71 Different Structures

MANAGEMENT STRUCTURE 7
7.1
DIFFERENT STRUCTURES;
LEGAL STRUCTURES

. The Legal Basis Of Social Enterprises

. Other Structures For Social Enterprise

. Choosing A Legal Basis

. Advantages And Disadvantages Of Models Of Organisation

. Community Enterprise - A Model For Local Economic Regeneration

. Reasons For Setting Up A Charity

. Useful Contacts

P 247

DIFFERENT STRUCTURES; LEGAL STRUCTURES 7.1
THE LEGAL BASIS
OF SOCIAL ENTERPRISES
There is no particular 'rule-of-thumb' on which legal structure
is best for your project.

. Small projects that want to operate Incorporating A Social Enterprise
in an informal way and are not likely There are three main ways to ’incorporate’
to need an overdraft or enter a social enterprise, giving the project a legal
into contracts can remain as status and limiting liability of members for
Unincorporated Associations. the project’s debts (if any).
. People who want to work together
1 : Industrial And Provident Society
as equals and share the benefits of
The project can incorporate under the
their activities often choose to be a
Industrial And Provident Society Acts as
Partnership or Co-operative.
either a ’Bona Fide Co-operative’ or a
. Longer-term projects which employ
’Society For The Benefit Of The Community’
people, which enter into longer-term - a minimum of 7 people are required. If
agreements or are acting on behalf of the aim of your project is charitable and its
other people adopt a set of rules and members wish to share in the benefits then
claim ’limited liability’ by incorporating you should register as a ’Society’.
as either a Company or a
Friendly Society. 2 : Company Limited By Guarantee
. If you aim to operate altruistically, A Community Enterprise or Co-operative
for the benefit of other people not can become a Company Limited By
yourself, then you may seek Registered Guarantee - a minimum of 2 people are
Charity status, though not all economic required. As a Company Limited By
development or regeneration activities Guarantee, the company has a separate
are charitable. legal identity and the individuals will not
have to use their personal possessions to
pay off the debts of the company in the
The main decision to make is whether to
event of liquidation: the members are
remain informal (Unincorporated) or - in
therefore said to have limited liability. On
exchange for regulation by law - claim
joining the company, a member ’buys’ a
limited liability status (by Incorporating).
nominal share - usually of £1 - this is the
extent of the member’s financial liability for
outstanding debts on liquidation (providing
that company law has been followed).

P 248

3 : Community Interest Company (CIC) Setting Up A Social Enterprise
There are two main features that distinguish When establishing a social enterprise, there
the CIC from other corporate forms. The are a number of legal structures to choose
compulsory asset lock and the community from, defined by:
interest test. The asset lock will ensure that . Its aims, and the beneficiaries
assets may only be distributed to a similar
of its activities
organisation and not to members or
investors. The community interest test must . Who owns the social enterprise and
be passed by all organisations wishing to can benefit from its success; and
register as a CIC. CIC’s must be registered . Who has the final say or authority in it
with Companies House and will either take
the form of company limited by guarantee Whatever the mix of these three, a social
or company limited by shares. enterprise can be incorporated - that is
established legally as a distinct and separate
Both Co-operatives and Community thing from its founders or members - in one
Enterprises exist to promote social as of three ways. It can be:
well as commercial objectives and part
. A company limited by guarantee
of the annual profits should be used for
social activities. . A company limited by shares
. An industrial and provident society (IPS)
Membership is restricted to those who
share the same interest or relationship to - see below
the organisation, for instance employment
or living in the same area so the members
control it. If they raise loans or grants Aims And Beneficiaries
the funder doesn’t usually get a vote. In
The decisions you make about aims and
Co-operatives members are equal partners
beneficiaries often determines what your
and people work co-operatively. Both are
social enterprise is defined as legally,
run democratically (in theory!) on the basis
what rules it can adopt and how it can
of one person - one vote. Community
operate legally.
Enterprises are usually run by a small group
or committee representing the ’community’ For instance, a social enterprise to benefit
and employ people to do the work - they are the workers in it is often called a ’worker’s
therefore hierarchical, unlike Co-operatives. co-operative’ or ’employee-ownership
enterprise’ and registers under one set of
If the project closes down, the assets go
rules. A social enterprise formed to benefit
first to meet its debts and the remainder
disabled people is called a ’social firm’ and
passed on to other similar projects or go
often operates as a charity.
back to funders.

P 249

Ownership Registration
There are two options: Companies must register under the
. Common Ownership - this is the usual Companies Act. Co-ops can register as
companies (see above) or register with the
basis of charities and companies limited
Financial Services Authority (FSA) under
by guarantee: profits or surpluses can
the Industrial and Provident Societies Act.
only be used to support the aims of
Community Interest Companies must
the organisation (i.e. not distributed to
register with the CIC Regulator. An
members) and if the organisation is wound
organisation that wants to be a Registered
up, its assets cannot be shared out but
Charity must do so via the Charity
must be given away to a designated
Commission (see below).
organisation or one with similar aims.
. Co-Ownership - profits and assets can
be divided amongst members, usually
Action Plan
in proportion to their involvement
. Get advice on which legal structure to use.
in the organisation or their investment
in it. This is often used for partnerships . Ask for model rules for your organisation.
between social enterprises or There may be a charge, but this is cheaper
’for profit’ co-operatives. and quicker than asking a solicitor to draft
a new set of rules.
. Get advice on the different options for
Control raising finance.
Who you want to control the organisation . Incorporate your organisation or ask
often determines its structure and
your business adviser or professional
legal basis.
registration service to do it for you.
If, for instance, you want the employees
to own and control the organisation and
benefit from its success, you are probably
setting up workers co-operative on either
a common or co-ownership basis.

If you are a group of social entrepreneurs
who want to control the organisation
but not benefit from it you’re probably
establishing a social business company
limited by guarantee.

A charity can benefit only its beneficiaries
but if its controlled by members it usually
registers as a company; if controlled by a
smaller group who are self-appointing (the
’trustees’), as a trust.

P 250

OTHER STRUCTURES
FOR SOCIAL ENTERPRISE
Partnerships Company Limited By Shares
A partnership is a collection of individuals A company limited by shares is a
or organisations rather than a separate legal separate legal entity formed by individuals
entity. The business is not separate from the or organisations who want to operate a
partners and their finances; each partner is business together and for their ownership
liable to pay for all the outstanding debts in to match their investment.
the event of a liquidation. If a partner runs
Shareholders own the company - having
up debts and disappears, the other partners
provided the capital - and their liability is
are liable for all those debts. This usually
limited to the amount of share capital they
only becomes clear when the tax man or
hold. They have the overall right to control
Customs And Excise present a bill for money
the company’s affairs by voting at the
not paid.
general meetings but it is the directors who
In theory, if a member joins or leaves the are entrusted with the task of managing
old partnership is dissolved and a new one the company on a day to day basis.
formed which can cause headaches. You
may need to draw up a new agreement One of the major differences between
between the partners (a Partnership Deed) Co-operatives and both Community
or re-do your letterheads. The normal Enterprises and share-based Companies
maximum size for a partnership is is that in the latter cases, control of the
20 partners. organisation is in the hands of people
who often don’t work for the company.
The partners generally have a say in
running the business in proportion to their In the event of liquidation, the directors
investment in it and therefore may not be are not generally liable for the company’s
debts unless they act outside their powers,
equal; the partners share the firm’s profits
recklessly or fraudulently. The shareholders
in proportion to their investment.
are liable only to extent of their investment
There is no reason why a group of social in the company.
enterprises shouldn’t form a partnership,
especially a temporary one, but if they want In return for their investment, shareholders
to co-operate on a long-term basis they are are awarded dividends on a yearly basis out
of the profit that the company is making;
more likely to establish a jointly-owned
company limited by guarantee or be shares. generally no dividends are awarded if the
company is making a loss.

P 251

Employee-Owned Businesses Some of the advantages of employee-owned
businesses include:
In an employee-owned business all
employees control and/or own shares . Start-up businesses can raise cash
in the company - or have the chance by selling shares to employees.
to do so in the future. You can create . Employee ownership helps a growing
employee ownership: business recruit and retain key employees.
. By selling shares to employees . Improved employee motivation leads
. Through schemes that allow employees to better performance.
to buy or own shares when key targets . Tax incentives are available for businesses
or a fixed date are reached that encourage employee ownership.
. Through governing rules (e.g. for
companies limited by guarantee where One disadvantage of employee-owned
all members have equal voting rights) businesses is that it dilutes control of the
business and profit share away from the
These formats are useful for high-growth original owners as it grows.
start-ups, social enterprises, and employee
Setting Up An Employee-Owned Business
buy-outs. In large social enterprises, the
individual member’s share is often less than If you want to set up an employee-owned
£100. In employee-owned firms it may be business, your business adviser or
large (£2,500 to £10,000 plus). accountant can advise you on the most
suitable structure or employee share
Employee-owned businesses can adopt scheme. You can also find a specialist
one (and sometimes more) of the adviser at the Employee Ownership Options
following structures: website or through the Co-operatives
. Company limited by shares UK website.

. Industrial and provident society (IPS)
. Company limited by guarantee Charities
. Partnership To be a charity an organisation must have
. Co-operative aims - charitable purposes - that are
exclusively charitable. These can be:
. Employee share ownership plan (ESOP)
. The relief of financial hardship

The choice will depend on available finance, . The advancement of education
number of employees, business size, desired . The advancement of religion
management structure, and the purchase
. Certain other purposes for the benefit
price of the existing business (if relevant).
Find out more about business structures of the community
for employee-owned businesses from the
Learn more about charitable purposes and
Employee Ownership Options website.
rules and find out which organisations are
not suitable for charitable status from the
Charity Commission’s website.

P 252

Some advantages of having charitable To help you set up a charity, the Charity
status include: Commission provides model documents
. Charities enjoy a wide range of tax for the above structures. Some national
charities also produce a standard governing
benefits and business rate discounts
document, for use by organisations
. Their status helps them raise funds
associated with them.
more easily than non-charitable bodies
. They get free advice from the
Charity Commission Registering A Charity
You must register with the Charity
Some limitations of having charitable
Commission if your organisation is set
status include:
up under the law of England and Wales,
. Activities are restricted to those for is established for exclusively charitable
charitable purposes purposes, and either:
. Strict campaigning, trading and financial . Has an income of more than £1000 a year
reporting rules apply . Uses or occupies land or buildings
. Trustees are subject to certain rules
. Has assets that constitute
and restrictions
permanent endowment

Read more about the advantages and
Find out about exemptions from registration
limitations of being a charity on the
from the Charity Commission website.
Charity Commission website.
Chapter 8, schedule 6 of the Charities
Bill 2004 has put forward a new form
Choosing A Governing Document of incorporated form for charities which
will offer the same protection as other
There are three main types of governing
incorporated structures (that is limited
document. Which you choose determines
liability and a separate legal identity).
the type of organisation the charity will be.
The perceived advantage is that this form
will remove the dual registration that exists
Governing Organisation with charitable companies that register
Document Created with both the Charity Commission and
Companies House. At the time of writing,
Constitution Unincorporated this structure has not been passed
or rules association by parliament.
Memorandum Company limited
and articles by guarantee
of association
Trust deed Trust

P 253

CHOOSING A LEGAL BASIS
Unincorporated Associations -needed goods and services. Profit can only
be used for the benefit of the community.
A very common form for smaller groups and
Members may be the general public, service
associations. Sets own aims and objectives,
users, funders, supporters and/or staff. One
members decide things on an on-going
person, one vote. Residual assets only to
basis, owns assets and liabilities jointly
a similar organisation.
and severally.

Holding Companies
Conventional Companies
(Public And Private) The community business may operate
as a holding company for several ’micro
Main aim is to maximise return on
-business’ projects. Though the micro
investment. Profits are divided on the
-business may be trading, its profits are
basis of shareholding. Those who own
guaranteed to return to the community.
shares have a proportionate voting power.
The parent organisation can exercise
Members, users or clients who own no
supervisory control and step in if things go
shares have no say except through
wrong. Typically, the holding company will
(possibly) an advisory committee. Assets
be a company limited by guarantee with
can be divided up amongst shareholders
charitable status. The community trading
after company is dissolved.
projects covenant their profits to the charity.
The holding company may act simply as
Co-operative, Mutual
the means by which trading ventures make
Or Friendly Society
efficient use of profits to achieve their
Although registered and set up in (often charitable) aims or may act to
different ways, these structures have develop new micro-businesses.
similarities. Aims are to maximise benefits
for members whether housing, employment, Charitable Status
health, social or economic benefits. Profits
Charities, whether companies or not, may
are usually reinvested but can be divided
themselves trade where the sale of goods
amongst members according to shares or
directly furthers the charity’s main aims.
contributions. Only members control the
But when trading activities become a large
organisation. One person, one vote. Residual
part of the charity’s activities it is probably
assets after dissolution may only be
best to set up trading subsidiaries.
transferable to another similar organisation.
Community businesses may covenant profits
to a charity they have no connection with;
Community Business,
or to a charitable holding company; or set
Enterprise Or Co-operative
up a charity itself.
Aims to maximise training and work
opportunities and/or to provide socially

P 254

Issues In Establishing B : Benefit
A Community Business . How are the benefits of the organisation’s
operations to be shared out, whether
A : Ownership And Control
work, training opportunities, management
. People involved must decide what responsibilities, money etc.?
constitutes the ’community’ - a . How are profits to be shared out?
geographical area or a community
. What balance should there be between
of interests.
income-generation, profit-making and
. Does control belong solely to the
employment and socially-necessary
community or can other groups be
activities and services?
accepted as members. If so, what
is the balance of control between
C : Financial Structures
various groups.
. How is the community business to be
. Can experts or important
financed and what implication does this
organisations be members? Again, what
have for the organisation?
is the best balance of control between
. What contribution is expected from
different groups.
members, whether finance, labour,
. What is the size and composition
goodwill etc and what is their liability
of any managing committee?
in case of debt?
. What role do workers or volunteers have in
. How will financial control and reporting
the day-to-day running of the organisation
be exercised? And what other measures
and its long-term plans?
of performance (for instance job
creation) will be used to assess the
organisation’s performance?

P 255

ADVANTAGES AND
DISADVANTAGES OF
MODELS OF ORGANISATION
Formal Organisations/Structures
There are 3 ways in which
organisations that are common in Advantage : Good at covering everything;
community environments can be Structured decision-making may help;
defined. They are: Provides clear roles and authority; Better
at representing and maintaining a diverse
1 : Formal or informal group; Provides familiarity or security.
2 : Hierarchical or Disadvantage : Slows down new ideas;
democratic/egalitarian Puts many people off; Resistant to change;
Restricts Roles and Tasks to particular
3 : Open or closed (membership) people (officers, old timers etc).

Informal Organisations/Structures
Advantage : More energy; Open to new ideas
and members; Able to allocate tasks flexibly.

Disadvantage : Information/Decisions may
get lost; Easily manipulated/diverted; Not
good at reviewing progress; shorter life.

Hierarchical Organisations/Structures
Advantage : Quicker decision making; Clear
authority/responsibility; Better delegation;
Information flows controllable.

Disadvantage : Inequality of participation
and reward; Formalised decision making;
Can’t always accommodate differences;
Information is controlled.

P 256

Egalitarian Organisations/Structures In each case the way in which the
organisation actually operates may be
Advantage : Greater participation levels;
stated or unstated. Very often community
Better ideas generation; More familiar to
organisations are theoretically or formally
most people; Able to generate approvals.
one thing and practically or informally
Disadvantage : Doesn’t allocate tasks another. They often have unstated rules,
easily; Dispersed authority and responsibility; sub-cultures, a language often varying from
Consensus may result in bad/poor decisions; what they do or how they act.
Vulnerable to faction forming.
Anyone working in the community needs
Open Organisations/Structures to first analyse the real structure of the
organisation, work out from its history or
Advantage : Greater participation; Better activity why the organisation operates this
representation; More welcoming; Greater way, and assess whether its structure is
diversity of aims and objectives. positive or negative and the cost benefits
Disadvantage : Vulnerable to take-overs; of proposing or initiating change.
Members don’t always share aims; More
likely to have poorly focussed priorities
or objectives; Less loyalty from members.

Closed Organisations/Structures
Advantage : Unity of culture and
participation; Clear status of members;
clearer boundaries of organisation.
Membership confers clear rights/duties.

Disadvantage : Inward looking; Relatively
immune to new ideas/criticisms; Vulnerable
to decay from within; Can create/maintain
a destructive culture.

P 257

COMMUNITY ENTERPRISE
- A MODEL FOR LOCAL
ECONOMIC REGENERATION
What Is A Community Enterprise? The Role Of Community Enterprise

Defining The Community Enterprise The Community Enterprise can act as
catalyst, advisor, financier, sponsor or
A Community Enterprise is an organisation
initiator. Whatever its activities, the
which provides a legal framework for a
Enterprise must be based on and
group of people who wish to create social
actually practice these principles:
and economic benefits for the community
. Wealth created is kept in the community
in which they live. There can be two kinds
of ’community’: and used for its future benefit

. A geographic community, . Democracy and local participation
such as a housing estate reduce dependency

. A community of interest, perhaps people . Skills are acquired and passed on
who share a common cause or culture. to benefit the whole community
. The enterprise must be accountable
How Do Community Enterprises Achieve to the community
Economic Regeneration?
. Plans and projects meet the needs and
A Community Enterprise succeeds by interests of the whole community
reflecting the needs of the community it
serves. It must take into account all social,
economic and cultural factors that are
important to it. It is usual for two main
targets to emerge:
1 : The Creation Of Economic Wealth
The creation of economic wealth for the
benefit of the community can involve the
establishment of projects to stimulate the
local economy, the financing of local
employment initiatives and the provision
of facilities to help create employment
opportunities for people in the community.
2 : The Creation Of Social Wealth
Social wealth is created through
environmental improvements, provision
of amenities such as childcare, and services
such as community transport.

P 258

Steps In Establishing 3 : Empowerment
The Community Enterprise model is
A Community Enterprise Or
an empowering framework that actively
Community-Based Enterprise works against discrimination, disadvantage
The Holding Company and neglect.

The model proposed makes use of the idea 4 : Mutual Support
of a holding company or charitable trust The protective management and financial
(commonly called a Community Enterprise umbrella allows projects to develop securely
or Community Business) which is a stimulus and get encouragement from mutual
for a variety of estate-based projects, mostly support among members.
economic but others which are mainly social
in nature but may generate income through 5 : Good Employment Practice
surpluses. The holding company owns all Because working life is part of the overall
assets and is democratically-controlled by quality of life we enjoy, Community
members from the local community. Its Enterprises typically try to be good
aims are primarily to provide opportunities employers and promote this concept
for work, volunteering or training. in their activities.

6 : Social Accountability
Main Features Of A Community Enterprise Social audits and councils, typically part
1 : Enterprise And Social Development of the internal structure of the Enterprise,
A Community Enterprise is concerned with allow both the registered objects and the
the creation of community wealth, both yearly objectives to be reviewed and the
social and economic. Therefore, it can effectiveness of their implementation to
sponsor projects that are subsidised but be measured.
provide a useful service and support small
business ventures which provide local
employment. Community benefit ranks
equally with commercial and employment
objectives. Profits generated by trading are
fed back to the community to benefit all.
Improving the quality of life of people is the
motivating force behind all Community
Enterprise ventures.

2 : Democratic Accountability
The membership of a Community
Enterprise consists of local residents who
run the organisation on a democratic one
person/one vote basis. The activities of the
enterprise are under the direct ownership
and control of people actively seeking to
promote the well-being of their community.

P 259

Typical Structure Of Managing The Enterprise
A Community Enterprise The members of the holding company
annually elect a Council of Management.
Owning And Controlling Community Assets
The constitution of the holding company
The Community Enterprise acts as a may ensure that residents of the community
holding company for assets such as always have at least 50% representation.
buildings and vehicles for the benefit of The Council of Management can support
the community. It tries to set up a number or create businesses by:
of small businesses and community . Employing staff to provide
projects which are independently run
common services
but which rent community-owned assets.
. Employing staff or using specialist
Independent projects may adopt any agencies to provide advice
legal form (charity, a workers’ Enterprise,
. Raising funds through grants or loans
a partnership, private company, an
unincorporated voluntary organisation . Applying rental income to subsidise
or another company limited by guarantee). certain projects
Each project or business is free to develop
and move out of the community, but the Making The Enterprise Socially Useful
assets remain in the community to be used
The Community Enterprise must be socially
by new groups.
accountable. It should define its social aims
and audit these aims annually and publicly.
Involving People In The
It should ensure that its members and
Life Of The Enterprise
employees are part of a democratic
Employees of all parts of the Enterprise are organisation practising equal opportunity
encouraged to take up membership of the procedures. It should make the enterprise
holding company whether they live in the accountable to its community and to the
community or not. Additionally projects consumers of its goods and services.
that provide work for volunteers or the
volunteers themselves can take up shares. The Enterprise may require independent
Users of the services provided and for ventures to act for the social good by
community organisations may take up writing in conditions in any agreement
shares if appropriate. made for the renting of assets or in any
loan or grant agreement.

P 260

Advantages Of The . The profits made from any trading
business within the Community Enterprise
Community Enterprise Concept
can be distributed according to the wishes
. Any well-run Community Enterprise of the workers or volunteers who created
contributes to the strengthening of the the profit. A profitable business can loan
economy of a community by circulating money to the holding company to support
money within a locality and by bringing other ventures.
assets under community control. . Any venture can decide to move away
. There is a high degree of worker control from the Community Enterprise in order
in day-to-day running and participation to develop, leaving the assets with
in longer term policy-making. The skills the community.
and experiences of workers are always
available to the Enterprise and they have
a direct incentive to work for success.
. The two tier structure maximises the
sources of revenue for the community
- the holding company can attract
grants and as a private company can
also raise share capital or loans. If a
charitable structure exists, independent
but associated enterprise can covenant
profits back to the Enterprise in a
tax-efficient way.
. The total flexibility of the Community
Enterprise allows for outside professionals
and local people to participate fully for the
benefit of the community:
Professionals can be brought in to advise
and support either the autonomous
projects or the holding company itself;
Local people have the advantage of being
able to become involved as volunteers
on one of the projects, developing skills
and confidence before becoming either
employees or elected Council of
Management members.

P 261

Stages In The Development 7 : Planning In Detail
Members form into sub-committees,
Of A Community Enterprise
project teams or action groups to establish
Initial Steps projects or to deal with constitutional and
fund-raising matters, led by members of the
1 : Choosing A Steering Group
steering group.
A steering group of between 10 - 20
residents and professional workers form a 8 : Getting Additional Help
company limited by guarantee and become Local professionals should be co-ordinated
the founder directors. by the manager and there should be formal
agreement about the roles of experts and
2 : Defining/Establishing The Vision
the boundaries for their activity on behalf
Members decide on initial or priority
of the Community Enterprise.
projects, balancing need with a program
of development that attracts resources,
Years 1 - 3
support or funding.
. Membership has expanded and Directors
3 : Is It Feasible? are now elected after the first AGM
The steering group draws up a list of
. As the role of the Manager expands,
required community assets (e.g. premises
more staff should be employed to form
or transport) and negotiates transfer
a management team that services the
of ownership.
board of directors and provides ’common
4 : Gathering Resources services’ to all projects.
The steering group builds resources through . The first trading company has been set
a fund-raising and resourcing strategy. up as a wholly-owned subsidiary in which
5 : Legal Status - Charitable? members work democratically and take
The steering group draws up and adopts charge of the day-to-day running of the
a legal structure for owning and controlling trading company. The workers are either
assets on behalf of the community. The the members of the original project team
constitution should ensure that the or sub-committee or are recruited, or
controlling body (for instance, a Board both. The workers automatically become
of Directors) will never be dominated by members of the Community Enterprise.
workers within the project and that . The trading company eventually becomes
community interests are safeguarded. independent after 2-3 years, with a legally
incorporated constitution but renting
6 : Making Decisions
assets, which remain within the Community
The steering group widens its membership
Enterprise. A licence agreement is
and develops and executive body to get
drawn up.
things done on a day-to-day basis or, if
. A Credit Union is formed, members
funded, appoints a manager or co-ordinator
to manage the whole Community Enterprise. are automatically members of the
The post should have both business and Community Enterprise.
community work skills. The manager is
entitled to join the controlling body.

P 262

. New projects with social benefits are Community Enterprises. Involvement in
formed to deliver services to the local the projects entitles individuals to become
community (for instance, welfare rights members of the Community Enterprise.
advice) and provide opportunities for . Subsidiaries continue to exist, either
volunteering. Workers are automatically
because it is appropriate for projects
members of the Community Enterprise
which rely on volunteers to have direct
and volunteers may be.
management support, or it can be an
. The management team and directors intermediate stage for some projects
continue to set up sub-committees to before they become independent.
establish new projects. . Projects leave the Community Enterprise
. As activities expand, the Community in increased numbers due to: growth,
Enterprise continues to draw in collapse or change in aims.
professionals and residents, but now In all cases, the assets remain with the
brings in skilled people to enrich the Community Enterprise.
residents skills: literacy and numeracy, . The Community Enterprise should
job-seeking and vocational skills, advocacy
establish some mechanism for setting and
and lobbying, communication skills,
monitoring its social aims, either regular
confidence and assertiveness, childcare.
social audits should be carried out or a
. By the second year, some founding separate Social Committee set up, or both.
members will begin to leave. Some will . New project development should continue,
have acquired skills and confidence
projects which will expand and assist the
and want to move on. Others will find
common services being provided. As the
themselves less relevant or there may
Community Enterprise grows, so will its
have been conflicts over direction and
confidence in setting up larger and more
speed, casualties of growth and change.
adventurous projects.
. If the Community Enterprise is successful
. Residents, volunteers, skilled people and
it will attract marginalised or multiply
professionals will be recruited now through
disadvantaged groups. Such groups and
involvement or employment with the
individuals should be encouraged to join
many projects.
to widen its representational base.
. There will be a high turnover of members

Years 4 - 10 and the Community Enterprise must by
now have a pool of talent available and
. Membership is now large. The board of
be able to accept departure as a natural
directors confines itself to policy decisions
phenomenon: the Community Enterprise
and continues to set up sub-committees.
must plan for this, accept the positive
Membership ceases to be individual but
leavings as part of achieved social aims
representational. The projects themselves
and seek to minimise the negative leavings.
are the members and send delegates to
. The common services should expand
the board of directors.
to provide extra facilities such as training,
. The independent projects have developed
advice, project development and a
into 4 types: Project Teams, Wholly-Owned
loan fund.
Subsidiaries, Worker Enterprises, New

P 263

Planning A Community Human Resources 2 : Newcomers
Enterprise In More Detail A forming group (a steering committee)
must find room for inexperienced members,
Human Resources 1 : Experienced People
since it is often these people who continue
It is probable that, in the early stages, longest with the project. But they will not
members of the initial steering group develop organisational skills unless provided
will be recruited from the membership with the active example of well-run meetings
of Community and Tenants’ Associations, and activities. Later, as new projects are
political and campaigning groups, or active launched, prospective members of each
interest groups such as social clubs or group must be given training appropriate
event-based groups. It is vital that residents to each activity.
with experience of community and collective
There is value in providing as
action are interested and involved in the
many opportunities as possible for new
activities of the steering group at this time
members to join the enterprise, perhaps
for the following reasons:
as volunteers, and a Community Enterprise
. They will find it easier to accept the
holding company may sometimes be
procedures necessary to create and pursuing a local activity mainly, if not
establish the organisation, especially solely, to offer this way in.
if it is to be legally incorporated.
. They will have experience of the formation Warning : There is no evidence that
process and the means to make decisions. residents of an estate who have no
Their presence is vital to establishing the experience of community and collective
’culture of enterprise’ and organised action will spontaneously take on
activity amongst the members, as well responsibilities or possess the necessary
as providing a sense of respectability confidence or skills to establish or
to outside observers. maintain a Community Enterprise.

Such people may be moving on from
established projects or ones winding down
and see the new group as an opportunity.
Or they may join, work within the group and
then move on once it is well-established.

Warning : Every community contains
its share of busybodies, people who may
be active and involved, but unpopular with
their neighbours or negative in outlook, and
therefore destructive to organisations. Great
care must be taken in recruiting people who
can not only do the work, but are acceptable
to the local community and will contribute to
the Community Enterprise’s positive image
and good reputation.

P 264

Forming A Steering Group Other Resources
There is no certain mix of people who should Premises
go to make up an effective steering group.
Community Enterprises and projects on
Commitment, energy, vision and enthusiasm
housing estates often have the same ’look’
are important but there also need to be
to a visitor, primarily because so many are
people who are practical and determined,
based in Local Authority converted flats and
people who possess good communication
shops. This occurs because on such estates
and presentation skills.
it is often the only property that can be
Professionals assisting the development acquired. Premises are a vital component
of a Steering Group should carry out an of any Community Enterprise, and if none
assessment of the group’s abilities and try are available in the area, it is unlikely that
to get the forming group to accept and projects can start.
identify with the Group’s needs for
particular kinds of people and skills. Vehicles And Other Assets
Since one role of the holding company
What is certain, however, is that there are
is to build up a stock of assets under
two key factors which can undermine the
community control, the Community
development of an effective Steering Group
Enterprise will need access to money or
and, indeed, the whole project. They are:
goodwill in order to acquire vans, cars
. Every estate has ’subcultures’, and their and equipment such as photocopiers and
priorities and perceptions will affect the computers. The enterprise may be able to
types of projects chosen for development obtain grants from say, the Local Authority,
and help to determine the level of sympathetic charitable trusts or local
involvement people are prepared to offer. fund-raising bodies, but if no sources
. Every estate has established cliques, often of funds are readily available, the group
grouped around points of activity such as may well never take off as a viable
the local community centre, labour club Community Enterprise.
or tenants’ association. If people with
established jobs or titles feel the new Experts
activity threatens their status or position, Estates usually contain a range of
they may be apathetic or hostile to the ’professionals’, be they social or community
Community Enterprise. workers, teachers, vicars, welfare rights
advisors, housing managers etc. The
steering group will benefit from having an
early sympathetic input from such people,
and most successful Community Enterprises
have been able to draw on a long-term
commitment from one or two professionals.

P 265

Using Experts as one year, after which the professional
worker will not be allowed to continue in
Such experts may become involved as
the role, no matter what the ’need’.
part of their work, or the development of
a community Enterprise may overlap with
part of their workload or they may have
a political or philosophical commitment Starting Work
to community self-management. A useful first step is to propose and carry
out an estate profile covering areas such
Their participation should be encouraged,
as income and employment, skills and
provided, of course, that it fits in with
resources, demographic profile, education
the overall strategy and structure of the
and training, participation and take up of
Enterprise; some community development
benefits, training opportunities, employment
workers may have a different approach
opportunities and so on. A review of physical
to the one detailed here, and other
resources (community and authority held
professionals may have differing aims
assets) and access to expertise based in the
or the sections of the community they feel
community could also be included.
particularly responsible for. It is important to
ensure that all these local experts are made There are advantages and disadvantages
fully aware of the aims of the Community in this approach as follows:
Enterprise from the beginning and are not
allowed to divert or distract the Steering Advantages
Group by introducing a different agenda. . Introduces research element, funders feel
they can justify any policy decisions they
The participation of professionals must be
make (in retrospect) and gives them a
controlled, a few actually on the controlling
clear proposal to vote for.
body with more behind in support.
Professionals must never be allowed to . Tangible work produced immediately.
outnumber local people. Moreover, their . Helps the community to assess the
participation should be seen as declining ability of experts, professionals and
with time. They must understand that theirs others assisting the process of
is an enabling role, providing information, community development.
training and support.
. Provides a clear assessment of both
A good technique to encourage is the the actual and potential capability
’shadowing’ or ’deputising’ role: a of the community.
professional worker may take the Chair at . Introduces outside bodies and new
early meetings, but appoints a local person
members to all activists.
as shadow or deputy, who is trained into the
. Provides the opportunity for a
role and allowed to gather experience and
confidence, until they are finally able to take comprehensive survey of the community
over the position and the professional can not just the parts those involved are
step down. To ensure the procedure is familiar with.
followed, a time limit should be set, such . The profile can be used to raise awareness
where it counts.

P 266

. It brings publicity to the work. Setting Up A
. It dispels myths about the community Community Enterprise
which may set artificial boundaries or
How To Get Started
lead to a focus on problems that don’t
. Form the steering committee - (a group
exist or which are less important than
other problems. of people representing the range and
variety of groups and individuals within
Disadvantages the local community)
. The profile can become an end in itself . Gather information, carry out research,
not a means to secure resources and identify resources, begin training
make plans. . Identify ideas for business/projects
. It may take too long to produce, sapping
. Register the community enterprise as
morale and reducing energy levels and
a legal entity
commitment among community activists.
. Raise money, gather resources,
. It may seem academic, remote and
recruit helpers
irrelevant. This is especially true of
profiles written for funding bodies that . Choose the first business/project
may need a lot of technical information. to develop
The community too must be given the . Draw up business/development plan
chance to learn about itself.
. Raise the money required to finance
the first business/project
. Launch the first business/project
. Choose the second business/project
to develop
. Hold the first annual general meeting
- (hold elections, affirm aims/objectives)

P 267

REASONS FOR
SETTING UP A CHARITY
Contacts
There are 6 reasons for setting
up a charity: Charity Commission

1 : Public benefit 2nd Floor, 20 Kings Parade,
Queens Dock, Liverpool L3 4DQ
2 : Relief of poverty 0151 703 1500
3 : Advancement of education 8th Floor, Clarence House, Clarence Place,
Newport, South Wales, NP19 7AA
4 : Advancement of religion 0845 300 0218
5 : Other beneficial services
National Council For
6 : Recreational facilities Voluntary Organisations
Regents Wharf,
How Could A Charity Help? 8 All saints Street, London N1 9RL
0207 713 6161
. A charity for the relief of the poor could
give cash or other benefits. Welsh Council For Voluntary Action
. A charity to advance education could 13 Wynnstay Road, Colwyn Bay,
operate vocational training facilities Conwy, LL29 8NB
. A charity to provide recreational facilities 01492 539800
could only do so if it was open to the
general public Directory Of Social Change

. A charity for other beneficial Radius Works, Back Lane, London NW3 1HL
purposes could help the mentally 0208 435 8171
or physically handicapped
Charities Aid Foundation
48 Pembury Road, Tonbridge TN9 2J2
0732 771333

P 268

Options For Charitable Structures Charity Supporting An Organisation
The obvious way to ’launder’ money in
Not For Profit, Not A Charity
a tax efficient way. Profits made by the
An organisation that is not-for-profit and organisation are given to the charity
does not distribute benefits to members tax-free and this money is then used to
and which, because of this, is able to claim benefit members directly or indirectly. But
some discretionary help such as rates relief. this relationship could not be sustained in
Would not be recognised as a charity by the long-term and the only contracts that
Charity Commissioners or Inland Revenue. could be awarded would be for clearly
charitable work only.
Worker/Member Owned
(Not Managed) Charity Charity With Trading Subsidiary
Members of the organisation work for it Increasingly common structure
but appoint trustees from outside. It would enabling charities to trade without danger
therefore be co-operative in spirit but not of incurring tax or losing charitable status.
legally. Extremely unlikely to be recognised Although the trading subsidiary is
as an acceptable charitable structure. independent of the charity, the charity
exercises ultimate control through
Worker/Member Controlled shareholding. It will probably appoint some
Exempt Friendly Society members of the trading organisation’s
Charitable objects but controlled by the management. But separate accounts must
members. The Commissioner does not be kept and the charity should not pay any
accept it as a registered charity; Inland of the trading organisation’s bills - it needs
Revenue gives it charitable status for to be kept at arms’ length.
tax purposes.

Organisation Sponsoring A Charity
The organisation could sponsor a charity
and money could move between them
(unless members of the organisation were
also trustees). Members of the organisation
could earn money from their work and
receive charitable donations providing the
work they did for the charity supported its
charitable aims.

P 269

USEFUL CONTACTS
Social Enterprise Coalition Inland Revenue
Enquiry Line 020 7968 4921 Self Assessment Orderline 08459 000 404
www.socialenterprise.org.uk www.inlandrevenue.gov.uk

Financial Services Authority Consumer Employee Ownership Options
Helpline 0845 606 1234 Enquiry Line 0845 603 9197
www.fsa.gov.uk/consumer www.employee-ownership.org.uk

Companies House Charity Commission
Contact Centre 0870 333 3636 Contact Centre Enquiry Line 0870 333 0123
www.companies-house.gov.uk www.charity-commission.gov.uk

CIC Regulator
0292 0346228
www.cicregulator.gov.uk

P 270

71 Different Structures

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

En vedette

En vedette (7)

Similaire à 71 Different Structures

Similaire à 71 Different Structures (20)

Plus de PAVO

Plus de PAVO (20)

Dernier

Dernier (20)

71 Different Structures