Understanding your Constitution and Standing Orders
The following are comments and guidance to take you through this exercise. Many of the answers come directly from your constitution and therefore will be specific to your organisation.
1. What determines charitable status?
Charities are organisations set up for public benefit. The objects of the constitution define the public benefit of the charity and if these are not deemed to be ‘charitable’ by the Charity Commission the organisations will have to take another form. Charities can be ‘profit making’, but the money must go back to the charity to enable it to be used for public benefit.
2. Is there a minimum and/or maximum age for a trustee?
The minimum age of a trustee is 18, there is no maximum age. The Charity Commission will consider trustees under 18 under special circumstances.
3. What is the difference between a Managing Trustee and a Holding Trustee?
A managing trustee takes on all the responsibilities and liabilities for the charity.
A holding trustee simply lends their name for legal transactions as an unincorporated charity does not exist in law and therefore legal documents are not able to be signed by the organisation, only by individuals.
N.B. Land and leases that are not already registered generally do not have to be registered until it is sold, mortgaged, or gifted. But from 6 April 2009 compulsory registration is triggered when unregistered land held in trust is vested in a new trustee. For trusts and unincorporated associations with unregistered land or leases of more than seven years, registration will be required within two months of a new holding trustee or custodian trustee being appointed. Following this, a Land Registry fee based on the value of the property is payable each time the property is vested in a new trustee. See the note below to avoid this problem.
4. Do you have holding trustees, how many and who are they?
Look for a section that refers to trust property and this will identify who can be holding trustees and how many should be in place. The Charity Commission can act as official custodian (in place of holding trustees). This solves problems of changing individuals when they move away. Information on the official custodian service from the Charity Commission
5. What is the difference between Objects and Powers?
Objects are the most important clause of the constitution. They define what the organisation is aiming to do, so your members/ supporters must be in agreement with it. Furthermore, its wording is vital in determining whether or not your organisation will be a charity, these statements to be wholly charitable
The powers are the activities your organisation can carry out In furtherance of their objects.
6. Do you have sufficient powers for what you do?
Check your activities against your powers - Are you doing anything that isn’t in your powers? You need to review this to ensure you are not contravening charity law by working outside your governing document.
7. What is your membership structure?
What powers does your organisation have with reference to membership – what constitutes a member?
8. How is your trustee board elected?
Have a look at the AGM – this information should be there
9. How many people on your board/committee?
The minimum legal amount of trustees on a board is two, but three would be a more accountable number. However, this puts a great deal of pressure on so few people, so why not put together a strategy to keep trustee numbers up.
10. How is that number made up?
Do you have co-opted, ex-officio or appointed members?
11. What is the quorum for committee meetings?
Discussion can take place if a meeting is not quorate, but no decisions can be made. Your governing dcoment should lay out what constitutes a quorate meeting.
12. What is the quorum for the AGM?
Don’t forget the AGM can’t go ahead if it is not quorate – your constitution will tell you what do if this happens
13. How much notice do you need to give for your AGM and how is notice given?
Your constitution will state this - how will you do this. How do you attract as many people as possible to this important event?
14. What must be on the agenda for the AGM?
Again this process will be stated in the constitution
15. Who approves the annual accounts?
The trustees take liability for the charity and as such they are the people who approve the accounts. They should be externally checked or audited. The threshold for requiring a full audit is £500,000, or £250,000 if the charity's total assets are more than £3.26 million.
The accounts are they presented to the members at the AGM, were they can ask questions, but they will already have been approved at this point.
16. How many persons can be authorised to sign cheques and how many signatures required for a cheque?
Take a look under your finance section of your constitution why not take a few minutes to consider if you have adequate financial procedures?
17. What are the procedures for amending the constitution?
You will usually find this information towards the end of your constitution. Full guidance is available on the Charity Commission website
18. If you make an amendment to the constitution at the AGM when does it come into force?
If it is a small administrative change (to the powers) you do not need to get consent from the Charity Commission and this would come into force at the end of the AGM.
If it is a more complex change or a change to the objects you need to have written to the Charity Commission in advance and got their consent. If this is in place the change will also come into place at the end of the meeting. It is always wise to contact the Charity Commission about any roposed change to ensure you have gone through the right process. Their helpline telephone number is 0840 3000 218. Full guidance at Charity Commission website
19. Does the date on the copy of your constitution concur with that shown on the Charity Commission register?
You can easily check this on the Charity Commission website. If the dates don’t correspond you need to contact the Charity Commission as the copy they recognise (as shown on their website) is actually the one you should be working to rather than any you may hold with amendments that have not been approved by the Charity Commission.
Always ensure you send a copy of the minutes showing acceptance of the changes with the new constitution. It is up to you to ensure that the constitution gets amended on the website, so make sure you check.
20. What trading do you undertake and is it within the permitted limits for the charity to undertake?
21. Does each member of your committee have a copy of the constitution? YES/NO
If the answer is no then how can your trustees make informed decisions? Now may be the time to think about creating a trustee induction pack with all the relevant documents in it to help new trustees and as a reference to existing trustees.
22. Do you have Sections? If so, how are they managed?
1. Why have standing orders?
Standing orders allow the organisation to expand on the items contained in the constitution or governing document.eg. when you consider the possible complexity of financial transactions within the organisation, you do not need all that detail in the constitution, but the processes should be documented in someway, hence a standing order. Standing orders can be used for a wide range of processes in an organisation including committee procedures and how legal matters are dealt with. The most important point is that they can not conflict with the constitution.
2. Do you have standing orders?YES/NO
Here is an opportunity to find out what you have, review them and think about any new ones you might need to answer the questions below.