If you’re setting up a new organisation, think hard about the organisational structure and take advice.
What are the options?
Unincorporated association
Many small community food initiatives (e.g. food co-ops) are ‘unincorporated associations’. Legally this means that they are a group of people who have agreed to come together for a specific purpose.
This has the advantage of keeping things cheap and simple but means that everyone is personally liable for the debts of the organisation. However, if there is very little financial risk involved this isn’t too much of a downside.
Associations often have a governing document or constitution. They may be managed collectively with role sharing, or more formally.
Charity
Similarly, a charity is a group of people that has come together voluntarily to tackle an issue in society. They have a constitution that sets out aims and objectives etc, office bearers and a management committee, and in Scotland are accountable to the Office of the Scottish Charity Regulator (OSCR).
Again this is a low cost solution but individuals can be personally liable for debts and contracts need to be signed by office bearers.
Incorporated organisation
This is when the organisation becomes a separate legal entity and individuals have limited financial liability. You should consider this particularly if you are employing staff, managing large amounts of funding or taking on contracts.
Incorporated organisations can be charities, social enterprises and co-operatives.
There are many forms of incorporated structure, for example Scottish Charitable Incorporated Organisation (SCIO), Community Interest Company (CIC), Company Limited by Guarantee, Co-operative Society and Community Benefit Society.
Where to go for advice
Where to go to register
- Office of the Scottish Charity Regulator (OSCR) – charities
- Companies House – limited companies
- Community Interest Companies (CICs) – some social enterprises
- Financial Conduct Authority (FCA) – co-operative societies and community benefit societies