Karate Issues - Writing a Constitution
Writing a Constitution for Voluntary Management Committees
“Time taken in choosing the appropriate legal structure and
drafting the governing instrument is never wasted. Failure to
take care and time over this at the outset will frequently
result in problems and additional legal costs at a later stage.”
The National Council for Voluntary Organisations (NCVO).
What is your legal structure?
When an enthusiastic group of people decide to work together to develop an early education or Karate group for instance, they may not immediately think about the legal nature of the group they are forming.
Sometimes a well-established group, which has been operating for years with frequent changes in committee personnel, may have lost track of any governing documents, like a constitution, and may therefore not know what the organisation’s legal status is.
In both these situations, it is important that the legal structure is clearly identified and has the appropriate documentation to support it. This protects the organisation, the committee, and can limit the liability of individual members. In certain circumstances, funding bodies, the local authority, and others may require you to tell them what your legal status is.
There are four most commonly used legal structures and a organisation should choose the structure which most suits the activities they carry out and satisfies HM Revenue and Customs.
1 Associations – (Unincorporated body)
This is the most common structure for a voluntary organisation. The association exists where a group of people carry out their agreed purpose, in this instance Karate, other than for profit. The association is governed by a constitution or a set of rules which sets out its objectives, membership, and powers. The association is composed of members who delegate responsibility to a voluntary management committee to carry out the association’s activities. The voluntary management committee is accountable to and elected by the members. Members of the voluntary management committee are personally liable if there are inadequate funds to pay outstanding debts.
2 Trusts – (Unincorporated body)
This is the traditional structure for a charity and is governed by a trust deed which sets out the purpose of the trust, names the trustees and provides for the administration of the trust. Trustees are not usually subject to election and generally remain in office until they retire or stand down after a fixed period. As it does not have members, trustees are not accountable to anyone for their decisions and are only answerable to the courts for their actions. You may be personally liable if the charity loses money as a result of your actions. You can minimise the risk of this by acting in accordance with the governing document, taking the necessary professional advice and acting reasonably.
3 Companies – (Incorporated body)
A company limited by guarantee is the usual form of limited company within the voluntary sector where a minimum of two members are required to set up a company. The company is governed by its ‘memorandum and articles of association’ which is usually drawn up by a solicitor. The company is the legal person and its debts and contracts belong to the company not the members. The liability in the event that the company cannot meet its debts when they fall due and enter into bankruptcy is limited to the amount the person guarantees when they become a member. Members agree on liability limits when they set up the company.
4 Industrial and provident society (IPS) – (Incorporated body)
This body is a society providing an industry, business or trade for the benefit of the community usually as a cooperative society. Profits are put back into the society. A minimum of seven members is required to set it up. As the IPS is defined as a society carrying on an industry, business or trade it is unlikely to be compatible with the requirements of charity law.
What is a constitution?
A members’ association which is an unincorporated body, such as a voluntary management committee, will require a constitution.
A constitution is a written document that sets out the rules by which your group is run and provides an overall reference. It is a legal and binding document, which is accepted into use by being adopted at a formal meeting. It is an active document that shouldn’t be filed away as it provides the foundations upon which the organisation is based.
What is it for?
The constitution provides anyone looking at it with some of the following:
- What the group does and where it does it.
- The purpose of the organisation.
- Who can be a member of the organisation.
- How someone can be involved.
- How meetings are called.
- How the organisation can be dissolved if required.
Why do you need a constitution?
The constitution acts as the set of rules for how the committee should operate. It should guide the committee on how business is to be conducted.
The constitution also provides the details that grant-making bodies and other funders need to confirm that the group is properly organised and has rules to account for how the money will be utilised.
What is usually found in each section?
There are two ways to write a constitution. First is to use a model constitution of an existing, similar group or from an appropriate website. This can provide the starting point for the committee to work together to make the document appropriate to the organisation. This needs to be a process in which committee members, parents and staff are involved and participate in an approach which promotes understanding and ownership of the constitution.
The second way is to write the constitution from the beginning. This could be very complicated and a solicitor’s advice would be recommended. If the committee is a member of a national or local association, part of the membership may mean adopting their constitution.
The constitution is put into operation by being adopted (accepted for use) at a formal meeting of those people who are or will be the officers of the voluntary management committee and the general membership. A final typed version is required which is signed by the officers, dated the date of the meeting at which it was agreed and noted in the minutes that the constitution was formally adopted. It should be formally reviewed on an annual basis.
A constitution should include the following:
Name: A name is important, so spend time thinking about it. Will the name be easy to find in local directories? What do the initials spell when used as an acronym? Check the registers of charity and company names at the Charity Commission and Companies House websites.
Objects: This section covers what the group wants to do: its objectives. It not only covers what
you want to do now, for example, provide Karate instruction but also in the future: for example, offering support services. By keeping the objects broad it means that an activity can be
changed or a new one provided without changing the constitution. This section is difficult to
change once completed.
The objects also include the geographical area the committee covers: for example, a village, a borough, or a wider area. If the committee may expand its operation in the future include the statement ‘and the surrounding area’.
Powers: This is everything the group intends to do to meet its objects. Keeping this broad doesn’t mean that the committee has to carry the power out, but can do if needed.
This section usually includes the following – this list is not exhaustive:
- To meet the requirements of appropriate legislation.
- To provide equipment and accommodation.
- To employ paid and unpaid staff (who shall not be members of the committee) as may be required from time to time.
- Decide membership of the committee.
- To decide and collect fees for individuals, clubs and groups run by the organisation.
- To raise money for activities.
- To recruit volunteers.
- To work in partnership with other organisations.
- To insure property and assets in connection with the organisation.
- To do anything else within the law that’s necessary to achieve the objects.
Membership: This section details everything a member should know including:
- Who can be a member? Should the membership be restricted or include others? It may be appropriate to include committee members who don’t practise Karate but have a specific skill (for example, marketing, fundraising, bookkeeping) or because of their role in the community, for example local police officer or community leader.
- Is there a membership charge?
- How will membership be recorded?
- How often will members meet?
- What is the procedure for notifying members of meetings?
- When will the financial year start and finish and when will the Annual General Meeting (AGM) be held? Some organisations agree their financial year is from 1 August to 31 July, so there is handover time during the summer holidays to give newly elected members the chance to get used to their roles. Others use the financial year, 1 April to 31 March.
How does membership of the group finish? Think about written notice periods, or when a member leaves the organisation, or if a member has brought the organisation into disrepute or has failed to abide by the rules of the committee.
Management– the committee: The organisation is composed of members who delegate responsibility to a voluntary management committee to carry out the association’s activities and this section describes how it will work. It should:
- Describe how and when the committee may be elected.
- Describe the officers – a chair, a treasurer and a secretary and discuss how long they can be elected for. This could be one year, and they may be re-elected at the AGM for a period set down within the constitution. You may want to limit the amount of years someone can be a member of any given committee.
- Specify the maximum number of co-opted members.
- Specify the minimum number of times the committee should meet in a year.
- Set out the minimum number of members required at the meeting.
- Describe any sub-committees which may be required now or in the future and make reference to this. This could be a fundraising sub-committee, for example.
- Set out who chairs the meetings in the absence of the chair.
- State whether the chair has the casting vote.
- Require that the meetings are minuted by the secretary and distributed to confirm accuracy.
- Describe which issues will be considered at the meeting, put to a vote and resolved at the meeting.
- Make reference to who may or may not stand as committee members. This is for protection of all parties, where decisions can be seen as transparent rather than interpreted as being influenced by another, and to prevent fraud.
These decisions could include:
- Clarification that a certain percentage of clubs or groups must be on the full committee or if a certain percentage of the full committee must be instructors.
- Clarification that a committee member is unable to act as such if they are: a paid member of staff; related to a paid member of staff which includes cohabiting; related to other committee members, including cohabiting.
- Clarification that no other person can represent a member at meetings, or have the rights that a specific elected committee member has.
- Procedure in the event of death or resignation. You may wish to discuss that the vacancy can be filled by another committee member until the next AGM.
There should be a section on dealing with money which could include:
- The power to open a bank account in the name of the organisation.
- The position of those committee members who can sign cheques and the minimum number of signatories.
- What accounting records are required such as all day-to-day income and expenditure, the assets and property held by the organisation.
- A requirement that the treasurer presents an up-to-date statement of accounts to the committee at every meeting.
- The position of those committee members (and others) who can enter into financial agreements on behalf of the organisation for example, to authorise equipment, stationery, temporary staff.
- The definition of reasonable out-of-pocket expenses payable to volunteers.
- The way in which your accounts will be independently examined each year by a book keeper or accountant. Only use the word auditor if there is a legal requirement to have a full audit.
- The way in which the accounts relating to the organisation shall be available for inspection by committee members, including where and when.
- General meetings of the committee. This section prescribes that within each calendar year the
committee will invite everyone to an AGM, provide an agenda in advance and describe the business to be conducted there.
This is usually:
- The presentation of a written annual report by the committee.
- The presentation of accurate annual accounts of all income and expenditure by the committee.
- The election of committee members.
- The agreement of plans for the forthcoming year.
- Any other business.
In the future, changes or additions to the constitution may be required so there should be a section to allow for this. Call a special general meeting of all members, with reasonable notice, where changes are to be considered. If the changes or alterations required coincide with the AGM, they can be included in the agenda.
Dissolution: This section describes what happens if the organisation decides to close due to a change in circumstances. Again a special general meeting will need to be called for all members, giving reasonable notice to them.
What do you need to do?
It is important to confirm that the organisation has a constitution; to locate a copy of it; and to make sure that it has been recently reviewed. If appropriate, the committee will need to ensure that the Charity Commission has an up-to-date copy.
Put the constitution on the agenda for the next committee meeting and arrange for a small working group to either write a constitution or work through a model constitution adapting it to your organisation’s needs.
Formally adopt the constitution at the AGM or special general meeting. Once the constitution is adopted, the committee can carry out its work under the management of its elected committee.
Discuss any concerns you have with changes of committee members.
For continuity purposes, always keep one or two members of the management committee on annually.