Choosing the right legal structure
From Our Toolkit
If you are setting up a group from scratch the first task it to decide upon the right legal structure for your organisation. This decision is important as it will effect how your group will operate in the future.
About your organisation
When considering which legal structure is right for you one should know the following things about your organisation:
- What do you want your organisation to do? Will you be a museum, archive, network, friends of group, community group or something else?
- How will your organisation be funded? Will it be by applying for grants and securing donations, or by selling goods and services, or securing social investment. Depending on the balance between the three this will influence your choice of legal structure. Some types of structure are less likely to attract grants and donations.
- Will you want to employ staff or lease property? If you don’t then a simple structure like an unincorporated association may be sufficient for you (dependent on the amount of funding you want to secure and the level of liability individuals will have.)
- Will your organisation have voting members?
There are a range of legal structures to choose from which we have summarised them in this ‘at a glance’ document.
To help you decide on which structure is best you can refer to the clear advice below:
- National Council for Voluntary Organisations (NCVO) – Governance structures
- National Council for Voluntary Organisations (NCVO) – Legal forms for non-profit organisations
- Resource Centre – Legal structures
- Resource Centre – Route map to help choose to right legal structure
Is incorporation right for you?
You may wish to consider, if appropriate for your organisation, incorporation. Incorporation means you choose a legal structure which limits individual liability and provides you with a formal legal structure to support the development of your organisation.
Without incorporation individuals are personally liable unless they have relevant insurance. Incorporation is managed through Companies House as the regulatory body, and as such requires more formal reporting procedures.
Is becoming a charity or charitable incorporated organisation right for you?
You may wish to consider whether it would benefit your organisation to become a charity. To find out more about this please see the guidance below:
- For England and Wales: Charity Commission – Check if a charity is the best option
- For Scotland: Scottish Charity Regulator – Thinking of becoming a charity
- For Northern Ireland: The Charity Commission for Northern Ireland – Start up a charity
- NCVO – Setting up a charity
Other legal structures
If you are interested in exploring other legal structures these are listed in the ‘at a glance’ document again with links to the appropriate bodies.
Sector specific advice
There is also sector specific advice, broken down by nation, which you may find helpful:
For those working within local government: