with the Charity Commission, and how to do so.
These books are available at the Resource Centre, for reference only. If you prefer to borrow them, some of the titles are available at local libraries in Brighton & Hove. Groups based in Sussex are welcome to come in and browse our bookshelf and noticeboards.
- Charitable Incorporated Organisations
- Charitable Incorporated Organisations (Key Guide)
- Charities - The New Law 2006
- Charities and Public Benefit
- Community Matters: Reference Manual for Community Organisations Advisers
- Simply Governance: A comprehensive guide to understanding the systems & processes concerned with the running of a sustainable community enterprise
- Simply Legal: All you need to know about legal forms and organisational types for community enterprises
- Voluntary Sector Legal Handbook
The services listed below are not provided by the Resource Centre. These are websites and services we feel are particularly useful for small groups in Brighton & Hove, and which are not easy to find by searching the internet.
Most useful services for local groups
Help with developing constitutions and sample constitutions, Information on charities and charity law, Information on insurance, Information on legal structures, Information on managing money, Information on running a group, Information on running childrens groups, Information on setting up a company, Risk Assessment (Financial and Organisational)
Very comprehensive website with information how to set up a charity, legal guidance, and a database of all registered charities. Also has specialist guidance section specifically aimed at small groups wanting to become charities.
The Charity Commission is now part of the GOV.uk site, which can make it difficult to search for the information you need. They advise you to:
- always include 'charity commission' in your search terms, eg 'report serious incident charity commission'
- enter your search term, then select 'Charity Commission' from the drop down list of 'Organisations' on the search results page
Some specific guidance you may find useful:
- Information on the regulations about accounts and reporting for registered charities
- Guidance on the forms of insurance available to charity trustees, highlighting the importance of risk assessment
- Model governing documents for charities, including unincorporated associations and small charities
- Guidance about trustee conflicts of interest, including employing trustees
Free online reference and decision-making tool for charities, social enterprises and co-operative organisations.
Get Legal has been developed by NCVO, with support from BWB, to enable organisations to access information and guidance on the most appropriate legal form and governance structure for delivering their goals.
A useful collection of simple information sheets on running groups, covering things like What Insurance do we need?, The committee's essential responsibilities, A Glossary of Committee and Meeting terms, Committee rifts and disputes, How well does your group run?, and a Good Practice Guide on Volunteering.
- Getting outside help with running a sports group
- Information for social enterprises and co-operatives
- Information on charities and charity law
- Information on legal structures
- Information on managing community and voluntary sector groups
- Information on running a group
- Information on setting up a company
- Legal advice
- Online tools to help choose a legal structure