Notes on setting up a voluntary group Introduction The information here is taken from NICVA’s booklet on this subject So You Want To Be a Charity? These notes summarise very briefly the most straightforward options, which a new group should consider before setting up. What to do first Before any group can set up as a voluntary organisation, it will need to call a meeting of all interested parties to discuss the following: Do you want to undertake one particular project, or do you have a number of aims? Do you intend to complete your work in a limited period or remain in existence for a long time?
It is important that the meeting discusses and agrees the main aims right at the start, so that everybody works together with a common purpose. Having decided what you want to do, the group should elect a steering committee to draw up a constitution, which sets out the rules by which the organisation will run. A first priority for the steering committee is whether the organisation should be formally a charitable body. If the answer to this is yes, particular care will be required in preparing a constitution.
Why have a constitution? A constitution is an important document and it is necessary to have one whether or not the organisation wants to seek charitable status. It is worthwhile to take the trouble to ensure that it takes into account not only what you intend to do in the first year, but also allows for the future development of the organisation’s work. It is a legal document, which once adopted, requires a lengthy formal procedure to alter it. An unincorporated body is the simplest type of organisation, and the favourite legal structure chosen by new groups. The attractions are that it is cheap to set up and run and there is no red tape to deal with. Other types of legal structure are: a Trust, a Company and an Industrial & Provident society. See notes on Legal Structures to compare the pros and cons of these different types of legal structures. It is available, free of charge, from NICVA’s Charity Advice Service. A constitution should include the following: 1. Name of the organisation. SCNI Building Sport Setting up a voluntary group Feb 05
2. Objects - the aims and purposes of the organisation. It is important that these are written in such a way as to cover everything you want to do and how the organisation will operate to attain these objectives. When writing the objects of a charity, particular care is required to make sure that they are all charitable in law, and not a mixture of charitable and non-charitable objects. 3. Membership - this clause states who will be eligible for membership of the organisation and the types of membership, if applicable (e.g. full, associate, group). This clause can also provide for termination of membership. 4. Management - this clause describes how the organisation will be managed, i.e. by a Management or Executive Committee, how and when they are elected, the number of co-opted members, the minimum number of times they should meet in a year, and what a quorum for their meeting should be. If it is the intention of the organisation at some stage to appoint sub-committees, reference to this should be included. 5. General Meetings - this clause will state when the Annual General Meeting will be held and what business is to be transacted at it, which should always include: Receiving from the committee an annual report and statement of accounts. Electing office-bearers and the committee, and appointing auditors for the coming year.
The second part of this clause should make provision for extraordinary or special general meetings of the entire membership of the organisation - these are usually called when some special business has to be considered. 6. Rules and procedures at all meetings- this clause may or may not be included but, if it is, it should state: Who chairs meetings in the absence of the Chairperson. Whether the Chairperson has a casting vote. What records (minutes) of all meetings should be kept by a named office-bearer.
7. Finance - this clause should make clear that the funds of the organisation can only be used to further the objects of the association and for no other purpose. It should also state that a bank account should be opened and who is authorised to sign cheques on behalf of the organisation. 8. Trustees - an unincorporated body cannot hold property. If such a body wishes to own buildings or land, it will need to appoint
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trustees. Trustees are people who hold property which is not their own, but has been entrusted to them. 9. Amendments to constitution - a constitution may be altered, but only at a special general meeting of which proper notice has been given to the members. In the case of an organisation which is a charity, no changes should be made which would alter the charitable nature of the organisation. 10.Dissolution - this states what happens, if the organisation decides to wind up, in particular, what will be done with any funds remaining after all liabilities have been met. And Finally……. When all members of the group have formally agreed to the constitution, as prepared by the steering committee, the next step will be to submit it for approval to the Inland Revenue if charitable status is deemed desirable (see below). If charitable status is not desired, the organisation can proceed to carry out its work under the management of its elected committee without further ado. In other words, without charitable status, the organisation can raise money through membership fees, jumble sales and other events. If street, house to house collections or flag days are contemplated, the prior permission of the local police is required. It can spend the proceeds on out of pocket expenses, stationery and organising special events in pursuit of the aims of the organisation. However, accurate accounts of all income and expenditure must be kept for presentation at an Annual General Meeting. Advantages of seeking charitable status The advantages are mainly financial and include: Relief from Capital Transfer Tax Relief from Capital Gains Tax Relief from Stamp Duty. Probable rates relief on premises. Recovery of Income Tax on covenants. Only charitable organisations are, strictly speaking, eligible to receive grants from charitable trusts. Easier access to charitable appeals on radio and television. The general public usually has more confidence in a body that has been formally recognised as charitable.
It might be worth pointing out that charities must not be established to pursue a political object. Charities can and often do undertake a certain amount of lobbying or political activities. There are guidelines available on what is acceptable. However, a ‘would be’ charity must take care not to include acting as a pressure group as one of its aims.
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Becoming a charity in Northern Ireland The Inland Revenue is the body which can confirm if a group in Northern Ireland is accepted as a charity ‘for tax purposes’ or not. The officers of the new organisation should send in a draft constitution, plus an outline of the practical activities the group intends to pursue, to: Inland Revenue FICO (Charity Title) St John’s House Merton Road Bootle Merseyside L69 9BB The accompanying letter should include the following sentence: ‘I would be grateful for your advice as to whether, on the information enclosed, the above association/group is entitled to be recognised as a charity under the provisions of the Income and Corporation Taxes act 1998’ If a group requires detailed advice and assistance on its application, NICVA’s Charity Advice Service will be glad to help. When the Inland Revenue has given formal recognition that a group is a charity, the group should not assume that it need never bother about charitable status from then on. In order to retain its charitable status, a group must always be ready to submit its accounts to the Inland Revenue (FICO) if the Inland Revenue requests to see the accounts. This is because the Inland Revenue must be satisfied that the group’s income is applied only to charitable purposes. For further advice and help, write to: Charity Advice Service Northern Ireland Council for Voluntary Action 61 Duncairn Gardens Belfast BT15 2GB Email: brid.mckernon@nicva.org The Charity Advice Service is available for advice and information by telephoning: 028 9087 7777 from Monday to Thursday, between 9.30 and 5.00p.m.
SCNI Building Sport
Setting up a voluntary group Feb 05