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Following some Forum discussions earlier in the year, I have written the attached article (in full below as well) to set out some information about what is involved in setting-up and running a group or society.
It is intended to provide helpful hints - it is not a definitive list of what is involved.
Circumstances vary from group to group, so if you have any doubts about anything, seek appropriate qualified advice.
I have run it past a couple of mods to sense check it, so hopefully it makes sense.
Let me know what you think. Full text below.
Setting up and Running a Group or Society
NOTES
The place to obtain information about what is required to set-up and run a charity in the UK is the Charity Commission, their web site is: www.gov.uk/government/organisations/charity-commission please note that URLs have a habit of changing so if that doesn’t work, enter ‘charity commission’ into your search engine.
Information about Gift Aid can be obtained from the HMRC web site: www.gov.uk/claim-gift-aid
This article is intended to provide some ideas about the types of things that you may need to consider when setting up a group of some sort and some thoughts on running such a group. It is not a definitive guide nor can it offer anything more than basic ideas of what is involved. If you have any queries or concerns about setting up or running an organisation then you should consider obtaining appropriate qualified advice from a specialist lawyer or other qualified person.
For a lot of information and guidance, plus sample documentation, contact information etc. see the Charity Commission web site
INTRODUCTION
I have written this article in response to a number of threads that have appeared on the Café over recent months. Being part of a group, whether small and informal or much larger and highly organised is a good way of adding to the enjoyment of music-making. Groups come in all sorts of sizes and shapes, from a few friends meeting over a coffee and noodling around, to professionally minded quartets giving recitals, to bands, ensembles, and beyond.
Some people, like me, have been involved in setting-up and running amateur organisations of various types for almost their entire life – my first committee post was as a 16 year-old on the council of a learnèd society that was founded in Victorian times (hence ‘council’ rather than ‘committee’ and ‘president’ rather than ‘chairman’). Since then I have been on the committees of numerous groups from local, to regional, through to national level. Some of these have stayed as unincorporated societies, some have become charities, one is going to become a CIO in the summer of 2016 and another is Company Limited by Guarantee. I am currently a trustee of two charities. I have held every level of post from representing junior members, committee member, minutes secretary, secretary, librarian. treasurer, vice president, vice chairman, president and chairman, and more besides.
I thought I would pass on the benefit (hopefully) of some of the things that I have picked up over the last 40 years or so.
Why Set-up a Group?
I am going to assume for the purpose of this article that you are part of a small music group, perhaps rehearsing weekly or similar.
Small groups can run themselves informally – someone books a room to meet in, the hat gets passed around to cover costs etc. Two groups I am involved with work on this basis: the Café Trio/Quartet/Quintet/Sextet/Septet and Chester Sinfonia. However, once you are a certain size – usually when more than one person is required to organise things – then you will probably look to be set up on a more ‘formal’ basis.
The advantage of a group is that it has a structure and people have roles and responsibilities. Some people dislike ‘formal’ and don’t see why everything can’t just be very informal and ad-hoc. There are several reasons for this. Very small groups can operate on that basis, but once you are looking at a dozen or more people, you need a bit more structure: someone needs to be responsible for booking venues for rehearsals, someone needs to be the external contact point (e.g. to liaise with rehearsal venue and book concerts etc). Someone needs to co-ordinate things. If you are using local authority premises, such as village or school halls, they may insist on you carrying Public Liability Insurance (PLI). It is not practical for the responsibility and costs for all of this to fall on some lucky volunteer. If it does fall to one person, then you become a hostage to fortune, since you are dependent on that person’s enthusiasm and commitment. Even a small organisation provides the ability to spread the workload around and make it more reliable – hopefully.
Options Available
I will assume that you have decided that you want to move on from being ad-hocly organised and want to set-up some sort of group. There are basically a couple of options: to become a ‘society’, or to become some form of registered charity. These are the basic options available:
Unincorporated society
Registered charity – there are a number of options within this:
unincorporated society
Charitable Incorporated Organisation (CIO)
Company Limited by Guarantee
I should mention that that there are rules around minimum size for becoming a registered charity. You can still be a charity below the threshold, but not ‘registered’ and claim Gift Aid – see the Charity Commission and HMRC web sites for more information.
The ‘standard’ basic group/society is called an ‘unincorporated society’, which is just your typical small society, with a constitution (‘governing document’ in the parlance of these things) and run by a committee. This is how the vast majority of organisations are run. It’s a perfectly acceptable way of running a group.
An unincorporated society can register with the Charity Commission to become a registered charity. It is still an unincorporated society. The only difference is that the governing document has to adhere to guidelines and principles set-out by the Charity Commission and the committee members become trustees of the charity.
In both of the above cases, the committee/trustees carry personal liability. This means that if things went awry, they would be liable. Plenty of organisations are run on this basis, but it helps to be aware of this point, since it does put some people off from joining the committee.
Recent Acts of Parliament have brought in ‘Charitable Incorporated Organisations’ or CIOs. These have been created to address the problem of trustees carrying personal liability and avoiding the complexity of the Company Limited by Guarantee route. The key thing is that a CIO removes the personal liability from trustees, which immediately makes it an attractive option for societies with larger financial turnover.
The final option of becoming a company is really aimed at larger organisations, or ones with large turnover. However, until CIOs were an option, this was the only way for trustees to not hold personal liability. You will almost certainly require expert advice if considering this option since it involves setting up a company and there are legal complexities involved.
Unincorporated Society
This is what most groups start life as. Basically, you adopt a governing document (‘constitution’) and elect a committee and off you go… To make life simple, go to the Charity Commission web site and download one of their specimen governing documents – even if you do not intend to register as a charity at this stage, you can still use the templates. You can drop some of the charity specific clauses if you wish, but you can leave them in. You can of course write your own.
The purpose of the governing document is to set out as simply as possible how the organisation is to run. It is NOT about the policy of the organisation, nor about what it does, except for its objectives/aims. The sorts of things it says are: the name of your organisation; the objectives of the organisation; key roles and number of other committee members; process for electing the committee; powers of the committee; membership rules; how to convene an AGM and other General Meetings; dissolution of the organisation. There may be other clauses, but that tends to be the main areas that need to be covered.
The best thing to do with a governing document is keep it simple, don’t get over-elaborate, don’t stuff it with ‘policy’ items. For example, if you have minors participating in events, you may have a child protection policy – that is about how and what you do and how you choose to operate as an organisation, it does not need to be part of the governing document of the organisation. Try to make the document flexible. For example, you might say: “ The level of subscriptions and details of any deferred payment scheme(s) for the following year shall be determined by the Committee and notified to all members at the start of each concert season...” This leaves it open as to whether you have a subscription, or not, also that it may vary. It also permits ‘deferred payments’ i.e. paying in instalments. The idea is that you only change the governing document when you absolutely have to.
The committee size should be ‘sensible’. You will need a chairman, a secretary, and a treasurer. You will probably want a few other people as well as ‘ordinary’ committee members to pick-up other tasks and to provide support and balance. You can always co-opt other people to assist or undertake specific tasks. Don’t load one or two people with everything.
Unless you are a large organisation, you do not have to have the annual accounts formally audited (by which I mean reviewed and assessed by a qualified accountant/auditor). Auditing is a formal process and is time consuming and can be costly if you have to engage certified professionals. It is good practice to have them independently ‘scrutinised’. This means that someone who is not involved with their preparation, ideally outside of the committee, or outside of the organisation, carries out a ‘sense’ check on the accounts. If you have a friendly accountant, bookkeeper or similar who will assist, so much the better. The important thing is for everything to be transparent and open.
Registered Charity
I have dealt with the Charity Commission a number of times over the years and they are in fact helpful. Also, they know that most organisations are small and run by volunteers who are by and large not accountants nor lawyers. Unless you are a large organisation with a turnover of a lot (e.g. £250k+) the reporting requirements are fairly simple. The precise boundaries at which enhanced financial reporting is required is detailed on the Charity Commission web site.
The only basic difference between an unincorporated society and a registered charity is that the governance document has to be approved by the Charity Commission. It also has to contain certain specific clauses. If you use one of the Commission’s templates, it should be a straightforward process. This is one reason for using it in the first place. The template includes these specific requirements. There are also eligibility criteria for becoming a registered charity (e.g. minimum income of £5k p.a.) and you will need to check that you meet the criteria.
The committee members become the trustees of the charity, unless you have specified it differently. There is plenty of help on the Charity Commission web site. You have to submit accounts and a report annually. This is done online. As before, unless your turnover exceeds certain criteria, you will not require formal audit by an accountant or auditor: independent scrutiny is acceptable. The rules about this are on the Charity Commission web site.
CIOs are new and there are different ‘flavours’ depending on the nature of your organisation and its size. Talk to the Charity Commission about what would suit you best. I am currently involved in converting a registered charity which is operated as an unincorporated society to a CIO. We’ve downloaded the template governing document and we’ve been through it. Yes, it is more complex than the one we currently have, but that is because CIOs potentially cover much larger organisations with turnover possibly in £millions (the one I am working on has a turnover of around £80k). This does mean it is a bit more prescriptive about aspects of running the organisation. But, overall it is not really much more complex than the current one. In our case, we will need to convene a General Meeting at which we will set-up the new CIO and an AGM of the existing one to close it and move it to the new CIO.
I know very little about Companies Limited by Guarantee (even though I am a trustee of one – I had no involvement in its initial set-up) and I do not feel able to comment about them. Seek professional expert advice if considering this route.
Charities have to submit an annual report. This is quite simple but the items it must cover are detailed on the Charity Commission web site. One of the items that must be reported is the charity’s current position on financial reserves, i.e. you have to state what reserve you are currently holding, e.g. “The XYZ Society has reviewed its policy on financial reserves and this is now set at £10,000”.
Public Liability Insurance – PLI
Until about 20 years ago, local authorities, and others, tended to carry PLI for their premises. Some genius decided in most cases that they would only hold cover for events which they themselves directly organise. This means that frequently groups using local authority premises (schools, village halls etc.) are required to hold their own PLI cover, typically for £5million – this does vary. The number of insurers providing this type of cover has dropped significantly and applying for it independently is likely to be expensive, but can be done. Some venues include cover in the hire fee – this should be checked.
One way of bringing the cost down is to join an organisations such as Making Music. This is an ‘umbrella’ organisation for amateur music groups of all sorts of shapes and sizes. One of the services they provide is PLI cover: they take out a policy and organisations sign-up to it. This dramatically reduces the cost to the individual organisations. At the time of writing, membership fees are based on size of organisations, as are the insurance premia, see www.makingmusic.org.uk for more information. An alternative route would be to look at the Musicians Union or ISM.
You can arrange your own cover directly with an insurer or through a broker.
It is not only local authorities that may require PLI cover, other venues may too – it is always worth checking what the requirement is. You may wish to consider other insurances such as event cancellation cover. None of these insurances is likely to cover loss or damage to instruments or equipment.
Hints and Tips about Running an Organisation
I thought I would pass on some thoughts on the running of an organisation from my experiences.
The Committee Here are some points about running the committee.
Unless you are a learnèd society, or have specific reasons to, you do not usually need to keep verbatim minutes of meetings
Appoint a separate minutes secretary to take ‘summary’ minutes and produce an ‘action point list’ with names and dates attached
Produce an agenda for committee meetings and stick to it. I am pretty ruthless at stopping off-topic discussion in committees
The ‘Any Other Business’ (AOB) agenda item can kill organisations. One idea is to insist that AOB items are pre-submitted, or at least agreed at the very start of the meeting (the risk of not doing this is that a pile of important stuff gets shoved in at the end and there is not time to discuss them properly leading to either rushed or deferred decisions).
The reality of most organisations, whether 20 or 150 in size is that there are 3 or 4 key people who do most of the work. If you can get more people involved by giving them bite-sized activities, this results in a better run organisation. The danger is that the secretary or the chairman gets lumbered with everything, which is not a good place to be. It is also good practice to rotate key roles. I like to see chairman, secretary, and treasurer limited to a maximum of three years in post without a break. It is not good for an organisation to have a stale committee. Also, it is easier to recruit if people know that there is a limit to the time served. Equally, you don’t want a merry-go-round of annual changes either as you need continuity to make progress.
Other things to think about:
Create a new members’ pack providing useful information e.g. key contacts, concert and rehearsal venue details, dress code and other useful information
If you are a charity, make sure trustees are aware of their roles and responsibilities. The Charity Commission web site includes useful downloads about this.
It is worth having a practice of providing an up-to-date set of information and guidance notes to trustees after each AGM
It is good practice to have trustees sign a document stating that they know of no reason why they should not be a trustee
Keep committees to a workable size. You need enough people to run the organisation, but large committees risk becoming ‘talking shops’ where little is done
Run committee meetings to an agenda and stick to it. Keep an eye on the clock and move stuff along. If necessary ‘time-box’ items – set a fixed amount of time for items, so that all agenda items are fairly reviewed and not rushed
Unless there is a very good reason, do not re-review previous decisions – I’ve seen organisations get into an endless loop of re-revisiting…
Time-box committee meetings. The maximum length I would suggest is 2 hours. If you can’t get through the agenda in that time, you need more meetings… until you’re back on top pf things
Unless you are a very busy organisation, I would suggest meeting about every 6 weeks or so. Longer than this tends to lead to a loss of focus. More frequent than this can become tedious, so I tend to only do that when there happens to be an unusually large amount of work to handle
Draw up a list of roles and responsibilities and make sure new committee members know what their duties are. It is amazing how easy it is to discover that ‘x’ did not know it was their job to book concert venues… probably because no one told them and everyone assumed… This is also a good way of uncovering activities that happen but people are unaware of and helps to make sure that they don’t get lost, or gets them stopped if they’ve become redundant
Committee meetings are the place where decisions are made. They are not where you work it all out – that’s what sub-committees are for. For example, when we were organising a large concert in a cathedral, I was put in charge of that project (concert budget £14k) and I had a small team of 4 in all. We did all the detailed planning and organising and reported back to main committee. The main committee’s job was to ratify decisions and to make sure the overall project was on track, not to worry about minutiae of platform arrangements, emergency procedures, green room allocation, number of stewards, ticket printing…
Keep governing documents short and simple
Draw-up an annual budget and track your actual spend against the forecast budget. Better to get bad news early than late. Get into the virtuous circle of plan, track, review, plan… Once you have got the habit of doing this, it runs itself and it all becomes much easier
You should think about carrying a financial reserve that would see you through something going awry. The likeliest scenario is that you’ve booked a concert and have to pay for a venue and possibly for some equipment hire or pro players and there is some last-minute problem, such as power failure or the building flooding, which means that the event is cancelled and you have costs to cover
If you are a charity, tax-paying members can Gift Aid their subscriptions, which means that the charity can claim money from the tax man. Put someone in charge of this as it is a worthwhile benefit that can be claimed annually
When it comes to raising funds, don’t overlook the small things. It is much easier to raise ten lots of £200 than one of £2,000. One organisation I know has a weekly raffle at rehearsals, buys in and charges for drinks during rehearsals etc. and generates nearly £1,000 p.a. just from that (OK they have around 100 members and meet about 40 times a year)
Public Liability Insurance – PLI. See separate note above.
Finances Finances and financial planning are often the weak points of organisations. It’s not difficult and you don’t need to make things complicated. The main secrets are:
Simple, consistent recording
Planning ahead.
A common fault for organisations is being unrealistic about costs and overheads and then setting subscription levels too low. So first thing to do is: work out all your overheads for the year – the things you have to pay regardless. This will include things like venue hire, PLI, fees to conductors/music directors, music hire/purchase. If you are planning to have concerts, you need to factor in things like printing costs for posters/flyers/tickets, concert venue hire costs. When you have done all of that, add 10% as a contingency figure and then you have your basic gross running costs. You may wish to add on to that discretionary spend items that you expect for the year. You then divide that number by the number of members and you then have your core costs per member.
A basic balance sheet is simple: it is the balance of your accounts at the start of the organisation’s financial year plus or minus the surplus/deficit on the year and the end result will be the bank balance as at the end of the year.
You then show the breakdown of the surplus or deficit by detailing the income and expenditure. The I&E statement lists (summarised up to higher level items if necessary) all the income items (e.g. subscriptions, Gift Aid, grants, donations etc.) and expenditure items (e.g. fees to MD, venue hire, printing, PLI, music hire/lending fees etc.). The end result of that will be the figure that is plugged into the balance sheet as the surplus or deficit.
Produce an annual budget forecast by working out what you plan to spend in the forthcoming year. At committee meetings, the treasurer should present a ‘running balance sheet’ to show the current position and on ‘actual’ versus ‘forecast’ to compare what the budget said with where you are in fact. This runs itself once it is up and running and it helps to avoid nasty surprises.
You should plan to hold a ‘reserve’ to cover unforeseen events, such as cancelling a concert at the last moment.
If you plan to hold concerts or other events, keep a separate record of the costs and income for them (budget for them that way too).
Auditing Only large organisations require full audit by certified auditors/accountants. Scrutiny/oversight by an independent person is what is required for most organisations. Often local accountants will be happy to provide this service, but you will have to allow plenty of time for it to happen and it will cost. A sensible, independent person can do this – they should not be related to or otherwise involved with the treasurer and ideally outside of the committee. The function is to show that the society’s accounts represent a fair and accurate picture. They should be provided with all the bank statements, the ledger where transactions are recorded, cheque books and paying-in books, the provisional end of financial year balance sheet and the income and expenditure analysis.
The reviewer ticks back the statements to the ledger, cross-checking the cheque books and paying-in books. If everything ticks back OK, they then just need to check the addition. Anything which seems odd or unusual should be queried. Anything unresolved at the end of the review, or other general observations, should be mentioned in the sign-off document. For example, “I have reviewed the accounts of XYZ Society and believe that they present a fair and accurate picture of the accounts. I wish to note that more details should be recorded for petty cash items. I would also suggest that the Society reviews it financial reserves as I do not think the current level is adequate in the event for example that a major concert was cancelled at short notice”.
Author: Tenor Viol, June 2016
It is intended to provide helpful hints - it is not a definitive list of what is involved.
Circumstances vary from group to group, so if you have any doubts about anything, seek appropriate qualified advice.
I have run it past a couple of mods to sense check it, so hopefully it makes sense.
Let me know what you think. Full text below.
Setting up and Running a Group or Society
NOTES
The place to obtain information about what is required to set-up and run a charity in the UK is the Charity Commission, their web site is: www.gov.uk/government/organisations/charity-commission please note that URLs have a habit of changing so if that doesn’t work, enter ‘charity commission’ into your search engine.
Information about Gift Aid can be obtained from the HMRC web site: www.gov.uk/claim-gift-aid
This article is intended to provide some ideas about the types of things that you may need to consider when setting up a group of some sort and some thoughts on running such a group. It is not a definitive guide nor can it offer anything more than basic ideas of what is involved. If you have any queries or concerns about setting up or running an organisation then you should consider obtaining appropriate qualified advice from a specialist lawyer or other qualified person.
For a lot of information and guidance, plus sample documentation, contact information etc. see the Charity Commission web site
INTRODUCTION
I have written this article in response to a number of threads that have appeared on the Café over recent months. Being part of a group, whether small and informal or much larger and highly organised is a good way of adding to the enjoyment of music-making. Groups come in all sorts of sizes and shapes, from a few friends meeting over a coffee and noodling around, to professionally minded quartets giving recitals, to bands, ensembles, and beyond.
Some people, like me, have been involved in setting-up and running amateur organisations of various types for almost their entire life – my first committee post was as a 16 year-old on the council of a learnèd society that was founded in Victorian times (hence ‘council’ rather than ‘committee’ and ‘president’ rather than ‘chairman’). Since then I have been on the committees of numerous groups from local, to regional, through to national level. Some of these have stayed as unincorporated societies, some have become charities, one is going to become a CIO in the summer of 2016 and another is Company Limited by Guarantee. I am currently a trustee of two charities. I have held every level of post from representing junior members, committee member, minutes secretary, secretary, librarian. treasurer, vice president, vice chairman, president and chairman, and more besides.
I thought I would pass on the benefit (hopefully) of some of the things that I have picked up over the last 40 years or so.
Why Set-up a Group?
I am going to assume for the purpose of this article that you are part of a small music group, perhaps rehearsing weekly or similar.
Small groups can run themselves informally – someone books a room to meet in, the hat gets passed around to cover costs etc. Two groups I am involved with work on this basis: the Café Trio/Quartet/Quintet/Sextet/Septet and Chester Sinfonia. However, once you are a certain size – usually when more than one person is required to organise things – then you will probably look to be set up on a more ‘formal’ basis.
The advantage of a group is that it has a structure and people have roles and responsibilities. Some people dislike ‘formal’ and don’t see why everything can’t just be very informal and ad-hoc. There are several reasons for this. Very small groups can operate on that basis, but once you are looking at a dozen or more people, you need a bit more structure: someone needs to be responsible for booking venues for rehearsals, someone needs to be the external contact point (e.g. to liaise with rehearsal venue and book concerts etc). Someone needs to co-ordinate things. If you are using local authority premises, such as village or school halls, they may insist on you carrying Public Liability Insurance (PLI). It is not practical for the responsibility and costs for all of this to fall on some lucky volunteer. If it does fall to one person, then you become a hostage to fortune, since you are dependent on that person’s enthusiasm and commitment. Even a small organisation provides the ability to spread the workload around and make it more reliable – hopefully.
Options Available
I will assume that you have decided that you want to move on from being ad-hocly organised and want to set-up some sort of group. There are basically a couple of options: to become a ‘society’, or to become some form of registered charity. These are the basic options available:
Unincorporated society
Registered charity – there are a number of options within this:
unincorporated society
Charitable Incorporated Organisation (CIO)
Company Limited by Guarantee
I should mention that that there are rules around minimum size for becoming a registered charity. You can still be a charity below the threshold, but not ‘registered’ and claim Gift Aid – see the Charity Commission and HMRC web sites for more information.
The ‘standard’ basic group/society is called an ‘unincorporated society’, which is just your typical small society, with a constitution (‘governing document’ in the parlance of these things) and run by a committee. This is how the vast majority of organisations are run. It’s a perfectly acceptable way of running a group.
An unincorporated society can register with the Charity Commission to become a registered charity. It is still an unincorporated society. The only difference is that the governing document has to adhere to guidelines and principles set-out by the Charity Commission and the committee members become trustees of the charity.
In both of the above cases, the committee/trustees carry personal liability. This means that if things went awry, they would be liable. Plenty of organisations are run on this basis, but it helps to be aware of this point, since it does put some people off from joining the committee.
Recent Acts of Parliament have brought in ‘Charitable Incorporated Organisations’ or CIOs. These have been created to address the problem of trustees carrying personal liability and avoiding the complexity of the Company Limited by Guarantee route. The key thing is that a CIO removes the personal liability from trustees, which immediately makes it an attractive option for societies with larger financial turnover.
The final option of becoming a company is really aimed at larger organisations, or ones with large turnover. However, until CIOs were an option, this was the only way for trustees to not hold personal liability. You will almost certainly require expert advice if considering this option since it involves setting up a company and there are legal complexities involved.
Unincorporated Society
This is what most groups start life as. Basically, you adopt a governing document (‘constitution’) and elect a committee and off you go… To make life simple, go to the Charity Commission web site and download one of their specimen governing documents – even if you do not intend to register as a charity at this stage, you can still use the templates. You can drop some of the charity specific clauses if you wish, but you can leave them in. You can of course write your own.
The purpose of the governing document is to set out as simply as possible how the organisation is to run. It is NOT about the policy of the organisation, nor about what it does, except for its objectives/aims. The sorts of things it says are: the name of your organisation; the objectives of the organisation; key roles and number of other committee members; process for electing the committee; powers of the committee; membership rules; how to convene an AGM and other General Meetings; dissolution of the organisation. There may be other clauses, but that tends to be the main areas that need to be covered.
The best thing to do with a governing document is keep it simple, don’t get over-elaborate, don’t stuff it with ‘policy’ items. For example, if you have minors participating in events, you may have a child protection policy – that is about how and what you do and how you choose to operate as an organisation, it does not need to be part of the governing document of the organisation. Try to make the document flexible. For example, you might say: “ The level of subscriptions and details of any deferred payment scheme(s) for the following year shall be determined by the Committee and notified to all members at the start of each concert season...” This leaves it open as to whether you have a subscription, or not, also that it may vary. It also permits ‘deferred payments’ i.e. paying in instalments. The idea is that you only change the governing document when you absolutely have to.
The committee size should be ‘sensible’. You will need a chairman, a secretary, and a treasurer. You will probably want a few other people as well as ‘ordinary’ committee members to pick-up other tasks and to provide support and balance. You can always co-opt other people to assist or undertake specific tasks. Don’t load one or two people with everything.
Unless you are a large organisation, you do not have to have the annual accounts formally audited (by which I mean reviewed and assessed by a qualified accountant/auditor). Auditing is a formal process and is time consuming and can be costly if you have to engage certified professionals. It is good practice to have them independently ‘scrutinised’. This means that someone who is not involved with their preparation, ideally outside of the committee, or outside of the organisation, carries out a ‘sense’ check on the accounts. If you have a friendly accountant, bookkeeper or similar who will assist, so much the better. The important thing is for everything to be transparent and open.
Registered Charity
I have dealt with the Charity Commission a number of times over the years and they are in fact helpful. Also, they know that most organisations are small and run by volunteers who are by and large not accountants nor lawyers. Unless you are a large organisation with a turnover of a lot (e.g. £250k+) the reporting requirements are fairly simple. The precise boundaries at which enhanced financial reporting is required is detailed on the Charity Commission web site.
The only basic difference between an unincorporated society and a registered charity is that the governance document has to be approved by the Charity Commission. It also has to contain certain specific clauses. If you use one of the Commission’s templates, it should be a straightforward process. This is one reason for using it in the first place. The template includes these specific requirements. There are also eligibility criteria for becoming a registered charity (e.g. minimum income of £5k p.a.) and you will need to check that you meet the criteria.
The committee members become the trustees of the charity, unless you have specified it differently. There is plenty of help on the Charity Commission web site. You have to submit accounts and a report annually. This is done online. As before, unless your turnover exceeds certain criteria, you will not require formal audit by an accountant or auditor: independent scrutiny is acceptable. The rules about this are on the Charity Commission web site.
CIOs are new and there are different ‘flavours’ depending on the nature of your organisation and its size. Talk to the Charity Commission about what would suit you best. I am currently involved in converting a registered charity which is operated as an unincorporated society to a CIO. We’ve downloaded the template governing document and we’ve been through it. Yes, it is more complex than the one we currently have, but that is because CIOs potentially cover much larger organisations with turnover possibly in £millions (the one I am working on has a turnover of around £80k). This does mean it is a bit more prescriptive about aspects of running the organisation. But, overall it is not really much more complex than the current one. In our case, we will need to convene a General Meeting at which we will set-up the new CIO and an AGM of the existing one to close it and move it to the new CIO.
I know very little about Companies Limited by Guarantee (even though I am a trustee of one – I had no involvement in its initial set-up) and I do not feel able to comment about them. Seek professional expert advice if considering this route.
Charities have to submit an annual report. This is quite simple but the items it must cover are detailed on the Charity Commission web site. One of the items that must be reported is the charity’s current position on financial reserves, i.e. you have to state what reserve you are currently holding, e.g. “The XYZ Society has reviewed its policy on financial reserves and this is now set at £10,000”.
Public Liability Insurance – PLI
Until about 20 years ago, local authorities, and others, tended to carry PLI for their premises. Some genius decided in most cases that they would only hold cover for events which they themselves directly organise. This means that frequently groups using local authority premises (schools, village halls etc.) are required to hold their own PLI cover, typically for £5million – this does vary. The number of insurers providing this type of cover has dropped significantly and applying for it independently is likely to be expensive, but can be done. Some venues include cover in the hire fee – this should be checked.
One way of bringing the cost down is to join an organisations such as Making Music. This is an ‘umbrella’ organisation for amateur music groups of all sorts of shapes and sizes. One of the services they provide is PLI cover: they take out a policy and organisations sign-up to it. This dramatically reduces the cost to the individual organisations. At the time of writing, membership fees are based on size of organisations, as are the insurance premia, see www.makingmusic.org.uk for more information. An alternative route would be to look at the Musicians Union or ISM.
You can arrange your own cover directly with an insurer or through a broker.
It is not only local authorities that may require PLI cover, other venues may too – it is always worth checking what the requirement is. You may wish to consider other insurances such as event cancellation cover. None of these insurances is likely to cover loss or damage to instruments or equipment.
Hints and Tips about Running an Organisation
I thought I would pass on some thoughts on the running of an organisation from my experiences.
The Committee Here are some points about running the committee.
Unless you are a learnèd society, or have specific reasons to, you do not usually need to keep verbatim minutes of meetings
Appoint a separate minutes secretary to take ‘summary’ minutes and produce an ‘action point list’ with names and dates attached
Produce an agenda for committee meetings and stick to it. I am pretty ruthless at stopping off-topic discussion in committees
The ‘Any Other Business’ (AOB) agenda item can kill organisations. One idea is to insist that AOB items are pre-submitted, or at least agreed at the very start of the meeting (the risk of not doing this is that a pile of important stuff gets shoved in at the end and there is not time to discuss them properly leading to either rushed or deferred decisions).
The reality of most organisations, whether 20 or 150 in size is that there are 3 or 4 key people who do most of the work. If you can get more people involved by giving them bite-sized activities, this results in a better run organisation. The danger is that the secretary or the chairman gets lumbered with everything, which is not a good place to be. It is also good practice to rotate key roles. I like to see chairman, secretary, and treasurer limited to a maximum of three years in post without a break. It is not good for an organisation to have a stale committee. Also, it is easier to recruit if people know that there is a limit to the time served. Equally, you don’t want a merry-go-round of annual changes either as you need continuity to make progress.
Other things to think about:
Create a new members’ pack providing useful information e.g. key contacts, concert and rehearsal venue details, dress code and other useful information
If you are a charity, make sure trustees are aware of their roles and responsibilities. The Charity Commission web site includes useful downloads about this.
It is worth having a practice of providing an up-to-date set of information and guidance notes to trustees after each AGM
It is good practice to have trustees sign a document stating that they know of no reason why they should not be a trustee
Keep committees to a workable size. You need enough people to run the organisation, but large committees risk becoming ‘talking shops’ where little is done
Run committee meetings to an agenda and stick to it. Keep an eye on the clock and move stuff along. If necessary ‘time-box’ items – set a fixed amount of time for items, so that all agenda items are fairly reviewed and not rushed
Unless there is a very good reason, do not re-review previous decisions – I’ve seen organisations get into an endless loop of re-revisiting…
Time-box committee meetings. The maximum length I would suggest is 2 hours. If you can’t get through the agenda in that time, you need more meetings… until you’re back on top pf things
Unless you are a very busy organisation, I would suggest meeting about every 6 weeks or so. Longer than this tends to lead to a loss of focus. More frequent than this can become tedious, so I tend to only do that when there happens to be an unusually large amount of work to handle
Draw up a list of roles and responsibilities and make sure new committee members know what their duties are. It is amazing how easy it is to discover that ‘x’ did not know it was their job to book concert venues… probably because no one told them and everyone assumed… This is also a good way of uncovering activities that happen but people are unaware of and helps to make sure that they don’t get lost, or gets them stopped if they’ve become redundant
Committee meetings are the place where decisions are made. They are not where you work it all out – that’s what sub-committees are for. For example, when we were organising a large concert in a cathedral, I was put in charge of that project (concert budget £14k) and I had a small team of 4 in all. We did all the detailed planning and organising and reported back to main committee. The main committee’s job was to ratify decisions and to make sure the overall project was on track, not to worry about minutiae of platform arrangements, emergency procedures, green room allocation, number of stewards, ticket printing…
Keep governing documents short and simple
Draw-up an annual budget and track your actual spend against the forecast budget. Better to get bad news early than late. Get into the virtuous circle of plan, track, review, plan… Once you have got the habit of doing this, it runs itself and it all becomes much easier
You should think about carrying a financial reserve that would see you through something going awry. The likeliest scenario is that you’ve booked a concert and have to pay for a venue and possibly for some equipment hire or pro players and there is some last-minute problem, such as power failure or the building flooding, which means that the event is cancelled and you have costs to cover
If you are a charity, tax-paying members can Gift Aid their subscriptions, which means that the charity can claim money from the tax man. Put someone in charge of this as it is a worthwhile benefit that can be claimed annually
When it comes to raising funds, don’t overlook the small things. It is much easier to raise ten lots of £200 than one of £2,000. One organisation I know has a weekly raffle at rehearsals, buys in and charges for drinks during rehearsals etc. and generates nearly £1,000 p.a. just from that (OK they have around 100 members and meet about 40 times a year)
Public Liability Insurance – PLI. See separate note above.
Finances Finances and financial planning are often the weak points of organisations. It’s not difficult and you don’t need to make things complicated. The main secrets are:
Simple, consistent recording
Planning ahead.
A common fault for organisations is being unrealistic about costs and overheads and then setting subscription levels too low. So first thing to do is: work out all your overheads for the year – the things you have to pay regardless. This will include things like venue hire, PLI, fees to conductors/music directors, music hire/purchase. If you are planning to have concerts, you need to factor in things like printing costs for posters/flyers/tickets, concert venue hire costs. When you have done all of that, add 10% as a contingency figure and then you have your basic gross running costs. You may wish to add on to that discretionary spend items that you expect for the year. You then divide that number by the number of members and you then have your core costs per member.
A basic balance sheet is simple: it is the balance of your accounts at the start of the organisation’s financial year plus or minus the surplus/deficit on the year and the end result will be the bank balance as at the end of the year.
You then show the breakdown of the surplus or deficit by detailing the income and expenditure. The I&E statement lists (summarised up to higher level items if necessary) all the income items (e.g. subscriptions, Gift Aid, grants, donations etc.) and expenditure items (e.g. fees to MD, venue hire, printing, PLI, music hire/lending fees etc.). The end result of that will be the figure that is plugged into the balance sheet as the surplus or deficit.
Produce an annual budget forecast by working out what you plan to spend in the forthcoming year. At committee meetings, the treasurer should present a ‘running balance sheet’ to show the current position and on ‘actual’ versus ‘forecast’ to compare what the budget said with where you are in fact. This runs itself once it is up and running and it helps to avoid nasty surprises.
You should plan to hold a ‘reserve’ to cover unforeseen events, such as cancelling a concert at the last moment.
If you plan to hold concerts or other events, keep a separate record of the costs and income for them (budget for them that way too).
Auditing Only large organisations require full audit by certified auditors/accountants. Scrutiny/oversight by an independent person is what is required for most organisations. Often local accountants will be happy to provide this service, but you will have to allow plenty of time for it to happen and it will cost. A sensible, independent person can do this – they should not be related to or otherwise involved with the treasurer and ideally outside of the committee. The function is to show that the society’s accounts represent a fair and accurate picture. They should be provided with all the bank statements, the ledger where transactions are recorded, cheque books and paying-in books, the provisional end of financial year balance sheet and the income and expenditure analysis.
The reviewer ticks back the statements to the ledger, cross-checking the cheque books and paying-in books. If everything ticks back OK, they then just need to check the addition. Anything which seems odd or unusual should be queried. Anything unresolved at the end of the review, or other general observations, should be mentioned in the sign-off document. For example, “I have reviewed the accounts of XYZ Society and believe that they present a fair and accurate picture of the accounts. I wish to note that more details should be recorded for petty cash items. I would also suggest that the Society reviews it financial reserves as I do not think the current level is adequate in the event for example that a major concert was cancelled at short notice”.
Author: Tenor Viol, June 2016
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