A guide to third sector trading - WCVA

It’s an idea, but is it business? A guide to third sector trading
1: Getting
started
2: First steps 3: Business
planning
4: Legal and
governance
5: Funding
and
resourcing
6: Financial
controls
7: Managing
growth
8: Management
and
governance
9: Social
enterprise
10: Sources
of support
4: Legal and governance structures
It is quite common for steering groups and boards to devote more nervous energy to discussing the future legal structure
of their organisation than to planning the business they intend to undertake. And there seems to be little connection
between the length of time devoted to the subject and confidence that the structure is the right one for
their circumstances.
In the case of one Welsh charity there was a lengthy debate over whether to establish a wholly owned subsidiary
trading company to undertake business activities and look after the charity’s building assets, or to take advantage
of the prestigious new Community Interest Company structure. Enthusiasm for the CIC won the day, and one was
eventually set up. Unfortunately, the process had taken so long that the original objectives were overlooked at the
registration stage and the CIC was accidentally established as largely independent of the charity. The full implications
of the blunder took a while to emerge. The charity was left with no assets of its own, and the terms of a building
redevelopment grant meant that the mistake could not be corrected for several years.
It can be better to keep arrangements as flexible as possible so they can be adjusted as circumstances change or as
mistake become apparent.
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