Constitution for an Unincorporated Charitable Association
This Constitution for an Unincorporated Charity is designed for use where it is decided that a charity should be set up in unincorporated form rather than in the form of a company under the Companies Acts.
Since the charity will be in unincorporated form, it will not have an independent legal identity/personality. This means that its trustees will be more at risk of personal liability for debts or other liabilities than trustees of an incorporated organisation. However, if they act honestly and reasonably and the charity has sufficient assets to meet liabilities, the trustees will not normally become personally liable. It is advisable for the charity to take specific legal advice on this point, and also to take out suitable insurance.
Assuming that the charity’s annual income exceeds £5,000, it will need to register with the Charity Commission, but one of the advantages of setting up a charity in unincorporated form is that its administration and regulation will be simpler and less expensive than if it were a company since it will not have be subject to any requirements of company law.
This Constitution for an Unincorporated Charity takes into account the needs of charities and the requirements of charity law, and it is based on the Charity Commission’s Model Constitution for Charitable Associations but with a number of changes and additions. (Crown copyright in the provisions included from the Commission’s Model is hereby acknowledged.)
Setting up a charity in the form of an unincorporated association will be appropriate where:
• the annual income of the charity may be substantial. (A charity whose income will not exceed £5000 should instead use the Short Form Constitution for a Small Unincorporated Charity);
• the resources of the charity will be relatively small;
• the charity will not need to raise finance by borrowing. It will only be able raise funds through members’ subscriptions, grants, or donations;
• the charity will not own freehold or leasehold land or other substantial property, e.g. vehicles. Any assets of the charity will need to be held under separate arrangements, e.g. by setting up a trust, or allowing a group of members to hold the legal ownership of the assets;
• the charity will have few or no employees;
• the charity will have a membership, in particular if the number of members will be quite substantial, they will be actively involved in the charity (as volunteers, or by contributing in various other ways to the charity), and their views on the work of the charity are to be taken into account; and
• the charity will not enter into commercial contracts (including contracts to deliver services), or engage in activities involving commercial risks.
Where the charity is to be involved in such contracts or activities, consideration should be given, and legal advice taken, as to whether it should be formed as a company instead; that would provide better protection from personal liability for the charity’s debts which may make it easier to recruit trustees.
If a company is to be used instead, the charity could adopt the Charity Articles of Association-Private Company Limited By Guarantee.
The charity’s purposes (as described in the Constitution) must be charitable and it must have demonstrable public benefit, otherwise it will not be a charity in law. The Charity Commission website includes guidance on public benefit and on what purposes are charitable.
If it is a charity in law, it may refer to itself as a “charity”, but not otherwise. If HMRC has also formally recognised it as charitable and it has a tax number, it may state that it is recognised by HMRC but it must not publicly quote its tax number or suggest that it is “registered” or has “charity status”. If it is recognised by HMRC it may claim gift aid on payments made to it.
This Constitution for an Unincorporated Charity provides for the charity to be run by a management committee of three or more trustees. Three of the trustees will serve as the Chair, Secretary and Treasurer of the charity.
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