FAQs unincorporated associations

Staying unincorporated is an ideal way for a new or small charity to raise money, says charity expert Ian McLintock

If youre a new PTA or a small group that doesnt expect to raise more than £5,000 a year, theres no obligation to register with the Charity Commission. Remaining unincorporated will keep admin to a minimum, leaving you more time to plan events and raise funds. You can even open a bank account and claim Gift Aid.

How can I set up an unincorporated association?

Its quick and straightforward. All you need is a written constitution and three people willing to be trustees. Unlike a registered charity, an unincorporated association doesnt have limited liability, so trustees may be personally liable if anything goes wrong. Good insurance is therefore a must, and unincorporated associations should avoid entering into major contracts, such as taking on leases or employing staff. They should also be careful when planning potentially risky activities.

Is there a difference in law between charities registered with the Charity Commission and unincorporated associations?

No, in law a charity is an organisation which has charitable purposes and is exclusively for the public benefit. Trustees must act in the charitys best interest at all times and ensure that no individual derives personal gain from its work.

Can an unincorporated association open a bank account?

Yes, you can open a bank account in the name of your charity. The bank will probably want to see your constitution first. Having a bank account will reassure people who interact with you, and youll need it if you start applying for grants.

Does an unincorporated association need to file any documents?

No, but its good practice to make everything publicly available. Add your constitution to your Facebook page, send it as a PDF if anyone enquires and make it available on your school website or noticeboard. Be fair and transparent at all times.

Does an unincorporated association need to file accounts?

No, but you should still keep proper records of your income and expenditure. Something simple, such as a cash book, would be sufficient.

Should an unincorporated association hold an AGM?

Yes, you must hold an AGM at which the accounts and annual report should be presented, and trustees elected.

Does an unincorporated association need insurance?

If youre running events, youll still need public liability insurance. You might also consider adding any officers and directors to indemnify those individuals. Events and activities should be fun, but you are responsible for running them properly and safely. For example, if youve hired a local hall, you'll need to be familiar with the fire safety procedures and exits. Make sure risk assessments are completed and circulated ahead of time.

Can an unincorporated association claim Gift Aid?

An unincorporated association can still register with HMRC and claim Gift Aid. HMRC wont register you if you raise more than £5,000 and arent registered with the Charity Commission.

Can an unincorporated association still apply for grants?

Its commonly understood that only registered charities can apply for grants. But grant givers can fund anyone they choose to. Many organisations, including big funders such as the National Lottery Awards for All, will accept applications from unincorporated associations. Youll need to have a constitution and a bank account. There are 10,000 fund makers in the UK, and often less competition for the smaller, local grants that will be perfect for your PTA.

If the grant youre interested in states that only registered charities can apply, you wont be eligible. But phrases such as constituted or local community groups usually mean you can go ahead. Contact the funder before you start if youre not sure.

Does incorporation affect licensing?

Your association can apply for any licences it requires to legally hold events and fundraisers. But remember that the trustees need to apply on their own behalf, so make sure everyone acts responsibly.

Are people less likely to donate and give raffle prizes to an unincorporated association?

Inside your school community, everyone knows who you are and the good work you do, so its unlikely to make much difference. Once you start to look outside the school gates, people are more likely to donate to a registered charity. If youre going after additional funds, youll soon reach a point where you need to register anyway.

At what point must we register with the Charity Commission?

All charities with an annual income above £5,000 must register with the Charity Commission. You are allowed to register if your income is lower and you wish to do so.

Ian McLintock is the founder of the Charity Excellence Framework, a free online toolkit that connects charities to resources and people who can help. charityexcellence.co.uk

 

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