Governance: How to start and run your group

Governance is about running your organisation
Starting a group takes planning, and running it well takes ongoing care.
This page guides you through the main decisions, from your purpose and legal structure to managing risk. It also explains how to close a group properly.

Looking for information about trustees? See our Trustees page.

Starting your group

1. People

Voluntary and community groups are not one-person shows. You need at least three people who will take responsibility for the group. They will serve on the committee, or as trustees.

2. Values

Your values are the principles your group is built on. Talk about them together and write them down. Keep them simple. You might think about justice, equality, diversity, empowerment, respect and human rights.

For example, a community centre might commit to:
  • treating everyone who uses the centre as an equal,
  • recognising that everyone in the community has something to contribute,
  • respecting everyone who uses the centre.

3. Vision

What kind of world do you want to see? What will your group help to bring about? For example, the British Deaf Association’s vision is ‘to see a world where deaf people who use sign language enjoy the same rights, responsibilities, opportunities and quality of life as everyone.’

4. Mission

Your mission sums up what your group does in one sentence. For example: ‘Our mission is to improve the health and wellbeing of women and children in poor and marginalised communities.’

5. Objects

Objects are your aims. They matter because the law only allows your group to work within its objects.

Not sure what your aims are? Write down what you plan to do, then ask yourselves why. The answer is your object. For example, a group provides information and support to the Eastern European community. Why? To reduce isolation. So the object is to reduce social isolation.

6. Area of benefit

The law says your group can only work within the area named in your governing document, so decide carefully. Will you work in:
  • your local area or ward,
  • the city of Leeds,
  • the whole Leeds district, including Otley, Wetherby and Morley,
  • West Yorkshire (Leeds, Bradford, Calderdale, Kirklees and Wakefield),
  • England and Wales,
  • other countries? If so, which ones?

7. Legal structure and governing document

Get advice before you choose. Your legal structure decides what kind of organisation you are and which rules you must follow. Each structure has one governing document: the rules that say what you aim to do and how.
Legal structure Governing document
Unincorporated association Constitution
Trust Trust deed
Company limited by guarantee Memorandum and articles of association
Charitable incorporated organisation (CIO) Constitution
Community interest company (CIC) Memorandum and articles of association
Registered society Rules
Read more about each structure.

8. Name

Check the naming rules and make sure nobody else uses a similar name. See the Charity Commission’s guidance on charity names.

9. Finances

Set up sound financial systems from the start. Four things will help you build a strong organisation:
  • Planning: look ahead at the money you expect to receive and spend.
  • Recording: keep a clear record of every transaction.
  • Reporting: tell your committee, members, funders and regulators about your finances.
  • Procedures: agree rules that help prevent errors and fraud.
Read more about each structure.

Legal structures explained

Unincorporated association

Many small community groups are unincorporated associations. A group of people come together for a purpose, often with a membership that elects a committee to run things.
  • There are fewer rules, and the constitution is simple to understand.
  • The group cannot sign contracts, leases or employment contracts. Committee members sign on its behalf.
  • Committee members are personally responsible for the group’s risks, liabilities and debts.
Model constitution for unincorporated associations.
Model constitution for charitable associations with an income of £5,000 or less.

Company limited by guarantee

When you form a company, the organisation becomes a legal person. Committee members become directors. The company signs contracts, takes on leases and employs staff.
  • Directors are not usually personally liable. They can be if they act dishonestly, commit fraud or are negligent, work outside the company’s objects, keep trading when they know the company cannot pay its debts, sign a personal guarantee for the company’s debts, act while disqualified, or break a legal duty.
  • A company limited by guarantee suits organisations that want to register as a charity.
  • Companies House regulates companies. You must file accounts on time, or you face a fine. New directors must also verify their identity with Companies House.
Model memorandum and articles of association for charitable companies.
Companies House guidance.

Charitable incorporated organisation (CIO)

Only charities can be CIOs. A CIO has a legal identity and limited liability, but you register only with the Charity Commission, not Companies House.
  • The Charity Commission thinks CIOs suit small to medium-sized organisations that employ staff or sign contracts. A company may suit you better if you want to issue debentures.
  • Exempt charities cannot be CIOs.
  • There are two model constitutions. In the foundation model, only the trustees vote. In the association model, members vote as well as trustees.
Model constitutions for CIOs.

Community interest company (CIC)

A CIC suits organisations that want to be social enterprises. A social enterprise is not a legal structure. It is a way of doing business for a social or environmental purpose, where surpluses go back into the business or community.
  • A CIC cannot be formed or used for the personal gain of particular people.
  • It can be limited by guarantee or by shares. Many funders prefer not to fund CICs limited by shares.
  • An asset lock means a CIC can only use its assets and profits for the community it names. It must also pass the community interest test.
  • A CIC cannot be a charity, so it is more likely to pay Corporation Tax.
  • Companies House regulates CICs.
Government guidance on CICs.

Registered society

A registered society is registered under the Co-operative and Community Benefit Societies Act 2014. This includes co-operative and community benefit societies. Societies once called industrial and provident societies are now registered societies. If yours has the old name, you do not need to change it, your registered number stays the same and you do not need to change your rules.
Financial Conduct Authority guidance on registered societies.

Registering as a charity

Charities exist to benefit the public. The Charity Commission regulates charities in England and Wales. There are more than 1,500 registered charities in Leeds. You can search for them on the Charity Commission register or the Doing Good Leeds directory.

Think carefully before you set up a charity. Check you are not duplicating the work of an existing one.

Who must register

Your organisation must register with the Charity Commission if it:
  • has only charitable purposes,
  • exists for the public benefit,
  • has an annual income over £5,000.
A CIO must always register, whatever its income. If you need to become a company, do that before you register as a charity.
Charitable purposes. All your purposes must fall within the 13 charitable purposes set by law. They include relieving poverty, advancing education or health, and protecting the environment. See all 13 charitable purposes.

Public benefit. Your purposes must benefit the public. The Charity Commission explains this in three guides: the public benefit requirement, running a charity and reporting.

Your responsibilities as a charity

You must follow the Charities Act 2011. The Charity Commission’s guidance covers:
  • annual returns and annual reports,
  • telling the Commission about changes,
  • good practice for trustees,
  • land and property,
  • accounts and finance,
  • fundraising and campaigning,
  • delivering public services,
  • managing risk and reporting serious incidents,
  • insurance,
  • international work.
Charity Commission guidance for running a charity.

We run charity law seminars with a charity law solicitor for registered charities and exempt charities in Leeds. Find training and seminars.

Running your group well

Changing your governing document

First, check the amendments clause in your governing document. It sets out the steps to follow.

Registered charities have extra rules. Some changes need the Charity Commission’s permission before you make them. These include changing your objects, changing what happens to property if you close, and any change that lets funds or property benefit directors or members. Always tell the Charity Commission, and Companies House if it applies, about any change. The process takes time, and you may need a solicitor.

Charity Commission guidance on changing your governing document.

Managing conflicts of interest

Trustees must always act in the best interests of their charity. A conflict of interest is anything that could affect that. For example:
  • a trustee works for a local authority that is thinking about funding the charity,
  • a trustee gets paid for work they do for the charity (the governing document or a court order must allow this),
  • a trustee’s sibling sends in a quote for a piece of work.
To manage conflicts:
  • have a written conflict of interest policy,
  • keep a register of interests,
  • ask trustees to declare any interest at the start of each meeting, before the discussion begins,
  • remind trustees who sit on other boards to remember which ‘hat’ they are wearing.
Your policy should cover definitions, trustees’ general duties, how to declare interests, financial interests, duality of interests, what to do when an interest is unclear, and how to record interests. Charity Commission guidance on conflicts of interest.

Insurance

Insurance is one way to manage risk. Think about what cover you need and ask your insurer to check any policy against your activities.
  • Employers’ liability insurance: the law requires it if you employ staff. You must display the certificate in the workplace. It does not usually cover volunteers, so check your policy and make sure it includes them.
  • Public liability insurance: covers injury or loss caused by your negligence. Make sure it covers trustees, staff, volunteers and visitors. Check the limit. If a claim is higher than your cover, trustees could be personally liable.
  • Buildings and contents: if you rent, check your lease to see who insures the building. Think about theft, accidental damage and money kept on the premises or in transit.
  • Vehicles: you must insure any vehicles you own. If trustees or volunteers use their own vehicles for your group, check their insurance covers it.
  • Other cover: you might also need personal accident, trustee indemnity, professional indemnity or legal expenses cover. A registered charity can only buy trustee indemnity insurance if its governing document allows it.
Tell your insurer about all your activities, including fundraising events. Some activities, such as events with aircraft or water sports, need specialist cover.

Insurance checklist
  • Ask one person to lead on insurance.
  • Check your lease for insurance responsibilities.
  • Review each policy every year.
  • Read the small print.
  • Keep copies of policies off site.
  • Keep your inventory of furniture and equipment up to date.
  • Keep up with payments.
  • Report claims quickly and never admit liability to a third party.
  • Have a way to report and record accidents.

Good governance

Good Governance: A Code for the Voluntary and Community Sector is a guide written by voluntary organisations, for voluntary organisations. You can also read the National Occupational Standards for Trustees.

Closing your group

Closing a group is also called winding up or dissolving. Trustees and committee members stay responsible until the group has formally closed, and for decisions they made while in post.

Whatever your structure:
  1. Check the dissolution clause in your governing document.
  2. Deal with debts and liabilities. WYCAS can advise.
  3. Deal with employment issues properly. PERS can advise. If you do not follow the right procedures, you could face an employment tribunal claim.
  4. Prepare final accounts.
  5. Tell everyone who needs to know, including staff, unions, service users, funders, your accountant, solicitor, insurer, bank and creditors.
  6. Hold a final meeting to close the group formally.
After closing, close the bank account and any supplier accounts, and keep formal records for seven years. You can pass records you do not need to keep to the West Yorkshire Archive Service, or shred them. Wipe computers, destroy headed paper, and close your website and email accounts.

For registered charities: tell the Charity Commission using the charity closure form, and follow its guidance on how to close a charity.

For charitable companies: first remove the company from the Companies House register, then ask the Charity Commission to remove the charity. Companies House can help on 0303 123 4500.

For CIOs: your constitution has a dissolution clause. If you use the Charity Commission’s model, it is clause 29. A CIO cannot use the online closure form, so follow the Charity Commission’s guidance on closing a CIO.

For unincorporated associations that are not charities: follow your constitution’s dissolution clause. If you do not have one, ask for advice. The usual steps are:
  1. The committee agrees closing is necessary.
  2. The committee calls a special general meeting. It gives members the notice your constitution requires, usually 21 or 28 days.
  3. Enough members attend for the meeting to be quorate.
  4. Members approve the resolution to dissolve by the majority your constitution requires.
  5. Someone, usually the treasurer, identifies all assets, debts and liabilities. The group pays its debts and shares out any remaining assets as the resolution states.
  6. The meeting minutes record the resolution and how assets will be shared.

Where to get help

Training

We run regular training courses for people starting a new group or thinking about it. Find upcoming courses and how to book.

Checklist: is your group ready?

Your organisation

  • Legal structure
  • Bank account
  • Policies and procedures
  • Governance
  • Finance
  • Action and business plans

People

  • Needs of the people you support
  • Employment policies and procedures
  • Volunteering policies and procedures
  • Safeguarding policies and procedures

Premises

  • Needs of the people you support
  • Employment policies and procedures
  • Volunteering policies and procedures
  • Safeguarding policies and procedures
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