Building the Powerhouse … Corporate Structures Part 1
As Powerhouse Ballet takes off, it will need to become a organisation in it’s own right of some kind
There are a number of possible options for the corporate structure of the eventual organisation
- Unincorporated Association
- Community Benefit Society, which is a form of co-operative
- Charitable Incorporated Organisation (CIO)
- Community Interest Company (CLG)
- An ‘Ordinary’ Limited Company
- A Registered Charity
It could even be argued that there is the possibility of being a Partnership (either traditional or Limited Liability).
As mentioned in The Future of Powerhouse Ballet the similar extant organisations use a number of different forms of organisation.
My own background and involvement with the management of volunteers, charities and the like is two-fold … I learnt a bit about membership organisations at the knee of my late Father through his involvement with various sports clubs and their organising committees and then latterly as a volunteer and manager of volunteers in a large national charity, although never reaching the dizzy heights of trustee or adjunct roles.
In the sector of that large national charity we saw ‘competitors’ come and go on a regular basis, as it’s a sector where the easiest way to make a small fortune is to start with a large one… some even managed to get as far as registering as charities ,however there were often questions over the control of the operation – be careful of a charity where the founder / ‘main person’ is not a trustee…
‘Can’t we just register as a charidee, mate?’ in best Smashie and Nicey voice. Registering with the Charity Commissioners as a charity doesn’t actually come with any form of incorporation for the organisation, there are charities that are
- Unincorporated Associations
- Charitable Incorporated Organisation
- Companies Limited by Guarantee (CLG)
- Community Benefit Society / Co-operative
- CICs can’t be charities but a Charity (that is CIO or CLG) can own a CIC,
- An ‘ordinary’ limited company with share capital can’t be a charity , neither could a publicly traded limited company PLC (but that’s totally irrelevant to PHB).
So we’d also need to become one of the ‘compatible’ incorporated forms of organisation e.g. CIO, CLG or the Community Benefit Society/Co-Op options.
I think a partnership structure whether traditional or limited liability can be excluded , as quite simply there is too much work to be done to maintain the partnership , if most or all of the adult members of the organisation were to become partners ( also creates an entry hurdle of equity unless it’s nominal sum – then there is the issue of ‘power’ for voting rights of those with more equity).
An unincorporated association can’t transact or own stuff on it’s own account, the liability would be In the hands of trustees, this may be problematic for some organisations we might wish to deal with. It also exposes the trustees to liability for debts that the organisation cannot meet through it’s resources.
The NCVO have some advice with regard to Trustee duties and accountability/ liability (see its TrusteeLiability Guide), In this guidance they say “If the charity is entering into contracts, employs staff or has premises then its trustees should seriously consider incorporation as an option. “
Will PHB be entering into contracts ? In every likelihood yes we will,
- We’ll need places to perform so we’ll be hiring or sharing (with other companies/schools/ studios) the hire of these venues.
- We’ll need to purchase or hire/ lease costumes and sets etc. (or commission their design and construction)
- We’ll be securing the rights to perform pieces still under copyright/licensing agreement or getting pieces composed and choreographed.
- Possibly we may lease or buy premises at some point (whether that’s storage for costumes/ props/ sets , office space or if the stars align our own rehearsal/ studio space).
Will we be employing people? Perhaps , perhaps not – depending on exactly how we contract with teachers, accompanists, and the exact terms of the relationship of the ballet master/mistress and any administrator as well as how we relate to choreographers and composers.
So what does this mean ?
Fundamentally there are three options which protect the trustees/directors from liability to a greater or lesser extent, which one is best suited depends on a number of factors.
So who/what is left in this contest
So who/what is left in this contest
- CLG and registered charity;