A Big Local partnership is a group of at least eight people who guide the overall direction of Big Local in your area, most of whom (at least 51%) live within your Big Local area. Each Big Local partnership has its own way of working. We expect partnerships to:
It is important that partnership members are fully aware of and act in accordance with these points.
In most cases, the Big Local partnership delivers through an existing organisation that acts as the locally trusted organisation. The locally trusted organisation has a legal identity, enters into agreements in line with the Big Local plan, and fulfils the necessary legal requirements for the funding in each Big Local area. This enables the partnership to provide overall guidance on Big Local and protects individual partnership members from being personally liable.
Because people come together as a Big Local partnership to achieve a common goal, it could be argued that the partnership is an unincorporated association (defined below). This works well if your activities and projects are being implemented by a locally trusted organisation and your role is to guide the overall direction of Big Local in your area. As an unincorporated association the Big Local partnership does not have a legal identity above or separate from you as individuals.
However, if, as a Big Local partnership, you take on legal responsibilities for employment, contracts, assets and liabilities or running community events, then your personal liability as a member of the partnership is not limited, as it is in the case of incorporated organisations.
Before reviewing the different organisational and legal identities, consider whether you really need one and ask:
Remember that, if it relates to delivering your Big Local plan, you can use money from your Big Local budget for specialist support and advice to explore your options.
Think about how setting up a new organisation will help you to deliver your vision and aims. Start by spelling out your vision of success – what will have changed if the new organisation is successful in ten years’ time? Then list three to five aims that you intend to achieve to deliver your vision.
Next, what exactly will the organisation do and how will it do it? Are there existing organisations that already offer what you intend to provide? Duplicating a service can be expensive and create ill-feeling between you and your competition. Working with an existing organisation could save time and result in a better outcome.
Finally, if you are considering applying for charitable status (see below), you should consider whether your vision and aims fit within the list of charitable purposes as defined by the Charities Act 2011: https://www.gov.uk/government/publications/what-makes-a-charity-cc4/what-makes-a-charity-cc4#part-2-about-charitable-purposes.
Organisations that have charitable status are given particular benefits;
However, charities do pay tax on dividends and on profits from developing land and buildings. Trading (social enterprise) is allowed where it is undertaken for the charity’s main objectives. This is known as primary-purpose trading, for example, a community theatre group selling tickets for its performances. You will need to assess whether your trading is undertaken for community/public benefit, or whether it is primarily to benefit your members/investors – in which case you cannot be granted charitable status.
If any trading is not primary-purpose trading, there are limits on the proportion of your income that can be generated in this way. For example, charities with a turnover between £20,000 and £200,000 cannot generate more than 25% from trading. You can find more information on charities and trading, including trading subsidiaries here: https://www.gov.uk/guidance/charities-and-trading.
If the purposes of your new organisation are exclusively charitable for public benefit (which is what Big Local funding is for) and if it will comply with rules on trading, you can apply to the Charity Commission for charitable status. You can find more information at https://www.gov.uk/government/publications/public-benefit-the-public-benefit-requirement-pb1/public-benefit-the-public-benefit-requirement.
The legal forms for charitable organisations are:
The Charity Commission has guidance on these forms here: https://www.gov.uk/running-charity/setting-up.
Consider how the new organisation will be financed, both in the short and the long term. What is the source of your income, initially and in the long term, and will it cover your expenses?
Income may come from:
If your organisation will be reliant on grants – from Big Local or elsewhere – any long term future is determined by funders. The organisation is more likely to be sustainable if it has various sources of income, so it will be important to draw up a business plan and ensure it is financially sustainable.
If you will be dealing with large amounts of funding, holding property, entering into contracts or employing staff, an incorporated governance model with legal identity will limit the liability of individuals involved on the governing body.
An organisation with charitable objects can apply for grants from a variety of funding organisations. A few funders will award grants to social enterprises that do not have charitable status but operate for community benefit, such as community interest companies (CICs) and co-operative societies. Some organisational forms have specific powers to raise funds: for example, community-interest companies can raise share capital, and community-benefit societies and co-operative societies can issue community shares.
Most incorporated organisations are owned by members, who then appoint trustees or a board of directors at an annual general meeting. There are three types of membership;
Your decision on membership is important, because Local Trust will want to ensure that any new organisation respects the role of the Big Local partnership and ensures that the voice of local residents will be heard in the long term. Your governing document will also need to allow for the removal of members, should the need arise.
If your Big Local partnership wants to become the locally trusted organisation, you need to work out the relationship between the two – are the directors/trustees of the new organisation also members of the Big Local partnership? How do the governing documents for the new organisation relate to the documents about how the Big Local partnership operates?
Is the Big Local partnership establishing an organisation to deliver a project in the Big Local plan (such as to manage a community hub)? If so, it is likely that some of the individuals on the new governing body will also be members of the Big Local partnership. But not all members of the partnership will be on the governing body, as the partnership and new organisation are two different entities.
Partnership members oversee the delivery of the Big Local plan. Directors or trustees of the new organisation have a responsibility to act in the best interests of their organisation. If Big Local money is funding the new organisation, the Big Local partnership will need to identify and manage conflicts of interest. If partnership members are also involved in the new organisation, how will non-conflicted decisions be made and how do you show they are supported by the people in the Big Local area?
For organisations with legal identity, whatever governance model is chosen, the organisation will be accountable to Companies House and/or the Charity Commission, and maybe the Financial Conduct Authority or the Audit Commission as well. There are requirements to make annual returns and submit reports in a specified format. Failure to submit reports on time may result in fines.
Types of governance model include:
For full information on all these types of governance model and their features, download the full guidance using the button below.