A constitution is a document that describes the purpose of the organisation, who can become a member, and how decisions are made. Lots of different kinds of organisations have a constitution, as it is useful for a number of reasons. It helps to make sure that all members are treated equally and most grant giving organisations usually require organisations to have a written constitution before they can apply for money.
When writing a constitution you should decide at the outset whether it is likely that you will apply for charitable status in the future as this will affect the purposes or objectives that you will be able to adopt in the future (see below). Finally, when writing a constitution it is a good idea to try to keep it as broad and general as possible, as this will give the organisation more flexibility in the future.
What is charitable status and does my organisation need it?
If your organisation has charitable status this means that it is legally recognised as operating for ‘charitable purposes.’ An organisation that has charitable status is not allowed to distribute profits to members. Charitable purposes (sometimes called ‘objects’) are defined in Scotland by the Inland Revenue and generally limit organisations to activities that ‘provides public benefit’. Charitable status will not be granted to organisations that have been set up primarily to benefit the members of the organisation. For example, an organisation set-up to enhance an area of land that is not open to the public may not qualify as a charity, nor would a sports club that seeks money to improve sports facilities that are not open to the public.
Charitable status has both advantages and disadvantages for an organisation. An organisation with charitable status is eligible to apply to a broad range of grant giving organisations and can receive a range of tax benefits on some kinds of donations. This obviously makes fundraising much easier. Therefore, if your organisation will only undertake activities that are of ‘public benefit’ and you need more than a few thousand pounds to undertake these activities, it may be a good idea to work towards charitable status.
However, organisations with charitable status are also constrained in a number of ways. For example, charities must produce audited financial accounts each year and send them to the Inland Revenue. Also, they may only spend money on furthering their charitable purposes (or on making investments that give a good return). This means that if the organisation should want to undertake additional activities, such as trading, it could lose its charitable status.
Do we need to know about equal opportunities?
Although legislation relating to equal opportunities is mainly aimed at employers with over five employees, voluntary organisations should also pay attention to these issues. There are recent cases where volunteers have taken an organisation to a tribunal over equalities issues that have resulted in damages being given to the volunteer. In practice, this means your organisation should consider developing equal opportunities policies to show that your organisation takes these issues seriously. The very act of having effective policies will help to mitigate a small organisation’s liability.
Child Protection
Child protection is also an important issue for voluntary organisations to think about, as once again, the law emphasises the fact that everyone is responsible for ensuring children are safe. Quite simply, if the activities that your organisation undertakes involves young people under 16, then your organisation should have a child protection policy.
Regular volunteers who work with young people should obtain a disclosure from Disclosure Scotland. A disclosure is a certificate that is sent to potential employers or voluntary organisations that gives details of any criminal convictions a potential employee or volunteer may have. New legislation in Scotland means that every voluntary organisation that works with young people must register with the Central Registered Body in Scotland. This organisation was set up to provide free Disclosure Scotland checks for volunteers.