A guide to third sector trading - WCVA

More documents

Recommendations

Info

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 • Other constitutional arrangements: You may come across other slightly more idiosyncratic legal formats for certain types of social enterprise organisations. But, except for a few very special circumstances, they do not have advantages over limited companies. Newcomers can usually discount them as options. − Industrial and Provident Societies (IPS) evoke the historically important co-operative movement and sustain its ethos, but they tend to be more cumbersome and less flexible than companies limited by guarantee. They have the significant advantage that they can sell shares to the general public. If you are thinking of raising money for your business in this way this could be the legal structure to pursue. See section 5.4 on raising money with shares and bonds. − Credit unions are specialised, highly regulated organisations which use the IPS legal structure with a distinct constitutional format (see the Association of British Credit Unions at www.abcul.org). − Trusts are unincorporated structures that do not enjoy limited liability and face the same problems as unincorporated associations in holding title to property, entering into contracts etc. • Terms that have no legal status: Many terms have no meaning in British law, and have no specific constitutional arrangements associated with them. They are really descriptions of ways of working (sometimes rather indistinctly), and reflect changing fashions and politics in third sector trading over the last 30 years. You do not need to research them, and you should certainly not be constrained by them – although their supporters may sometimes recommend off-the-shelf constitutions. The terms include: − community businesses − community co-operatives − community development trusts − community partnerships − development trusts − not-for-profit organisations − social firms − worker co-operatives 80
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 The options for trading organisations Companies limited by guarantee are by far the most widespread format for trading because, as the name suggests, the financial liability of the directors and members is usually limited if the business fails. Though not ideal, they are enormously flexible and are usually the obvious choice. They can be adapted to operate, among other purposes, as: • stand-alone trading companies – with or without charitable status • charitable (or non-charitable) holding companies with subsidiary trading companies • subsidiary trading companies • community-owned regeneration organisations with multiple activities • worker-controlled co-operatives (although these commonly use structures under the Industrial and Provident Society legislation). Companies limited by shares have two main uses in third sector trading organisations, as: • Stand-alone trading ventures (often community-based) in which groups of individuals or organisations can buy shares to invest in, and own, trading activities which are run for social benefit: − They have been used, for instance, in rural communities to raise funds to buy buildings and businesses such as post offices and shops threatened with closure. − The individual shareholders may be offered a share of the profits, via dividends, to entice their investment, or the shareholding may be seen as a long-term interest-free loan to support essential community services. − It is extremely important to make sure investors are aware of the terms of their financial involvement, to avoid community resentment if expected dividends are not paid. In one example, a rural community became seriously divided by an ill-defined project to which individuals had each contributed hundreds of pounds. See also section 5.4. − Local organisations such as community groups may own shares in social enterprise businesses in order to retain profits for their communities – as in the case of small wind turbines or hydro-electric power schemes (Bro Dyfi Community Renewables has pioneered this approach in Wales). • Trading subsidiaries: Companies limited by shares are used much more widely as wholly-owned subsidiary trading organisations by charities, development trusts and other community ventures. See section 4.6. 81
Page 1 and 2:
It’s an idea, but is it business?
Page 3 and 4:
Page 5 and 6:
Page 7 and 8:
Page 9 and 10:
Page 11 and 12:
Page 13 and 14:
Page 15 and 16:
Page 17 and 18:
Page 19 and 20:
Page 21 and 22:
Page 23 and 24:
Page 25 and 26:
Page 27 and 28:
Page 29 and 30:
Page 31 and 32: It’s an idea, but is it business?
Page 81: It’s an idea, but is it business?
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Page 183 and 184:
Page 185 and 186:
Page 187 and 188:
Page 189 and 190:
Page 191 and 192:
Page 193 and 194:
Page 195 and 196:
Page 197 and 198:
Page 199 and 200:
Page 201 and 202:
Page 203 and 204:
Page 205 and 206:
Page 207 and 208:
Page 209 and 210:
Page 211 and 212:
Page 213 and 214:
Page 215 and 216:
Page 217 and 218:
Page 219 and 220:
Page 221 and 222:
Page 223 and 224:
Page 225 and 226:
Page 227 and 228:
Page 229 and 230:
Page 231 and 232:
Page 233 and 234:
Page 235 and 236:
Page 237 and 238:
Page 239 and 240:
Page 241 and 242:
Page 243 and 244:
Page 245 and 246:
Page 247 and 248:
Page 249 and 250:
Page 251 and 252:
Page 253 and 254:
Page 255 and 256:
Page 257 and 258:
Page 259 and 260:
Page 261:
show all

A guide to third sector trading - WCVA

Create successful ePaper yourself

Delete template?

Save as template?