RS7 - Membership Charities · Introduction Membership of a charity can bring real benefits both to the work of the charity and for society more generally. When a charity's members

RS7 - Membership Charities (Version March 2004)

Contents

PPaaggee

IInnttrroodduuccttiioonn 11

EExxeeccuuttiivvee ssuummmmaarryy 22

PPaarrtt AA:: CCaasseewwoorrkk eexxppeerriieennccee aanndd ssuurrvveeyy ffiinnddiinnggss 55Defining membership 5

Non-voting members 5Voting members 5

Managing a mix of membership types 7Governance considerations 9

Benefits of having a membership 9Potential governance problems 10

Membership structures 11Restructuring the membership 13Reasons for restructuring 14Remote voting 15

Diversity and inclusion 16The motivations of membership 17Rights and responsibilities of charity members 17

Responsibilities of corporate members 18Charity Commission intervention 19

PPaarrtt BB:: BBeesstt pprraaccttiiccee - ssoommee gguuiiddeelliinneess 2233Best practice in the governance of membership charities 23Best practice in managing the governing document 24Best practice in managing elections 24

Voting at annual general meetings 24Establishing a quorum level 25

Best practice in managing membership structures 27Best practice in managing diversity 27Best practice in managing the balance of power 27

Liability for decisions taken 28Trustees' power to remove members 29Members' power to remove trustees 29Appointment of trustees 30

Best practice in solving disputes 31

Contents

PPaaggee

PPaarrtt CC:: LLeeggaall ccoonnssiiddeerraattiioonnss 3322Public benefit 32Members' rights 32Members' voting obligations 33Removing members 34

AAnnnneexx AA - RReesseeaarrcchh tteecchhnniiqquueess aanndd ssuurrvveeyy ffiinnddiinnggss 3355

AAnnnneexx BB - GGlloossssaarryy ooff tteerrmmss 4455

AAnnnneexx CC - RReessoouurrcceess ffoorr ttrruusstteeeess 4466

AAnnnneexx DD - BBiibblliiooggrraapphhyy 5533

AAcckknnoowwlleeddggeemmeennttss 5544

Introduction

Membership of a charity can bring realbenefits both to the work of the charity andfor society more generally. When a charity'smembers are active in shaping the agendaand objectives of their charity, the trusteebody is refreshed and its accountability toits members is improved. Membershipcharities which are effectively run can alsoenable individuals to be more involved intheir local communities and can contributeto fulfilling the Government's agenda toincrease individual participation in civilsociety.1

An effectively run membership charity isonly possible when members use theirvoting rights in the best interests of thecharity and where the trustee body andgovernance structure allow for propermanagement of the membership. Thisincludes recognising that the charity'smembership structure may need to changeas the charity develops and grows.

Each charity needs to strike its own balancebetween membership involvement and thetrustees' general responsibility for runningthe charity. This report sets out thecharacteristics of an effective membershipcharity. It assesses the extent to which theproblems associated with membershipcharities can be resolved or avoided bybetter governance and by the actions of themembership, and clarifies where theCharity Commission will become involved.

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1 Membership of a charity is not the only way in which people can contribute to civil society, however, any manypeople will be engaged by becoming involved in other non-charitable membership organisations such asunincorporated associations.

Executive summary

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Membership is a common governancemodel in the sector and its popularity lookslikely to continue. Just over half of thecharities surveyed for this report have amembership structure of some description.44% of charities surveyed have memberswho can vote in order to influence thecharity's governance and, therefore,influence the decisions that affect them.Extrapolating these results across theregister, the Charity Commission estimatesthat approximately 80,000 charities have amembership structure and will therefore beaffected by some or all of the issues coveredin this report.

Our research indicated that charities withmembers overwhelmingly saw the role oftheir membership as a positive one, with84% of charities with individual membersand 81% with corporate members statingthat their members made a usefulcontribution to the running of the charity.Charities with a corporate membershiphighlighted financial support, expertise,influence on governance and contact withother relevant bodies as reasons why theirmembers were of benefit. Individualmembers were valued more for theirparticipatory role and their diversity ofopinion. The minority of charities that didnot think their members were useful gave alow voting turn-out at the charity's annualgeneral meeting as the main reason fortheir view.

Membership charities, like all charities, canrun into difficulties if proper attention isnot paid to their governance arrangements.The scope for problems is greater inmembership charities, however, because

the number of people involved can makethe governance arrangements morecomplex to manage. Differences of opinionsometimes arise which, if not wellmanaged, can disrupt the smooth runningof the charity and result in charitableresources being wasted. Analysis of asample of Charity Commission caseworkshowed that more cases are opened formembership charities than otherorganisations, including a greaterproportion of cases related to internaldisputes.

Dispute cases are a minority, however. Thevast majority of the 80,000 membershipcharities on the register are well run, withboth the membership and the trustee bodyacting responsibly and in the best interestsof the charity and its users or beneficiaries.

Our findings show that membershipcharities receive wide-ranging benefitsfrom their members, and these benefitsinclude:

• enhancing the trustee board'stransparency and accountability;

• providing a greater appreciation of theneeds of beneficiaries;

• improving a charity's influence withinthe charity sector, giving weight to anadvocacy role;

• providing fundraising opportunities;and

• providing a consistent source oftrustees.

EExxeeccuuttiivvee ssuummmmaarryy

However, Charity Commission experienceindicates that those few charities that dorun into problems with their membershipare likely to have one or more of thefollowing features:

• Trustees are not clear about their roleand their legal responsibilities towardtheir charity's members.

• Charity members are not clear abouttheir role and responsibilities towardsthe charity.

• There are insufficient or inadequategovernance structures in place tomanage the charity's relationship withits members.

• The trustee body puts up barriers tomembership involvement, eitherdeliberately or inadvertently.

• The charity's membership lacksdiversity so the trustee board is self-perpetuating or change-resistant andunrepresentative of its potentialbeneficiaries.

• Members or trustees deliberately abusevoting procedures and rights.

• There are weak administrativearrangements in place leading toproblems such as accusations ofelections being held on the basis ofinaccurate membership lists orproblems with organising quoratemeetings.

A summary of the report'srecommendations is set out below.

RReeccoommmmeennddaattiioonnss ffoorr cchhaarriittyy ttrruusstteeeess

Trustees should:

• pay careful attention to the governancearrangements that relate to the charity'smembers, in particular:

- that the rights of each differenttype of member and their rolewithin the charity are clearly setout;

- that the role of corporate membersis fully understood;

- that effective means ofcommunication with all membersare in place;

- that the membership list is kept up-to-date;

- that the governance arrangementsare regularly reviewed, includingthe number of members they haveand the level at which a quorum isset;

• consider whether it is appropriate toinclude a clause in their governingdocument setting out the respectiveroles and responsibilities of membersand consider whether any additionalprocedural documents would bebeneficial;

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EExxeeccuuttiivvee ssuummmmaarryy

• consider whether their membership istruly representative of the group it isdesigned to serve and, if not, considerways of reaching those that areexcluded;

• be aware of the potential benefits ofmediation and, where appropriate,consider whether it might be a usefultool for resolving a disagreementwithin the charity.

RReeccoommmmeennddaattiioonnss ffoorr cchhaarriittyy mmeemmbbeerrss

Charity members should:

• ensure that the charity clearly explainswhat the membership role entails,including the rights andresponsibilities which accompany therole;

• exercise their right to vote in theinterests of the charity for which theyare a member;

• abide by decisions that are taken fairlyand within the rules of the charity.

RReeccoommmmeennddaattiioonn ttoo uummbbrreellllaa aanndd aaddvviissoorryybbooddiieess

• Umbrella, professional and advisorybodies should do further work tosupport membership charities andtheir members by producing bestpractice guidelines.

RReeccoommmmeennddaattiioonn ttoo tthhee HHoommee OOffffiiccee((AAccttiivvee CCoommmmuunniittyy DDiirreeccttoorraattee))

• The findings of this report, and thepotential of members of a charity tocontribute to civil society, should beused by the Active CommunityDirectorate in its work to promotevolunteering and build civil renewal.

AAccttiioonn ffoorr tthhee CChhaarriittyy CCoommmmiissssiioonn

• The Charity Commission will reviewits publications and guidance to ensurethat they reflect the findings of thisreport and will also consider whether amodel clause setting out theobligations of members would be ofvalue to membership charities.

This report on charity membership hasbeen compiled using evidence from theCharity Commission's records and anexamination of our case files includinganalysis of the case histories of 2900charities over a four year period. We havealso spoken to numerous charities andundertaken a large-scale postal survey.Details of the research methodology can befound in Annex A.

This report is divided into three sections.Part A examines and reports on ourcasework experience and survey ofmembership charities, Part B providesguidelines and pointers for an effectivelyrun membership charity and Part Cprovides additional information relating tothe legal aspects of membership.

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Part A: Casework experience and survey findings

DDeeffiinniinngg mmeemmbbeerrsshhiipp

"Without our members we do not exist.”

Survey respondent

55

This report examines the role of charitymembers. It examines charities' governancestructures including those with memberswho are able to influence the governance ofa charity (voting members) and those withmembers who cannot (non-votingmembers). However, because governanceis a key area of involvement for the CharityCommission, the focus of the report is onvoting members.

The influence that a voting membershipcan have on the running of a charity can beextremely positive, both as a way forindividuals to be involved in decisions thataffect them and their society and as a wayin which charities can represent those witha vested interest in them.

NNoonn-vvoottiinngg mmeemmbbeerrss

The Charity Commission estimates thatsome 80,000 charities have a membershipstructure. The vast majority of thesecharities function well and theirmembership is of real value to the charityand its work. However, the CharityCommission's case work experience showsthat confusion over exactly which membershave voting rights within a charity is acommon reason behind the difficultieswhich membership charities can sometimesencounter. Trustees should ensure that theyand their membership can distinguishbetween those members with a vote andthose without. In this report, individualand corporate members, as defined below,are distinguished from supporters, friends,

affiliates, subscribers, service users and anyothers that may be called 'members' in theircharity but have no role in determining theconstitution and direction of the charity.Commonly this type of 'member' can be avolunteer, donor or beneficiary.

Our survey indicated that 20% of charitieshave non-voting 'members' and a variety ofterms are used to describe them.2

VVoottiinngg mmeemmbbeerrss

A charity can have either corporate orindividual voting members, or both. Theseare defined below.

IInnddiivviidduuaall mmeemmbbeerrss

An individual voting member of a charityhas the following defining characteristics:

An individual with the ability to affect thegovernance of a charity by voting at thecharity's annual general meeting and whomeets all other criteria for a member as setout in the charity's governing document.

Individuals acting in their capacity astrustee, director or any other role on thegoverning body are excluded from thisdefinition of a member.

Our survey data indicated that 39% ofcharities have individual voting members.

The size of a charity has some bearing onwhether or not it has an individualmembership, with the largest charities(income of over £1 million) being leastlikely to have individual members. Lessthan a third of these charities have anindividual membership.

2 Terms used can be found in Annex A.

There is some correlation between acharity's main activity and whether it hasan individual membership.

Charities providing services are most likelyto have an individual membership (48%),closely followed by those providingadvocacy (47%) and those sponsoring andundertaking research (45%). Charities thatprovide financial assistance are least likelyto have an individual membership (20%).

A charity's area of work also has a bearingon whether it has individual members,with charities working in the areas ofdisability being most likely (57%), followedby those working in arts and culture (52%).Annex A sets out more details of thesefindings.

PPaarrtt AA:: CCaasseewwoorrkk eexxppeerriieennccee aanndd ssuurrvveeyy ffiinnddiinnggss

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The main benefit of membership given bydisability-related charities was that theirmembers were able to influence the waythe charity is run. For arts and culture-related charities the emphasis was onmembers participating in the work of thecharity. Charities providing services andadvocacy were most concerned thatmembers ensure that services remainrelevant to beneficiaries' needs.

Surveyed charities had a mean average ofjust under 2000 individual members. Thenumber of individual members in a charityvaries considerably, however, with 13%having fewer than 10 members while asimilar proportion (14%) have well over1000. See table 1, Annex A for furtherdetails.

NNuummbbeerr ooff iinnddiivviidduuaall mmeemmbbeerrss iinn eeaacchh cchhaarriittyy

6 - 9 (4%)

Up to 5 (7%)

10 - 24 (14%)

25 - 49 (13%)

100 - 999 (27%)

50 - 99 (14%)

1000+ (14%)

Don’t know (7%)

Base (All with individual members): 591

7% 7% 4%

14%

13%14%27%

14%


77

CCoorrppoorraattee mmeemmbbeerrss

11% of surveyed charities have corporatevoting members. These are defined asfollows:

Corporate members include companies,local authorities and other public bodies ororganisations for which a nominatedrepresentative holds a right to vote at thecharity's annual general meeting on behalfof the organisation that they represent. Thiscategory would also include anyunincorporated charities and other not-for-profit organisations for whom arepresentative is a voting member ofanother charity.

Charities acting as umbrella or resourcebodies are most likely to have corporatemembers (21%), followed by thosesponsoring or undertaking research (17%)and those providing advocacy (14%).Corporate members are also morecommonly found in charities working inthe areas of environment and heritage(25%) or economic development andemployment (24%), although the latter isbased on a relatively small number ofrespondents.

Our survey illustrated a wide degree ofvariation in the number of corporatemembers in charities. The average numberof corporate members is 163, with almosthalf of charities (47%) having no more thanfive whilst a minority had very largenumbers of members, which brings theoverall average upwards.

MMaannaaggiinngg aa mmiixx ooff mmeemmbbeerrsshhiippttyyppeess

Casework experience shows that problemscan arise when a charity has more than onemembership type but has not clearlydefined the role of each type of member.Research also identified a trend amongstcharities toward restructuring in instanceswhere they had a growing membership sothat they could more easily identify thosewho were voting members.

66% of charities surveyed had just one typeof member, commonly individuals (44%),with only 4% of membership charitieshaving all three types identified in thisresearch (ie corporate, individual and non-voting). The following graph providesmore detail:


TThhee ffoolllloowwiinngg ccaassee iilllluussttrraatteess tthhee pprroobblleemmss tthhaatt ccaann aarriissee wwhheenn tthheerree iiss aa llaacckk ooff ccllaarriittyy oovveerrwwhheetthheerr mmeemmbbeerrss aarree aabbllee ttoo vvoottee..

The Charity Commission became involved with a medium sized charity when opposing groupswithin it were unable to resolve confusion over voting rights. The charity ran into difficultiespartly because it failed to hold adequate records of its members. The trustees did not keep an up-to-date membership list and details of voting members were included with those of individualswho were supporters or friends of the charity. This made it difficult to identify who was entitledto vote. The situation was further complicated by the fact that the charity's governing documentdid not contain a clearly defined membership provision.

Problems that arose within the charity came to the attention of the Charity Commission becauseof a complaint about the election of trustees. After assessing the situation, the CharityCommission advised that all identifiable subscribers should be classed as members and shouldbe able to attend and vote at the annual general meetings (and therefore be eligible to stand forelection to the trustee body). Once the revised membership list was in place, the trustees couldthen move to hold a properly conducted election.

The outcome of this case was that a Scheme of the Commissioners was made which revised thecharity's existing governing document and focused on those areas which had contributed to theproblem, including the need for the charity to keep an up-to-date membership list to which theycould refer in order to clarify who was eligible to vote.

88

CCoommbbiinnaattiioonn ooff ttyyppeess ooff mmeemmbbeerrss

Individual and corporate (8%)

Individual, corporate and other (4%) Corporate and other (2%)

Individual and other (20%) Corporate only (8%)

Other only (14%)

Individual only (44%)

Base (All with members): 774

14% 4% 8%

20%

2%

44%

8%


99

• Trustees should pay careful attention totheir charity's governancearrangements, and to how thesearrangements are communicated totheir members, to ensure that the rightsof each different type of member andtheir role within the charity are clear.

• Trustees should consider whether it isappropriate to include a clause in theirgoverning document which sets out therespective roles and responsibilities ofmembers.

• Charity members should ensure thatthey are fully aware of both the rightsand responsibilities that theirmembership affords them.

GGoovveerrnnaannccee ccoonnssiiddeerraattiioonnss

A charity with a membership structure canbring real and tangible benefits. Charitymembers, who will sometimes also beamongst the charity's beneficiaries or willhave a shared interest in the welfare ofthose beneficiaries, can influence thedecisions the charity makes that affect themand their community. They can also help tokeep the charity's governing body fresh,accountable and credible. This is onlypossible if the charity's:

• governance structure allows themembership to be managed to the besteffect;

• membership is inclusive andrepresentative of those the charity isdesigned to serve; and

• members use their influenceresponsibly.

BBeenneeffiittss ooff hhaavviinngg aa mmeemmbbeerrsshhiipp

"Our members are our life. They offerhelp, advice and experience.”

Survey respondent

84% of surveyed charities with individualmembers said that those members made auseful contribution to the running of theircharity. The main reasons for this wererelated to their diversity of opinion,influence, expertise and participation.

Corporate membership was also seen as apositive attribute for charities. 81% of thosecharities with corporate members foundthat they made a useful contribution to thecharity.

Charities highlighted the advantages offinancial and general support, expertise,influence over the running of the charityand contact with relevant bodies as reasonswhy corporate members were of benefit.

This pattern was broadly consistent for allmembership charities, irrespective of theirsize, activity and area of work.

A minority of charities with individual andcorporate members stated that theirmembership was not useful.

The most common reason given for thisview was that only a small number ofmembers actually exercised their vote atthe charity's annual general meeting(AGM). Again, this response was consistentacross all types of charity who saidmembership was not useful.


1100

Our research found that a number ofbenefits associated with membership wereidentified. Members of a charity were seento:

• keep the charity's trustee board up-to-date with the needs of beneficiaries,providing feedback and diverseopinions;

• keep the trustee board fresh andaccountable, and help ensure probityand transparency;

• improve the charity's ability toinfluence the social or politicalenvironment in which the charityoperated; and

• act as a pool of volunteers andpotential trustees.

"Having individual members ensuresthat the trustees do not manage thecharity in isolation and provides somein-house scrutiny of their actions anddecisions.”

Survey respondent

All types of members, including those whodo not have a vote, were regarded bysurveyed charities to be of benefit to theorganisation because they:

• provide fundraising opportunities;

• give their time and commitment to theaims of the organisation; and

• help to raise the profile of the charity.

A full list of reasons given by surveyedcharities for why individual and corporatemembers were or were not consideredhelpful can be found in Annex A, tables 10and 11.

PPootteennttiiaall ggoovveerrnnaannccee pprroobblleemmss

Membership charities, like all charities, canrun into difficulties if proper attention isnot paid to their governance arrangements.In a membership charity, there is an addedcomplexity because decisions are sharedbetween the trustees and the members. Insome cases this can mean more scope fordisagreement over decisions. Our casework experience shows that this scope fordisagreement is increased in those charitieswhere there are strong feelings about theissues in which the charity is involved.

Membership charities are slightly morelikely to have cases opened for them thannon-membership charities. We examinedthe case histories of 1450 charities with amembership and an equal number ofrandomly selected charities. Over a four-year period, a total of 3182 cases wereopened for these two groups of charities.61% of these cases related to charities witha membership.3

Whilst the five most common cases werethe same for both groups (enforcement,amendments to the governing document,general requests for information, windingup and amendments to objects) casesrecorded as complaints and internaldisputes were more common in thosecharities that have a membership thanthose without, perhaps reflecting thecomplexity of membership structures.4

3 Case types were examined for all charities which stated that membership was a source of their income in surveysundertaken during 2003 and for an equal number of randomly selected charities.4 Enforcement commonly includes cases where charities have failed to submit accounts or other important documentsto us.

• Trustees should put a series ofprocedural documents in place to fill indetails which cannot practically becontained within the governingdocument, with particular attention tothe rules and practices relating tomembership.

• Trustees should be aware of thepotential benefits of mediation and,where appropriate, consider whether itmight be a useful tool for resolving adisagreement.

MMeemmbbeerrsshhiipp ssttrruuccttuurreess

Case work analysis revealed a wide varietyof membership structures and voting rightsamong charities.

The survey confirmed that membershipcharities range from large organisationswith millions of remote members to smallorganisations with a few user-membersthat are regularly involved at a local level.

The origins of a charity may influence itsneeds, structure and the extent to whichmembers are involved in determining therunning of the charity.

The Charity Commission often registersorganisations which have begun life aslocal community groups, for example asupport group.

Charities that have started off in this waycan be reluctant to overhaul the structure oftheir organisation entirely and, as a result,operate their membership through acollective structure where trustees are asub-set of the members or notdistinguished at all.

1111


"[Action should be taken] to preventcharities from frittering away moneysubject to charitable trusts in pursuinglitigation relating to internal disputes.”

High Court Judge

The Charity Commission's case workexperience shows that underlying manygovernance problems is an inadequategoverning document and a lack of cleargovernance procedures relating tomanaging members.

Charities that are unable to resolve theirmembership problems often have poorgovernance provisions that would haveprovided an objective point of reference fordispute resolution.

Charity Commission experience indicatesthat charities can run into problems withtheir membership when:

• trustees are not clear about their roleand legal responsibilities towards theircharity's membership;

• there are insufficient governancestructures in place to manage themembership relationship;

• the trustee board put up barriers tomembership involvement;

• members or trustees deliberately abusevoting procedures and rights; and

• the membership lacks diversity so theboard is unrepresentative ofbeneficiaries' needs, self-perpetuatingor change-resistant.

Disputes and disagreements betweentrustees and within the membership can becostly and time consuming, and a diversionof charitable resources.


1122

TThhee ffoolllloowwiinngg ccaassee iiss aann eexxaammppllee ooff aa cchhaarriittyy wwhhoossee ggoovveerrnniinngg ddooccuummeenntt aalllloowwss eevveerryy mmeemmbbeerrttoo hhaavvee aa ssaayy iinn tthhee rruunnnniinngg ooff tthhee oorrggaanniissaattiioonn..

A large charity visited as part of our Review Visit program was organised so that all memberswere also trustees thus making it impossible to identify a distinct decision- making body. Thematter was further complicated by the fact that the charity's main activity focused on helpingvulnerable individuals and these beneficiaries were the members.

This had advantages in that the members could contribute their direct experience to thedevelopment of services and enabled a sense of ownership and empowerment. However, thecharity was dealing with significant amounts of charitable resource and had entered intocontracts and other potentially high-risk areas which necessitated a clearly defined trustee body.

The Charity Commission advised that it was inappropriate for all beneficiaries to be members ofthe charity since, by default, they would be the trustees too and recommended that the charityshould consider restructuring.

Ultimately, this decision rests with the members who are now considering their organisationalstructure and the membership/trustee issue in line with the good practice recommendationsmade.

Our Charity Commission publication UUsseerrss oonn BBooaarrdd:: BBeenneeffiicciiaarriieess wwhhoo bbeeccoommee ttrruusstteeeess (CCCC2244)provides further comment.

A second membership type commonly seenin our case work is that of a charity with anational presence and independent localaffiliated bodies. These may beadministrative centres or they may beregistered as charities in their own rightand therefore have a separate trustee body.Some of the complexities relating to thistype of membership charity are dealt within our publication CCoollllaabboorraattiivvee WWoorrkkiinnggaanndd MMeerrggeerrss (RRSS44) and relevant goodpractice considerations can be found onpage 27 of this report.

The advantages of this structure include itsability to facilitate involvement andcommunication at a local level and theopportunities for local affiliated bodies toreceive funding from their communities.However, the Charity Commission alsosees cases where the number of members ofthe local bodies varies significantly, andthis can lead to disproportionaterepresentation at a national level. Wherethis is the case, real or perceived, trusteesoften restructure their voting system so thateach member has one vote at a nationallevel.


1133

TThhiiss ccaassee iilllluussttrraatteess hhooww aa mmeemmbbeerrsshhiipp ccaann bbee rreessttrruuccttuurreedd ttoo bbeetttteerr rreepprreesseenntt tthhee vviieewwss ooff iittssmmeemmbbeerrsshhiipp..

A very large national charity has recently restructured its decision-making process in response toa general feeling that its voting structure did not allow for accurate representation of members'views. Members were unhappy and this threatened to lead to disruption of the charity's work.

The charity consists of a national body which retains overall responsibility for decision making,with local branches that deliver its services. In the previous voting system, members voted onkey decisions at local branch meetings and one 'united' vote from each branch was counted at thenational AGM.

The charity and its members did not feel that this allowed for a truly representative view to becarried at the AGM because of disparity in numbers of members voting at local branches. Afterconsulting with the members, the trustees moved to amend the voting structure so that everymember had an individual vote.

• Trustees should review theirmembership provisions regularly toensure that they are still the mosteffective for the charity.

RReessttrruuccttuurriinngg tthhee mmeemmbbeerrsshhiipp

A charity that identifies a need torestructure may require the help of theCharity Commission to consent to theamendment of their governing documentto reflect the changes agreed within thecharity.

Of the 1450 case histories of charities withmembers examined as part of this research,the majority only had cases opened toaccept changes to the governing document,objects or other similar issues. The fact thatthe Charity Commission only becameinvolved in order to accept the decisionssuggests that the majority of membershipcharities are well-run organisations whichare able to manage any restructuringwithout any problems.

The cases that we see at the CharityCommission are often those in which thetrustees have not amended their governingdocument to take account of changes to thecharity and its work.

Instead the charity has continued tofunction with inappropriate or insufficientprovisions and the trustees haveconsequently found themselves withproblems that they cannot solve using thecharity's existing governing document.

Failure to amend an unworkable quorumprovision is a common example of this. Seesection on EEssttaabblliisshhiinngg aa qquuoorruumm lleevveell onpages 25 to 26.

The charity's membership will usually haveto endorse the decision to restructure so it isessential that they fully understand themotives and anticipated benefits that thechanges will bring.

• Trustees should consider restructuringtheir membership if it is no longerproving effective. Restructuring needsto be expedient and in the best interestsof the charity and trustees shouldcommunicate with their members onthis issue.

RReeaassoonnss ffoorr rreessttrruuccttuurriinngg

Our research showed that often, in charitieswith a large membership, a significantnumber of members do not exercise theirright to vote but simply hold theirmembership in order to receiveinformation.

Members not exercising their right to votewas the main reason given by surveyedcharities that said their membership didnot make a useful contribution to therunning of their charity.

Charity members can often be split intothree groups:

• those who contribute to decision-making in the organisation;

• those who are relied upon to providemore general support, for example byproviding finance or by volunteering;and

• those who hold their membership inorder to receive information or otherbenefits.

Respondents to our survey stressed that alarge number of members can be useful interms of diversity and provide a pool ofexperience from which to draw. However,the Charity Commission sees the followingpotential problems when a charity ismanaging a large voting membership:

• a failure to reach a quorum in meetings;

• election processes that are complex andcostly; and

• difficulties in communicatingeffectively with large numbers ofmembers.

A number of best practice administrativeconsiderations that can help are set out inPPaarrtt BB.

Our survey found that medium and largecharities are more likely to have non-votingmembers, as are charities which registeredup to five years ago. This supports our casework evidence and anecdotal observationsthat charities adopt a two-tiered structurewhen they get larger. It can be expedient forsome charities to re-classify the passive

1144


TThhee ffoolllloowwiinngg iiss aann eexxaammppllee ooff aa ssiittuuaattiioonn wwhheerree tthhee mmeemmbbeerrss ooppppoosseedd tthhee rreessttrruuccttuurree ooff aacchhaarriittyy bbeeccaauussee tthheeyy tthhoouugghhtt iitt wwoouulldd lliimmiitt tthheeiirr aabbiilliittyy ttoo iinnfflluueennccee tthhee ddiirreeccttiioonn ooff tthhee cchhaarriittyy..

A large charity wanted to streamline its governance and administration by restructuring theirmembership. Whilst the trustees were in favour of the proposed changes, which would result ina smaller and ideally more efficient trustee body, some of the members felt that this would reducetheir democratic input to strategy and governance decisions. This was not, in fact, the case butmembers had been given little information about the change and this created suspicion amongthe membership, who consequently opposed the move.

The trustees took on board these concerns, amended their plans slightly and made sure that theycommunicated them to the membership. By making the members aware of the reasons behindthe proposals, the trustees resolved the matter and can now operate successfully.


section of their membership as 'supporters'or 'friends' so that they still receive thebenefits they require and remain involvedin the charity but are not involved in thevoting procedures. However, this kind ofrestructuring is not the answer or solutionfor dealing with potential opposition fromwithin the membership. Neither is it a validreason for a charity to limit the extent towhich its voting members are fullyrepresentative.

Before restructuring the charity'sgovernance arrangements, trustees shouldconsider whether they should instead bemaking a greater effort to encouragemembers to vote.

RReemmoottee vvoottiinngg

As a response to a low turn-out at AGMs,some charities approach the CharityCommission to amend their governingdocument to allow alternative forms ofvoting so that people who cannot attendthe AGM are able to exercise their voteremotely.

Where proxy or electronic votes are used,careful monitoring is required to ensurethat the system is not abused. Trusteesshould ensure that members understandhow their vote will be made if they do notexercise it themselves.

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TThhiiss ccaassee iilllluussttrraatteess tthhee uussee ooff rreemmoottee vvoottiinngg ttoo hheellpp wwiitthh ddiiffffiiccuullttiieess iinn aacchhiieevviinngg aa qquuoorruumm..

The governing document of a charity whose members are predominantly wheelchair usersrequired a quorum of at least a quarter of the membership to be present at any annual orextraordinary general meeting. This equated to around 200 members. This provision had notbeen complied with for some time due to the practicalities of organising the meeting, whichmeant that the committee elected at the last AGM was not valid.

The Charity Commission's usual action would be to confirm the committee by an Order to enablethe charity to continue to be managed legally and then recommend that the trustees amend theirgoverning document to lower the quorum. However, in this particular case, the governingdocument required amendments to be passed by a two-thirds majority of those members presentat the AGM. The problem of achieving a quorate meeting to pass such an amendment was againthe problem.

The trustees had not been able to find a suitable venue which would accommodate a large groupof people with special needs. Furthermore, although the governing document allowed for proxyvoting, it specifically barred proxy voting regarding alterations to the governing document.

The Commission resolved the matter by making a new fully regulating Scheme to lower thequorum at general meetings to 25 members and also allow for postal or proxy votes which canbe used to amend the Scheme in future.


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TThhiiss ccaassee iilllluussttrraatteess hhooww aa cchhaarriittyy ccaann bbee pprroo-aaccttiivvee iinn eennssuurriinngg iittss mmeemmbbeerrsshhiipp iiss ddiivveerrssee aannddiinncclluussiivvee..

Charity Commission staff visited a very large national membership charity and found it to bewell run. The charity reported that it had never experienced any problems with its membership.However, it had recently surveyed its members and discovered that they, like the charity's trusteeboard, were predominantly white. The charity provides information and support services for aparticular group of people and is also active in raising awareness of their needs and campaigningon their behalf. It is therefore important to the charity that the needs of all people within thatgroup are understood by the charity and that a more diverse range of people are encouraged tojoin.

The charity is running an on-going 'out reach' campaign designed to communicate with peoplewho might benefit from being a member of the charity but are currently not engaged by it. Thisincludes measures to modernise the charity's image and reflect the needs of different sections ofthe community. The charity recognises that this is important for its own strength as anorganisation as well as for the people it aims to help.

"We have a very diverse membership ofall ages…this enables us to have diverseopinions expressed and keeps usrelevant and up to date.”

Survey respondent

In some instances, sections of thecommunity that could benefit from being amember of a charity are not engaged by it,either because they are officially excludedfrom joining or just discouraged by aperception that the charity is 'not for me'.

Trustees should try to avoid limitations tothe membership. If the members are alsothe beneficiaries then in certaincircumstances limitations on themembership may adversely affect publicbenefit and hence the charity's status.

Our publications TThhee PPuubblliicc CChhaarraacctteerr ooffCChhaarriittyy (RRRR88) and TThhee RReeccrreeaattiioonnaallCChhaarriittiieess AAcctt 11995588 (RRRR44) provide a moredetailed explanation of the principle ofpublic benefit.

• Trustees should review theirmembership list periodically andensure that it is kept up-to-date.

• Trustees who find their quorumprovision unworkable should seek torectify the situation as soon as possible.

DDiivveerrssiittyy aanndd iinncclluussiioonn

Our research indicates that a diversemembership is a critical success factor inrealising the benefits of membership(diversity of opinion was given as a keyreason why membership is useful in oursurvey).

Membership can only be a means by whichindividuals can be engaged in civil societyif the membership is representative andinclusive.


It is particularly important thatcampaigning charities accurately reflect theviews of their membership and that theirmembership reflects the views of thosewho will be affected by the issues on whichthey campaign.

Where trustees have not formally soughttheir members' views on a particular issue,they need to be confident that theirmessage is consistent with the members'view and that they have an opportunity tocomment on messages that are delivered ontheir behalf.

The Charity Commission sees many caseswhere a lack of diversity in themembership leads to homogeneity in thetrustee body. Charity Commissionpublication, TTrruusstteeee RReeccrruuiittmmeenntt,, SSeelleeccttiioonnaanndd IInndduuccttiioonn (RRSS11), examines the issue ofdiversity in trustee bodies and suggestsstrategies for improvement in this area.

• Trustees should consider whether theirmembership is truly representative ofthe group it is designed to serve and, ifnot, put measures in place to reachthose that are excluded.

TThhee mmoottiivvaattiioonnss ooff mmeemmbbeerrsshhiipp

People have a variety of motivations forbecoming a member of a charity. Benefits ofmembership found in the researchincluded:

• access to information or support;

• a sense of contribution to andinvolvement in society; and

• tangible benefits, for example reducedadmission fees to historical sites orparticular areas.

RRiigghhttss aanndd rreessppoonnssiibbiilliittiieess ooff cchhaarriittyymmeemmbbeerrss

Disputes commonly arise when the trusteebody and/or membership is divided orwhen the trustee body is at odds and eachside attempts to manipulate themembership voting system to support theircause.

Approximately 50% of dispute cases thatare dealt with by the Charity Commissioninvolve a charity with a membership. Inthese circumstances the CharityCommission will work to enable the charityto find a resolution and get back on theright footing. We will look for evidence tosupport movement to a resolution andutilise all available information tounderstand sensitivities associated withparticular cultural, political and religiousbeliefs.

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"Our members make an extremely usefulcontribution to the running of thecharity, not least by assisting infundraising but they are fairly passiveabout its corporate governance.”

A charity trustee

The motivational factors for membershiphave an impact upon the level ofparticipation that each charity member willwant. Surveyed charities which provideadvice have the highest average number ofindividual members (4893), compared with410 for those providing facilities and 572for those providing services. This suggeststhat many members are involved primarilyin order to gain access to information andare passive rather than active participantsin the charity.


In exercising their right to vote andinfluence the governance of a charity,members of a charity should ensure thattheir behaviour is not damaging to therunning of the charity or to its good name.The Charity Commission takes the viewthat members have an obligation to usetheir rights and exercise their vote in thebest interest of the charity for which theyare a member. PPaarrtt CC provides the legaldetail.

Responsible trusteeship of a membershipcharity requires the ability to allow themembers to exercise their right to challengekey decisions while preventing them fromabusing that right. The balance of powerbetween trustees and members is exploredin more depth in BBeesstt pprraaccttiiccee iinn mmaannaaggiinnggtthhee bbaallaannccee ooff ppoowweerr on pages 27-28.

• Charity members should exercise theirright to vote in the interests of thecharity for which they are a member.

• Charity members should be preparedto abide by decisions that are takenfairly and within the rules of theorganisation, even if this does notmatch their own personal preferences.

RReessppoonnssiibbiilliittiieess ooff ccoorrppoorraattee mmeemmbbeerrss

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"They assist the other trustees inawarding grants that complement theaims of the body they represent and alsohelp prevent our limited resources beingwasted. They provide a widerperspective to the trustees' outlook.”

Survey respondent

"It provides the local authoritywith a good insight into the issuesfacing the charity. However, wewould not want any furthercorporate members - the one issufficient.”

Survey respondent

The Charity Commission is called upon toclarify the responsibilities of corporatemembers in a number of cases. Thisscenario often arises in connection withvillage hall charities. Often a number oforganisations will make use of the facilityand will also be corporate members of thevillage hall charity.5 When taking decisionsas members of the village hall charity,representatives from the user organisationsmay find it difficult to detach themselvesfrom the priorities of their organisation.

Corporate members in particular can beunclear about their role as a member of acharity and their responsibilities withrespect to representing the views of those inthe organisation which they represent. Forexample, if a local authority is a corporatemember they will usually nominate oneperson to go to members' meetings. Thisperson may feel that they should representthe best interests of the local authority, forexample with relation to a fundingdecision. Equally, trustees may feel thatthey are obliged to give greater weight tothe view of a corporate member.

The potential for conflict of interest in thissituation should be managed carefully. Seeour web-based guidance AA GGuuiiddee ttooCCoonnfflliiccttss ooff IInntteerreesstt ffoorr CChhaarriittyy TTrruusstteeeess.

5 Corporate members are defined on page 7.


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administration of a charity. It is not,therefore, part of the Charity Commission'srole to resolve disputes within charitieswhere trustees have acted within the scopeof their powers and duties, honestly and ingood faith.

The Charity Commission may intervene:

• where concerns are expressed aboutserious mismanagement, for exampleinvolving a failure to observe therequirements of charity law;

• where there is clear evidence ofdeliberate abuse;

• where trustees are not acting inaccordance with the provisions of thegoverning document;

• where the administration of the charityhas broken down to such an extent thatthe charity is not working effectively;

• where there is a clear danger of thename of charity being brought intodisrepute; or

• where honest errors have resulted inproblems (such as decisions ofinquorate meetings being acted upon)that require us to authorise actionsnecessary to remedy the situation; and

• where the use of the CharityCommission's powers areproportionate to it.

Sincerely held but differing views are of noconcern to the Charity Commission iftrustees are acting properly. Matters ofpolicy or administration may be disputedwithin the trusteeship or within themembership but they must be settledwithin and in accordance with the terms ofthe charity's governing document.

The role of a corporate member is the sameas that of an individual member where theprimary duty is to the organisation forwhich they are acting as a member.

Corporate members should have completeclarity about their role and obligations ininstances like these as, commonly,representatives from user organisationswill be voted on to the trustee body at alater date. The fiduciary obligations oftrustees are clearer than those of membersbut many corporate representativesmaintain a misunderstanding about theirfiduciary duty when they become atrustee.6 The difficulties involved inmanaging this scenario and others relatingto village halls will be explored in a CharityCommission regulatory report due forpublication by the end of 2004. Ourpublication RReessppoonnssiibbiilliittiieess ooff CChhaarriittyyTTrruusstteeeess (CCCC33) sets out the roles andobligations for trustees in acting in theinterests of the charity for which they are atrustee.

• Trustees should be particularly carefulto ensure that the role of corporatemembers is understood.

CChhaarriittyy CCoommmmiissssiioonn iinntteerrvveennttiioonn

The Charity Commission has a generalpurpose of ensuring the effective use ofcharitable funds and the integrity ofcharity. Where a charity is not being runeffectively or is publicly in dispute it is anarea of concern for the CharityCommission.

Charity Commission staff are oftenapproached by individuals associated withmembership charities in connection withan internal dispute between differentgroups within the charity. The CharityCommission cannot act in the

6 Fiduciary is defined in Annex B.


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Members who disagree with the directionof the charity to which they belong canmake a change by exercising their right tovote, either at the AGM or by calling anEGM (which requires a sufficient numberof members agreeing to it), or by puttingthemselves in a position to be elected on tothe committee. Where none of thesecourses of action result in a satisfactoryconclusion for a disaffected member, theyshould accept the majority opinion orconsider leaving.

A complaint to the Charity Commissionshould only be made where there are well-founded suspicions or evidence ofmalpractice.

Examples of situations in which the CharityCommission will not get involved include:

• disagreements between trustees orbetween officers and/or memberswhich can and should be settled by thepersons themselves;

• disagreements within religiouscharities relating to religious matterssuch as doctrine.

In these circumstances the trustees areresponsible for finding a solution with theirmembership and should only approach theCharity Commission if they propose acourse of action that requires CharityCommission authorisation.

For more information on the CharityCommission's position, please refer to ourpublication TThhee CChhaarriittyy CCoommmmiissssiioonn aannddRReegguullaattiioonn.

TThhee ffoolllloowwiinngg iiss aann eexxaammppllee ooff wwhheerree tthhee CChhaarriittyy CCoommmmiissssiioonn''ss iinntteerrvveennttiioonn wwaass eesssseennttiiaall iinnppuuttttiinngg aa cchhaarriittyy bbaacckk oonn aa sseeccuurree ffoooottiinngg aanndd ssaaffeegguuaarrddiinngg iittss aasssseettss..

Disputes between two rival groups in a small charity with a large membership had meant thatthe charity was effectively split into two separate organisations under one charity name andregistration number. There were also separate membership lists for both groups. Each sideoperated autonomously and had held its own elections for some time. It was impossible toidentify the properly appointed managing trustees as the charity's records were incomplete ormissing. The police had been involved because of confrontation and unruly demonstrations fromboth parties.

The Charity Commission became involved at the request of one of the rival parties and the localauthority. The most important issue to resolve was the election of a properly appointed trusteebody. The Charity Commission therefore moved to make an Order under section 26 of theCharities Act 1993 authorising the elections to take place. The Order took into account the issuesof both parties and stated that before any elections could go ahead an Election Board consistingof representatives from both would be established. This ensured that there would be fairrepresentation from both sides. The local authority was appointed to oversee the elections asElection Supervisor. Employing an impartial body to have the final say helped to ensure that theelection process would be democratic and fair.

Once the elections had successfully taken place and a properly appointed trustee body was inoffice the charity's position became more stable. The outcome of this case was that a situationwhich had continued for several years and had an adverse effect on the charity was brought to asatisfactory conclusion.


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The Charity Commission will not be able tobecome involved in resolving matters ofreligious doctrine or actually becomeinvolved in supervising or running anAGM for a charity. We may be able tosuggest alternative parties who may beable to help.

If the Commission's intervention isnecessary, we may take one of thefollowing courses of action.

Each membership case is unique, however,and the cases described below are examplesof action we have taken in the past and do

not represent the action that willnecessarily be taken in every similar case.

There are three main ways in which theCharity Commission will intervene, otherthan to provide guidance:

1. make an Order under section 26 of theCharities Act 1993;

2. provide a Scheme setting out newgovernance provisions; or

3. open an Inquiry under section 8 of theCharities Act 1993.

The Charity Commission became involved in a dispute between members of a medium sizedcharity over the election of its trustee body. Members complained that certain individuals hadbeen "selected" for trustee posts rather than having gone through a properly conducted electionat the AGM. In the same way, trustees had been removed from office. Consequently there weredoubts about the validity of the charity's serving trustee body, especially as the meetingconcerned had been inquorate. Accusations of unreasonable behaviour by various members fromboth sides only served to exacerbate matters.

The Charity Commission met with the charity to discuss the problems it faced and to try toresolve matters. The current state of affairs meant that the charity was not being administeredproperly which was a major concern. The first step in rectifying the situation was for the CharityCommission to make an Order under section 26 of the Charities Act 1993 enabling a properlyconducted election to take place. The Order also took into account the omissions of the charity'sgoverning document and clarified the rights and responsibilities of being a member, includingthe power to terminate or remove an individual's membership.

Because of the charity's previous history, the Order also directed that the trustees consult animpartial organisation to ensure that the elections were conducted fairly. Whilst this did notsatisfy all those concerned, the majority of members did concede that this was the mostappropriate way forward and eventually the elections went ahead and the trustee body wasproperly appointed.

MMaakkee aann OOrrddeerr uunnddeerr sseeccttiioonn 2266 ooff tthhee CChhaarriittiieess AAcctt

In the six months from June 2003, the Charity Commission made 482 Orders under section 26 of theCharities Act. 4% of these were made to regularise elections and procedures for holding an AGM.This scenario may arise when the trustee body has been elected at an inquorate meeting andtherefore is not authorised to call a meeting to correct the situation.


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Two similar charities, each with a large membership, wished to merge and approached theCharity Commission for advice.

The proposed amalgamation was felt to be in the best interests of both charities and the trusteesfelt that the combination of skills and expertise would be advantageous to the beneficiaries. TheCharity Commission facilitated this by means of a Scheme which effectively created a neworganisation. As well as defining the new charity's objects, the Scheme also addressed themembership provisions and the structure of the new trustee body.

The trustees wished to retain the characteristics of both charities by simply combining the two,but these proposals meant that the new trustee body would end up being very large andunwieldy and the membership provisions for each charity were not so easily transferable.

In discussion with the trustees, the Charity Commission drafted a membership structure whichaddressed the needs of the "new" charity without losing the original ethos.

The Charity Commission became involved with a medium sized charity which had beenexperiencing problems between groups of its trustees. There had also been allegations that themembership list was not made available so it was difficult to identify who was entitled to vote atthe elections. The Charity Commission initially tried to assist the trustees in resolving matters sothat a proper governance framework could be put in place. To move matters along, the CharityCommission offered to make an Order authorising a valid AGM but the trustees chose to ignorethis advice and proceeded to hold their own meeting without having obtained the necessaryconsent to do so.

The Charity Commission advised the trustees that those purported to have been electedappeared to have no legal authority to act in the administration of the charity and, in the light ofallegations of financial irregularities, moved to open a formal Inquiry. In this way all aspects ofthe charity's administration could be examined and protective intervention powers invoked ifnecessary.

The Inquiry made several recommendations regarding the administration and governance of thecharity which the trustees had to follow. In addition, the Charity Commission granted an Orderunder section 26 of the Charities Act to give authority for an AGM to elect a new trustee body.This has been achieved but the Commission will continue to provide any necessary supervisionand support.

PPrroovviiddee aa SScchheemmee sseettttiinngg oouutt nneeww ggoovveerrnnaannccee pprroovviissiioonnss

OOppeenn aa SSeeccttiioonn 88 IInnqquuiirryy

Section 8 Inquiries are normally carried out with the focus on areas such as misappropriation ormaladministration.7 Membership issues are not commonly the central concern but may be anunderlying factor in case work. Where possible our approach is to try to put a charity back on theright footing before an Inquiry becomes necessary.

7 Section 8 is the power that the Charity Commission has to formally investigate a charity or group of charities wherethere are concerns regarding misconduct or mismanagement of charity resources and to take action to rectify abuse orpoor practice where possible. The results of these inquiries are published on our website.

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Part B: Best practice - some guidelines

BBeesstt pprraaccttiiccee iinn tthhee ggoovveerrnnaannccee ooffmmeemmbbeerrsshhiipp cchhaarriittiieess

The positive potential of a membership ismore easily realised when there is clarityabout the rights and obligations of thecharity's membership. Charity Commissionexperience suggests that focusing on threekey areas will help to avoid confusion inthis area:

• clarity about who members are andabout their rights and responsibilities;

• clarity about the agreed practices andlegal considerations for running theAGM; and

• effective, regular communication withmembers.

Our case work experience and surveyresults show that the following bestpractice principles mitigate the possibilityof running into the most commondifficulties that membership charitiesexperience:

• keeping an accurate membership listand making it available to allstakeholders (there may be some dataprotection issues here which trusteesshould bear in mind);

• encouraging members to read andunderstand the membershipprovisions of their charity;

• keeping and communicatinginformation about the roles andresponsibilities of different types ofmember in the charity;

• keeping a record of the rules thatsurround continued membership andmaking it available to all stakeholders.

These rules should include:

• the grounds for eligibility ofmembership;

• the grounds for dismissal of a member;and

• the grievance procedures in place.

• being clear about, and communicatingto members, the agreed practices andlegal considerations for running thecharity's AGM.

Many of the problems that the CharityCommission sees in relation tomembership charities could be avoidedwith better communication betweentrustees and members.

To improve communication, trusteesshould:

• consider making use of newtechnology and emailing thosemembers who are happy to receiveinformation in that format (this is bothquick and cost effective); and

• ensure that any communications are inan appropriate format that is accessibleand understandable to all members.

Communication providing notice formeetings requires additional attention asthere are a number of areas that must becovered. See CChhaarriittiieess aanndd MMeeeettiinnggss(CCCC4488).

PPaarrtt BB:: BBeesstt pprraaccttiiccee - ssoommee gguuiiddeelliinneess

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BBeesstt pprraaccttiiccee iinn mmaannaaggiinngg tthheeggoovveerrnniinngg ddooccuummeenntt

An essential part of good governance is toensure that the governing document is fitfor purpose and that its terms are adheredto. The governing document should be thefirst place that trustees or members look inorder to clarify anything relating to therunning of their charity. Where thegoverning document is used effectively, itcan prevent problems and disputes arising.

The governing document will usually setout the basic conditions and terms ofmembership. It should be comprehensiveenough to allow for good governance andlimit scope for dispute. The governingdocument cannot, however, cover allscenarios. Nor should trustees attempt todo this as they may find it restricts anaction they need to take in the future. Anadditional set of rules or manual whichmembers agree to will satisfy the need tohave details of the arrangement laid out.

Within the governing document a numberof clauses will set out the way in which themembership should be managed. Theclauses that we recommend charities toinclude when adopting one of our modelgoverning documents can be found in ourpublications MMooddeell MMeemmoorraanndduumm &&AArrttiicclleess ooff AAssssoocciiaattiioonn ffoorr aa CChhaarriittaabblleeCCoommppaannyy (GGDD11) or MMooddeell CCoonnssttiittuuttiioonn ffoorraa CChhaarriittaabbllee UUnniinnccoorrppoorraatteedd AAssssoocciiaattiioonn(GGDD33).

Typically the clauses of the governingdocument of a membership charity will setout:

• who is eligible to be a member of thecharity;

• how their membership could beterminated or suspended;

• how voting rights are to be distributed;

• conditions and rules regarding runningand voting at the AGM includingquorum provisions;

• terms for calling a extraordinarygeneral meeting; and

• how alterations to the constitution ordissolution of the charity can bedecided.

Whilst some governing documents aremore prescriptive than others, trustees arerequired to interpret the governingdocument and will need to make decisionsfor the running of the charity on a day today basis without the membershipbecoming involved. This is a key factor indetermining the balance of power betweenmembers and trustees.

BBeesstt pprraaccttiiccee iinn mmaannaaggiinngg eelleeccttiioonnss

VVoottiinngg aatt aannnnuuaall ggeenneerraall mmeeeettiinnggss

Charities with a membership will usuallybe required to hold an AGM which is anopportunity for members to attend andvote on various matters that have a directbearing on the governance of the charity towhich they belong. The governingdocument and other rules of the charityusually set out the procedures for holdingan AGM.

Members may also have the opportunity tocall and participate in an EGM(extraordinary general meeting, sometimesalso called a special general meeting),where non-recurring decisions areconsidered/taken.


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Voting at these meetings is the mostcommon way in which members exercisetheir administrative rights and is their mainopportunity to influence the running of thecharity.

At the AGM, members will typically:

• endorse the accounts and report for theyear;

• elect some or all of the charity trustees(where elections are held annually);

• approve the appointment of auditors;and

• approve previous minutes.

They may also consider matters such as achange in the charity's name or objects anddetermine questions of constitutionalchange such as the destination of thecharity's property on winding up oramalgamation, although theseconsiderations are sometimes undertakenat an extraordinary general meeting.

The procedures which should be followedduring and in advance of the AGM are laidout in the charity's governing document.Charity Commission publication CChhaarriittiieessaanndd MMeeeettiinnggss (CCCC4488) provides advice onthe issues involved.

Charity trustees can open most decisions tothe membership but are only bound to acton decisions taken by the membershipwhere the governing document, rules orgeneral law directs that they must.

Where members who are entitled to voteare not present at the actual meeting then itmay be appropriate to have a postal vote.The charity's governing document willnormally state whether this is acceptable.More recently, charities have begun tomake use of electronic means of notification

and voting. In practice there is no reasonwhy electronic voting cannot be usedwhere members have signalled that theyare happy to receive notification in thisway, if authenticity of the vote can beachieved.

Where there is an express provision to thecontrary in a charity's governingdocument, then trustees will not be able toaccept votes electronically. Where thegoverning document states that postalvotes are acceptable, this will normallypreclude the use of electroniccommunication.

Strong governance procedures will helpcharities manage their meetings and ensurethat they are always carried out correctly. Anumber of considerations for best practiceare laid out below:

• make sure that the whole membershipcan exercise its right to vote at theintervals specified in the governingdocument by providing enoughinformation about the proposed timesand dates for the AGM;

• follow the correct procedures to ensurethat proxy, postal and electronic votingcannot be abused; and

• carefully record the decisions taken atany meetings.

EEssttaabblliisshhiinngg aa qquuoorruumm lleevveell

The governing document sets out thenumber of members eligible to vote whomust be present at the meeting (either inperson or by proxy) in order for thedecisions taken at the AGM to be valid - the'quorum'. Our publication CChhaarriittiieess aannddMMeeeettiinnggss (CCCC4488) provides best practiceadvice on voting procedures and quorumrequirements.


TThhiiss ccaassee iilllluussttrraatteess oonnee wwaayy iinn wwhhiicchh ddiiffffiiccuullttiieess iinn aacchhiieevviinngg aa qquuoorruumm ccaann bbee rreessoollvveedd..

A medium sized charity ran into difficulties because the quorum for the AGM was set at 100members. The trustees found it impossible to meet this number and approached the CharityCommission for advice on resolving the situation.

The trustees were effectively hindered by the terms of the charity's governing document whichdid not contain a clearly defined membership provision. Hence the large number for a quorum.However, it did have an amendment clause and, on the Commission's recommendation, thetrustees acted on their powers to amend the Constitution.

As well as reducing the quorum, the resulting amendment also allowed for a tiered membershipprovision that addressed the specific responsibilities for each membership category. In this waythe charity was able to operate more efficiently and the members had a clearer understanding oftheir role and what was expected from them.

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The number of people required for aquorum should be a key consideration inany charity. Where the quorum is set toohigh there may be difficulties achieving itand any absences may make it difficult tohave a valid meeting. If it is too low, aminority may be able to impose its viewsunreasonably.

The quorum should be set at a realistic levelbecause decisions made at a meeting that isinquorate are invalid. Failure to achieve aquorum can, therefore, seriously disruptthe decision-making process of a charity.

The quorum is often a percentage of theoverall number of members. As a charitychanges or grows, the proportion of themembership that can realistically beexpected to attend the AGM may changeand trustees should ensure that theyamend their governing document to reflectthese changes.

Problem cases that the Charity Commissionsees are commonly those in which a charityhas been unable to achieve their quorumlevel at meetings but have not taken thisinto account and have continued as thoughthe quorum had been achieved. Decisionsmade at an inquorate meeting are not

legally binding so a trustee body elected atan inquorate meeting cannot legally act astrustees. This can bring the charity to astandstill because no body within thecharity has the authority to call a meetingto rectify the situation.

The Charity Commission can help in suchsituations by making an Order givingtrustees authority to hold a proper meetingand get the charity back on track. TheCharity Commission will also advise arevision of the quorum provision for suchcharities.

Inquorate or illegally held meetings areoften cited by complainants in charities inwhich there is a dispute. Clarity andtransparency of voting procedures arecrucial to mitigate the opportunity formembers to use this in an attempt tooverturn decisions with which they areunhappy.

Where trustees are finding their quorumunworkable or unachievable, they shouldcheck whether they have the power toamend the provision. Where they do nothave the power, or the governingdocument is silent, trustees should contactthe Charity Commission for assistance.


BBeesstt pprraaccttiiccee iinn mmaannaaggiinnggmmeemmbbeerrsshhiipp ssttrruuccttuurreess

Case examples illustrate that whencharities have a very large membershipthey need to pay particular attention totheir communication strategies and to theorganisation of their AGM. Trustees need toensure that the size of their membership isnot unmanageable since the number ofvoting members required to attend theAGM in order for a vote to be valid (thequorum) will normally be a percentage ofthe overall number of members.

Maintenance of an up-to-date membershiplist is essential to ensure that all membersreceive necessary information about thecharity, especially regarding the AGM.Charities with larger memberships mayhave staff responsible for managingcommunication with members andmaintaining the membership list, or theymay outsource these services, all of whichwill incur costs for the charity. Whenoutsourcing, trustees are responsible forensuring that they get value for money.

Different membership structures requireattention to different aspects ofmanagement. For example, where theregional body is a separate charity,members of the regional charity elect theirown trustee body which then representstheir views to the national charity. Wherethe regional body is not a charity, thestructure is similar with regional votesbeing collective and represented upwardsto the national charity. This structure cancause confusion among members and otherstakeholders about whether they aremembers of the local organisation or of thenational body, or both. There can also betension between local and nationalinterests. It is the responsibility of thetrustees of the local and national bodies toensure that their members are clear abouthow the voting structure works and toattempt to resolve any tensions. Again,good lines of communication areimportant.

BBeesstt pprraaccttiiccee iinn mmaannaaggiinnggddiivveerrssiittyy

Procedures for agreeing new membersvary. Trustees should ensure that theirprocedures do not have the effect ofexcluding anyone who could legitimatelyjoin the charity. In most charities,membership is automatic, provided theprospective members meet some criteria(laid out in the governing document orrules) such as to have residence in aparticular area or to hold a particular faith.Limitation of the membership in this way isacceptable provided the test of publicbenefit is met. The principles of the publicbenefit test are set out in PPaarrtt CC.

In some circumstances, membership maybe subject to approval by a general meetingof the members or the trustee body.Charities that require new members to beproposed and seconded by existingmembers need to be sure that this does notamount to indirect discrimination. Thiscould occur if, for example, all the existingmembers are from one racial group and thisis seen to act as a barrier to people fromother groups becoming members.

BBeesstt pprraaccttiiccee iinn mmaannaaggiinngg tthheebbaallaannccee ooff ppoowweerr

Trustees are sometimes under amisapprehension that they are answerableto their corporate members in a differentway to individual voting members. Unlessthe governing document says otherwise,the votes of corporate members should notcarry any greater weight than individuals'.In some circumstances, however, corporatemembers may be allocated a larger numberof votes if the trustees consider that theircorporate members provide a greaterdegree of accountability.

2277


A membership that is actively andpositively involved in the running of acharity, exercising its right to vote andkeeping itself informed about what ishappening in the charity, is necessary if thebenefits of having a membership are to berealised.

2288

"While we would wish to see ourmembership engaged to a greaterdegree, regrettably this does nothappen.”

Survey respondent

There is a fine line between memberscalling the board to account for the bestinterests of the charity and membersasserting their power to the detriment ofthe smooth running of the charity. Valuabletime and resources are wasted by charitiesin which disagreement among themembership means that key decisionscannot be made or the board is changed toofrequently to be effective.

In cases where the ideological commitmentto an organisation is high, or where theinterests of the members in how the charityis run are significant, views can manifestthemselves in strongly voiced opinions. Inmany cases this is not problematic so longas there are sufficient procedures settingout how members can voice their views.

Members that oppose certain decisionstaken by a charity usually believe that theirviews are in the best interests of the charitybut, if the actions of the membership arepreventing the charity from carrying out itslegitimate aims, the membership should tryto find a solution. It is never in the bestinterests of the charity to prevent it fromoperating. Ultimately, if there is no way tocome to a compromise, members shouldconsider leaving the organisation or usingtheir legitimate right to vote in order toachieve change. Members shouldremember that, in any democratic decision,

the views of some people will not bereflected in the final action. Membersshould abide by decisions taken fairly andin good faith.

The governing document needs to be clearwhich rights and powers are reserved formembers and which are granted to thegoverning body or other persons such asthe founding trustee. Commonly, membersof a charity have the right to elect andappoint the governing body and thegoverning body is given full control overthe management of the charity at all othertimes.

Trustees are only obliged to put aresolution to the vote of the charity'smembers or subscribers where thegoverning document or any rules adoptedby the charity or the general law requires it.On other decisions the trustees may chooseto do this or simply put the decision to theirmembers for a recommendation rather thanto decide the course of action.

The different powers that rest withmembers vary considerably from charity tocharity. In some instances members areasked to vote on the appointment of the fulltrustee board annually, in others theirdecision input is limited to appointing aproportion of the body on a bi-annual basisor three-year cycle.

LLiiaabbiilliittyy ffoorr ddeecciissiioonnss ttaakkeenn

In some cases, executive powers areconstitutionally reserved or assigned topersons other than the charity trustees,such as members. This is not a problem solong as the assigned powers are exercisedin the interests of the charity. In such a case,the charity trustees would only haveliability for the consequences of givingeffect to the decision of the person orpeople who made that decision, if givingeffect to that decision involved their doingsomething that was a breach of trust.


There should be a clear distinction betweenthe agenda items on which members canmake a decision and those that require onlyrecommendation from the membershipand will not necessarily decide the courseof action.

TTrruusstteeeess'' ppoowweerr ttoo rreemmoovvee mmeemmbbeerrss

A number of legal rules exist relating to thecircumstances in which trustees canremove members and individual charitiesmay have their own criteria and proceduresthat must be followed.

There are cases in which a member hasattempted to sue the trustees after havingbeen removed from the membership of thecharity.

In one instance the removed member suedall of the trustees and other members whohad given evidence in support of theremoval. The case was unsuccessful,however, and the charity's legal costs werecovered by insurance.

2299

This was only the case because trustees hadfollowed carefully the provisions withinthe charity's Memorandum of Associationand taken extensive legal advicewhen making the removal. PPaarrtt CC providesthe legal detail for removing members.

MMeemmbbeerrss'' ppoowweerrss ttoo rreemmoovvee ttrruusstteeeess

Members can express their views on thepolicies of the trustee board by exercisingtheir right to vote at the charity's AGMwhere the membership is usually called tonominate and sanction the appointment ofnew trustees.

The membership can also call anextraordinary general meeting (EGM),sometimes called a special general meeting(SGM). These can be used to discuss anyof the decisions or actions taken bythe governing body if members feelthat they are not fulfilling the charity'saims and objectives or where they feelthat the charity is not being administeredproperly.

TThhiiss ccaassee iiss aann eexxaammppllee ooff hhooww aa cchhaarriittyy ddeeaalltt wwiitthh rreemmoovviinngg aann iinnddiivviidduuaall''ss mmeemmbbeerrsshhiipp..

A member of a local branch of a national charity wrote to the Charity Commission to complainthat he had been removed from the charity's mailing list. This meant that effectively hismembership had been terminated without his consent.

Initial enquiries revealed that the trustees were in dispute with the individual concerned and hadtaken a majority decision to act according to the powers available to them in their governingdocument. The trustees felt that this was the most appropriate way to resolve matters. Onreviewing the case it was confirmed that the charity's governing document did allow formembers to be excluded under certain conditions.

After evaluating the matter, the Charity Commission advised the complainant that it could notintervene with administrative decisions iiff these were within the discretion of the trustees. TheCharity Commission advised the complainant to contact the national charity as the appropriatebody to deal with this type of concern.


3300

TThhiiss ccaassee iilllluussttrraatteess hhooww iinntteerrnnaall ddiissppuutteess ccaann ddiissrruupptt tthhee ssmmooootthh rruunnnniinngg ooff aa cchhaarriittyy..

A disagreement within the trustee body of a medium sized charity escalated into a situationwhere the charity could not function and the Charity Commission became involved.

The members effectively divided into two opinion groups in line with the groups within thetrustee body. Members from each side then inappropriately employed their right to callextraordinary general meetings to elect the trustees with whom they empathised. This meant thatthe trustee body was constantly changing as the group of members who were stronger at theparticular meeting would vote in one set of trustees only for them to be overthrown at a laterdate.

The problem was exacerbated by the fact that the provisions in the governing document werevery vague and the criteria for membership was not clearly defined. Both sets of trusteesattempted to recruit new or additional members who agreed with their views giving weight totheir 'side' and improving their chance to be elected at the next EGM.

This is not the only purpose for an EGMand commonly trustees will call one forconsideration of non-recurring businessthat requires members' approval inbetween AGMs (such as alterations to thegoverning document). Trustees cannotrefuse to hold an EGM provided that themembers have satisfied all the rules in thegoverning document relating to organisingone.

Key to the level of power that membersmay have in this respect is the number oftrustees or the proportion of the governingbody which they are able to elect.

AAppppooiinnttmmeenntt ooff ttrruusstteeeess

Members are able to influence the directionof the charity through the election of atrustee board that they believe will serve itwell. Having only a proportion of thetrustee body elected by the membershipmay ensure that there is a measure of

continuity but this could also limit theextent to which newly elected members canmake amendments to the direction of thecharity or the way in which it is run.

It is important that the trustee body is notchanged with unnecessary frequency(which can happen in charities in whichthere are opposing groups within thetrustee body and/or the membership) andthat paperwork is kept up-to-date so thatadministration does not become neglected.

Our model constitutions recommend thatthe governing document contains a rulelimiting the length of time for which atrustee can serve and that terms oftrusteeship should be staggered so that thewhole board is not replaced at once.8

Charity Commission publication TTrruusstteeeeRReeccrruuiittmmeenntt,, SSeelleeccttiioonn aanndd IInndduuccttiioonn (RRSS11)provides some best practice suggestions forthe induction of new trustees.

8 Model Memorandum & Articles of Association for a Charitable Company (GD1) and Model Constitution for aCharitable Unincorporated Association (GD3).


3311

The Charity Commission hoped to assist by amending the governing document in order tostabilise the trustee body and clarify the membership provision. However, before these measurescould be put in place the main funder of the charity decided that they would withdraw theirsupport. The charity was not able to carry out its charitable purpose and as a result of thisdecided to close down.

The poor membership provisions in the governing document and the inability for trustees andmembers to prioritise the needs of the charity over their own preferences meant that charitableresources were wasted and charitable activity could not be carried out.

BBeesstt pprraaccttiiccee iinn ssoollvviinngg ddiissppuutteess

Clear rules and procedures settingout the way in which the membershipis expected to contribute to thecharity and the terms on whichtrustees should respond to theirviews will help to avoid disagreementsand act as a point of reference if theydo occur.

If the actions of trustees are lawful,disagreements cannot be settled in court orby referring the matter to the CharityCommission. Trustees should considerwhether a clause stating that disputesshould go to mediation is appropriate fortheir charity. Mediation does involve costsbut may mean that disputes are solvedbefore they get out of hand and become adrain on charity resources.

3322

Part C: Legal considerations

PPuubblliicc bbeenneeffiitt

Trustees need to give careful considerationto the way in which eligibility formembership is determined within theircharity. No one has an automatic right tomembership of a charity but restrictions onmembership must normally be avoidedand eligibility for membership should be asopen as possible.

In certain circumstances, which should betransparent, restrictions on membershipmay be necessary. Particular care needs tobe taken when membership is aprerequisite to receiving a benefit from thecharity. Here any restriction may impact onthe level of public benefit the charity is ableto demonstrate. Restrictions onmembership must not be used as a meansof conferring a non-charitable and purelyprivate benefit.

The level of non-charitable 'private benefit'that members of a charity can receive is alsoan important consideration, particularly inthe case of learned societies or professionalbodies in which there are quite tightrestrictions to membership. Charities needto ensure that the distribution ofmembership benefits does not cause theircharity to fail the public benefit test that isa prerequisite for charitable status.

Our publications TThhee PPuubblliicc CChhaarraacctteerr ooffCChhaarriittyy (RRRR88) and TThhee RReeccrreeaattiioonnaallCChhaarriittiieess AAcctt 11995588 (RRRR44) provide a moredetailed explanation of the principle ofpublic benefit.

MMeemmbbeerrss'' rriigghhttss

The administrative rights of members fallinto two categories:

(1) rights which are connected withdetermining the organisationalstructure of a charity eg rights directlyor indirectly relating to theappointment or removal of charitytrustees, or to the amendment of thecharity's constitution; and

(2) rights which go directly to theoperation of a charity, for example aright reserved to a charity founder bythe governing document of a charity todirect how the resources of the charityshould be applied. This includesprovisions which enable or require adistinct person or people to approve orvalidate a decision taken by the charitytrustees.

Normally membership charities will haveeither a constitution, if it is a Charitableunincorporated association, or aMemorandum and Articles of Associationwhere the charity is a company. Whilst it isuncommon for charities whose governinginstrument is a trust deed to have amembership as we define it here, there isno legal reason why they cannot. Other,less common forms of governingdocument, for example a Scheme or Act ofParliament, may or may not have amembership and this will vary in eachindividual case.

PPaarrtt CC:: LLeeggaall ccoonnssiiddeerraattiioonnss

The governing document of a charity mayconfer a number of enforceableadministrative rights on people other thanthe charity trustees. These may beenforceable either as a matter of contract,trust or both.

The property of all charities, whatever formof governing document they have, otherthan the corporate property of charitieswhich have been incorporated by or understatute, is held on trust.9 The following istrue of any charity that has property that isheld on trust:

• If the governing document of thecharity is also evidence of a contractbetween the members of the charity,then the members may enforce anyadministrative rights which thegoverning document gives them as amatter of contract.

• Whether or not the governingdocument is evidence of such acontract, any administrative rightswhich are conferred by the governingdocument on members, or any otherpersons separate from the charitytrustees, are enforceable as a matter ofthe law of trusts, because those rightsare part of the trusts of the charity.

However, the corporate property ofcharities that have been incorporated by orunder statute is not held on a trust.Therefore members' administrative rightsin connection with such property are notlegally enforceable under trust law.

In the case of a charitable company,members' administrative rights are legallyenforceable in accordance with theprovisions of section 14 of the CompaniesAct 1985 which says that the governingdocument of the company binds it and itsmembers to the same extent as if thosedocuments had been respectively signedand sealed by each member and containedcovenants on the part of each member toobserve all of the provisions of thegoverning documents.

Where the governing document is silent,and does not allocate administrative rightselsewhere, then it is assumed that thetrustees have overall control over decisions.

MMeemmbbeerrss'' vvoottiinngg oobblliiggaattiioonnss

Members of a non-charitable company donot have an obligation to exercise theirrights in "the interests of the company".When exercising their voting rights,members of non-charitable companies areentitled to take account purely of their owninterests.

However, the Charity Commissionconsiders that the rights that exist inrelation to the administration of acharitable institution are fiduciary,regardless of the identity of the person orpersons on whom the rights are conferred.Therefore this applies to both individualand corporate members.

3333

9 Corporate property is owned beneficially by a company in just the same way that an individual owns his property,except that a company can only deal with the property in a manner which is authorised by its governing documents.The profit obtained by the sale of goods or services by a charitable company, and unrestricted gifts or grants to thecompany, are examples of corporate property.

PPaarrtt CC:: LLeeggaall ccoonnssiiddeerraattiioonnss

If, under the terms of the governingdocument of an institution, administrativerights can be exercised otherwise than inthe interests of the institution, without abreach of trust or duty being committed,then the question arises whether theinstitution is in fact established foreexxcclluussiivveellyy charitable purposes. If this isthe case, the organisation is not charitable.

Some uncertainty does exist, however,about the extent to which members ofcharitable companies are legally obliged tovote in the best interests of the charity ofwhich they are a member. It has beenargued that the members of charitablecompanies are in the same position legallyas the members of non-charitablecompanies. It is proposed that for the newCharitable Incorporated Organisationstructure, legislation should make it clearthat the administrative rights of membersmust be exercised in a fiduciary way.

RReemmoovviinngg mmeemmbbeerrss

A governing document may set out theminimum procedures/rules relating to theexpulsion or suspension of members. Inmany cases the trustee body retains theright to terminate the membership of anymember, provided that the memberconcerned shall have the right to be heard,accompanied by a relative, friend oradvocate (if wished) before a final decisionis made.

As regards unincorporated organisations,there is no inherent power to expel amember (Dawkins v Antrobus (1881) 17Ch.D 615, 620). Where there is no power to

expel a member, but there is provision toamend the governing document, a newpower to expel a member whose conduct isinjurious to the organisation will be validprovided it is properly adopted under theprescribed machinery. However, itsoperation cannot be made retrospective(Dawkins v Antrobus; supra). A power toexpel a member must be exercised in goodfaith and not capriciously and the basicrequirements of a right to be told the natureand details of the offence and reasons forthe expulsion or suspension, a right tonotice of the hearing and a right for themembers to put his case are well accepted(Labouchere v Earl of Wharncliffe, (1879)13 Ch D 346; Calvin v Carr [1980] A.C. 574).These principles also apply to suspensionof membership.

Trustees also have the power not to admitsome members to the charity. Prospectivemembers may be denied admission to themembership if the trustees believe thattheir motivation for joining is contrary tothe aims of the charity. Members can alsobe expelled for this reason (Royal Societyfor the Prevention of Cruelty to Animals vAttorney General and Others [2001] 3 AllER 530).

Powers to exclude from membership arefiduciary in nature and must therefore beexercised according to the purposes forwhich they were conferred in good faith inthe interests of the charity and satisfy therules of natural justice. Trustees cannot usethese legal rules to adopt an arbitrarymethod of implementing a membershippolicy so as to ensure (for example) that themembership does not contain people thatmight oppose their views.

3344

Annex A - Research techniques and survey findings

The data used in this report was derived from seminars with Charity Commission staff, meetingswith individuals and groups of charities and an examination of the Charity Commission's extensivecasework archive.

In addition an independent research company was commissioned to undertake a postal survey of3000 charities in England and Wales during December 2003. The survey achieved a response rate of50% (1508 questionnaires) which is an excellent response rate for this type of survey. This allows aconfidence interval exceeding +/- 3%, which is industry standard.

The survey sample was stratified into the following income bands:

CChhaarriittyy ssiizzee ccllaassssiiffiiccaattiioonn

3355

Small income less than £10,000

Medium income £10,000-£249,999

Large income £250,000-£999,999

Very large income £1,000,000+

Financial assistance providing financial assistance (eg grant awarding to individuals and/or organisations)

Buildings providing buildings/facilities/open space

Services providing services (eg care/counselling)

Advice providing advocacy/advice/information/education

Umbrella body acting as an umbrella/resource body

Research sponsoring or undertaking research

Charities were asked to classify the type of activity that they undertook:

CChhaarriittyy aaccttiivviittyy ccllaassssiiffiiccaattiioonn

SSuurrvveeyy ffiinnddiinnggss

3366

Total (39%)

Main Activity

Financial Assistance (20%)

Buildings (34%)

Services (48%)

Advice (47%)

Umbrella Body (41%)

Research (45%)

Income

£1 million+ (36%)

£250k-£999k (46%)

£100k-£249k (47%)

£10k-£99k (41%)

Under £10k (28%)

Main Area of Work

Education (34%)

Medical/Health (38%)

Disability (57%)

Relief of Poverty (24%)

Housing (24%)

Religion (33%)

Arts/Culture (52%)

Sport (42%)

Environment (41%)

General (33%)

TThhee pprrooffiillee ooff tthhee cchhaarriittiieess ssuurrvveeyyeedd wwhhoo hhaadd iinnddiivviidduuaall mmeemmbbeerrss

60%

50%

40%

30%

20%

10%

0%Main Activity Income Main Area of Work

%

BBaassee (All): 1508


3377

Total (11%)

Main Activity

Financial Assistance (7%)

Buildings (14%)

Services (11%)

Advice (14%)

Umbrella Body (21%)

Research (17%)

Income

£1 million+ (11%)

£250k-£999k (16%)

£100k-£249k (15%)

£10k-£99k (9%)

Under £10k (5%)

Main Area of Work

Education (10%)

Medical/Health (9%)

Disability (10%)

Relief of Poverty (7%)

Housing (9%)

Religion (8%)

Arts/Culture (14%)

Sport (17%)

Environment (25%)

Economic (24%)

General (9%)

TThhee pprrooffiillee ooff tthhee cchhaarriittiieess ssuurrvveeyyeedd wwhhoo hhaadd ccoorrppoorraattee mmeemmbbeerrss

30%

20%

10%

0%Main Activity Income Main Area of Work

%

BBaassee (All): 1508


3388

TTaabbllee 11:: NNuummbbeerr ooff iinnddiivviidduuaall mmeemmbbeerrss - bbyy iinnccoommee

Small Medium Large Very Large

Total Under £10k- ££100k- ££250k- ££1m£10k £99k £249k £999k or more

% % % % % %

Base (All withindividual members) 591 93 138 136 125 99

Up to 5 7 4 5 7 10 9

6-9 4 4 1 4 5 9

10-24 15 28 14 15 13 6

25-49 13 18 12 14 12 11

50-99 14 13 18 10 15 12

100-999 26 15 36 35 24 13

1000+ 14 2 8 9 18 34

Don’t know/not stated 7 15 7 6 2 5

Average number ofmembers per charity 1972 232 426 342 1230 8740

TTaabbllee 22:: NNuummbbeerr ooff iinnddiivviidduuaall mmeemmbbeerrss - bbyy mmaaiinn aaccttiivviittyy

Total Financial Buildings Services AdviceAssistance

% % % % %

Base (All with individual members) 591 66 70 141 146

Up to 5 7 9 4 7 8

6-9 4 5 6 4 5

10-24 15 21 17 16 14

25-49 13 11 9 16 14

50-99 14 6 10 15 13

100-999 26 21 40 25 23

1000+ 14 18 7 10 19

Don’t know/not stated 7 9 7 7 6

Average number of members per charity 1972 1312 410 672 4892

Note: Other columns excluded as too small for analysis


3399

TTaabbllee 33:: NNuummbbeerr ooff ootthheerr mmeemmbbeerrss - bbyy iinnccoommee



% % % % % %

Base (All withother members) 300 35* 51* 67 73 74

Up to 5 19 14 28 24 12 16

6-9 5 9 4 5 3 7

10-24 14 17 18 15 19 5

25-49 5 14 6 6 3 -

50-99 8 3 18 5 7 10

100-999 18 3 18 21 25 16

1000+ 20 6 6 5 25 43

Don’t know/not stated 11 34 4 21 6 3

Average 5991 116 153 156 1186 20741

* Low bases

TTaabbllee 44:: SSuummmmaarryy ooff mmeemmbbeerr ttyyppeess

Total Individual Corporate Other

% % % %

Base (All) 1508 591 170 300

Individual 39 100 55 59

Corporate 11 16 100 14

Other 20 30 25 100

None 49 - - -

4400


TTaabbllee 55:: CCoommbbiinnaattiioonn ooff mmeemmbbeerr ttyyppeess - bbyy iinnccoommee ((eexxcclluuddiinngg cchhaarriittiieess tthhaatt hhaavvee nnoo mmeemmbbeerrss))



% % % % % %

Base (All with members) 774 112 166 174 171 151

Individual and corporateand other 4 1 0 6 5 4

Individual and corporate 8 4 10 9 11 6

Individual and other 20 20 19 16 20 24

Corporate and other 2 1 1 3 2 2

Individual only 44 58 54 47 37 32

Corporate only 8 6 5 6 9 13

Other only 14 10 11 13 15 19

* Less than 0.5%

TTaabbllee 66:: CCoommbbiinnaattiioonn ooff mmeemmbbeerr ttyyppeess - bbyy iinnccoommee ((iinncclluuddiinngg cchhaarriittiieess tthhaatt hhaavvee nnoo mmeemmbbeerrss))



% % % % % %

Base (All) 1508 258 299 292 309 350

Individual and corporateand other 2 * - 4 3 2

Individual and corporate 4 2 6 6 6 3

Individual and other 10 9 10 10 11 10

Corporate and other 1 * 1 2 1 1

Individual only 23 25 30 28 20 14

Corporate only 4 3 3 3 5 6

Other only 7 4 6 8 8 8

None 49 57 45 40 45 57


4411

* Low base ** Very low base

TTaabbllee 77:: CCoommbbiinnaattiioonn ooff mmeemmbbeerr ttyyppeess - bbyy mmaaiinn aaccttiivviittyy ((eexxcclluuddiinngg cchhaarriittiieess tthhaatt hhaavvee nnoommeemmbbeerrss))

Total Financial Buildings Services Advice Umbrella ResearchAssistance Body

% % % % % % %

Base (All with members) 774 94 95 182 185 43* 17**

Individual and corporateand other 4 3 4 2 5 7 0

Individual and corporate 8 7 12 7 11 7 18

Individual and other 20 18 16 16 22 7 24

Corporate and other 2 1 3 3 1 5 0

Individual only 44 41 42 52 42 42 35

Corporate only 8 13 11 5 8 14 12

Other only 14 16 13 14 12 19 12

TTaabbllee 88:: CCoommbbiinnaattiioonn ooff mmeemmbbeerr ttyyppeess - bbyy aaggee ooff cchhaarriittyy

Total 5 years 6-220 21-1100 101+or less years years years

% % % % %

Base (All) 1508 258 299 292 309

Individual and corporate and other 2 3 0 3 2

Individual and corporate 4 1 4 6 3

Individual and other 10 11 8 12 11

Corporate and other 1 2 1 1 1

Individual only 23 17 24 26 15

Corporate only 4 4 6 3 1

Other only 7 11 8 6 6

No members 49 51 49 44 61


4422

TTaabbllee 99:: CCoommbbiinnaattiioonn ooff mmeemmbbeerr ttyyppeess - bbyy mmaaiinn aarreeaa wwoorrkkeedd iinn ((iinncclluuddiinngg cchhaarriittiieess tthhaatt hhaavvee nnoommeemmbbeerrss

Total Education Medical Disability Relief Religious Housing Arts Sport Enviroment GeneralPoverty Activities

% % % % % % % % % % %

Base (All) 1508 400 152 84 68 130 68 95 60 64 94

Individualandcorporateand other 2 2 1 0 3 3 1 3 2 2 3

Individualandcorporate 4 3 3 6 1 2 1 2 5 5 13

Individualand other 10 7 9 21 1 10 3 10 18 10 8

Corporateand other 1 0 1 0 0 1 3 2 1 2 5

Individualonly 23 22 26 30 18 18 18 18 26 25 17

Corporateonly 4 4 5 4 3 1 3 1 5 8 5

Other only 7 6 4 12 4 14 9 14 7 0 11

None 49 56 52 27 69 51 62 51 35 48 39

Note: Other columns excluded as too small for analysis


4433

TTaabbllee 1100:: RReeaassoonnss ffoorr tthhiinnkkiinngg iinnddiivviidduuaall mmeemmbbeerrss uusseeffuull//nnoott uusseeffuull

Total

%

Base (All with individual members) 591

Positive Respponses 81

Gives users of charity a say/influence in how it’s run 15

They help/contribute/participate 15

Members provide diverse opinions 13

Members’ feedback is useful to committee/trustees 9

Members ensure services remain relevant to their/customers needs 7

We get the benefit of their experience 6

We get the benefit of their support 6

Ensures probity/transparency 6

Ensures charity is democratically run 6

Members provide financial support/contribute financially 6

Trustees/committee elected from membership 6

We get the benefit of their expertise and skills 5

Charity is run by the members for the members 5

Charity would not exist without the members 5

Negative Respponses 10

Too few attend AGMs 3

Too few vote/participate 2

Note: Many other responses were given at a lower level


4444

TTaabbllee 1111:: RReeaassoonnss ffoorr tthhiinnkkiinngg ccoorrppoorraattee mmeemmbbeerrss uusseeffuull//nnoott uusseeffuull

Total

%

Base (All with corporate members) 170

Positive Respponses 75

They provide financial support 13

Provide expertise/experience 11

Provide useful advice 9

Oversee how the charity is run 9

Provide support 8

Provide connection/influence with local council/public sector 7

Get good cross section of opinions 5

Provides professionalism 5

Negative Respponses 7

Too few attend AGMs 3

Too few vote/participate 2

Note: Many other responses were given at a lower level

TTaabbllee 1122:: TTeerrmmss uusseedd ttoo ddeessccrriibbee ootthheerr mmeemmbbeerrss

Total

%

Base (All with other members) 300

Sponsors 13

Friends 13

Associates/associate members 12

Patrons 7

Honorary members 5

Volunteers 4

Vice presidents 4

Junior members 4

4455

Annex B - Glossary of terms

An AAGGMM is an Annual General Meeting, open to all members.

CChhaarriittaabbllee ccoommppaannyy means a company formed and registered under the Companies Act 1985 orone to which the provisions of that Act apply, and which is established for charitable purposes.

CChhaarriittyy ttrruusstteeeess are the people having the general control and management of the administrationof a charity, regardless of what they are called. For instance, in the case of an unincorporatedassociation the executive or management committee are its charity trustees, and in the case of acharitable company it is the directors who are the charity trustees.

TThhee CCoommppaanniieess AAcctt means the Companies Act 1985 as amended.

CCoorrppoorraattee mmeemmbbeerrss include companies, local authorities and other public bodies or organisationsfor which a nominated representative holds a right to vote at the charity's annual general meetingon behalf of the organisation that they represent. This category would also include anyunincorporated charities and other not-for-profit organisations for whom a representative is avoting member of another charity.

An EEGGMM is an Extraordinary General Meeting (occasionally referred to as a Special GeneralMeeting (SGM) by unincorporated charities) and is any general meeting of members other than anAGM.

GGoovveerrnniinngg ddooccuummeenntt means any document that sets out the charity's purposes and, usually, how itis to be administered. It may be a trust deed, a constitution, memorandum and articles ofassociation, rules, conveyance, will, Royal Charter, Scheme of the Commissioners or, in relation toan appeal, the published terms of the appeal inviting donations.

An iinnddiivviidduuaall mmeemmbbeerr is an individual with the ability to affect the governance of a charity byvoting at the charity's annual general meeting and who meets all other criteria for a member as setout in the charity's governing document. Trustees, directors and any other person who is on thegoverning body are excluded from this definition of a member.

A qquuoorruumm is the minimum number of people entitled to attend and vote who must be present at ameeting to make valid decisions at that meeting. A quorum can be a fixed number or a percentageof those entitled to attend and vote. The number of people required to form a quorum is usuallystated in the governing document.

FFiidduucciiaarryy duties are those that must be carried out for the benefit of the charity's beneficiaries.

4466

Annex C - Resources for trustees

OOrrggaanniissaattiioonnss

�� TThhee CChhaarriittyy CCoommmmiissssiioonn ffoorr EEnnggllaanndd aanndd WWaalleess

Responsibility for charities is split between our three offices. Further information can be obtainedfrom the Commission at:

LLoonnddoonn LLiivveerrppooooll NNeewwppoorrtt TTaauunnttoonnHarmsworth House 2nd Floor 8th Floor Woodfield House13-15 Bouverie Street 20 Kings Parade Clarence House TangierLondon Queens Dock Clarence Place TauntonEC4Y 8DP Liverpool Newport Somerset

L3 4DQ NP19 7AA TA1 4BL

Tel: 0870 3330123Minicom: 0870 3330125E-mail: [email protected]: www.charitycommission.gov.uk

�� AArrbbiittrraattiioonn aanndd CCoonncciilliiaattiioonn SSeerrvviiccee ((AACCAASS))

ACAS is an organisation devoted to preventing and resolving employment disputes

Head OfficeBrandon House180 Borough High StreetLondonSE1 1LW

Tel: 020 7210 3613Website: www.acas.org.uk

�� AAssssoocciiaattiioonn ooff CChhiieeff EExxeeccuuttiivveess ooff VVoolluunnttaarryy OOrrggaanniissaattiioonnss ((AACCEEVVOO))

ACEVO provides good practice resources and information on sector issues.

83 Victoria StreetLondonSW1H OHW

Tel: 0845 345 8481Email:[email protected]: www.acevo.org.uk

RReessoouurrcceess ffoorr ttrruusstteeeess

4477

�� AAssssoocciiaattiioonn ooff CChhaarriittaabbllee FFoouunnddaattiioonnss ((AACCFF))

ACF promotes and supports the work of charitable grant-making trusts and foundations.

2 Plough YardShoreditch High StreetLondonEC2A 3LP

Tel: 020 7422 8600Website: www.acf.org.uk

�� CCeennttrree ffoorr EEffffeeccttiivvee DDiissppuuttee RReessoolluuttiioonn ((CCEEDDRR))

CEDR is widely regarded as a leading provider of alternative dispute resolution services.

Exchange Tower1 Harbour Exchange SquareLondonE14 9GB

Tel: 020 7536 6000Website:www.cedr.co.uk

�� CChhaarriittiieess AAiidd FFoouunnddaattiioonn ((CCAAFF))

CAF helps non-profit organisations in the UK and overseas to increase, manage and administertheir resources.

Kings MillWest MallingKentME19 TA

Tel: 01732 520 000Website: www.cafonline.org

4488


�� CChhaarriittyy TTrruusstteeee NNeettwwoorrkkss

This charity offers mutual support by encouraging and developing self-help trustee networkgroups proving cost effective, peer to peer consultancy and mentoring.

PO Box 33834LondonN8 9XF

Tel: 0167 254 1781Email: [email protected]

�� DDiirreeccttoorryy ooff SSoocciiaall CChhaannggee ((DDSSCC))

The Directory promotes positive social change and provides a wide range of resources for trustees.

LLoonnddoonn24 Stephenson WayLondonNW1 2DP

LLiivveerrppoooollFederation HouseHope StreetLiverpoolL1 9BW

Tel (books): 020 7209 5151Tel (training and events): London 020 7209 4949 & Liverpool 0151 708 0117Website: www.dsc.org.uk

�� EElleeccttoorraall RReeffoorrmm SSoocciieettyy

The Electoral Reform Society is a membership organisation which campaigns for improvements indemocracy, particularly through the use of better voting systems.

6 Chancel StreetLondonSE1 0UU

Tel: 020 7928 1622Website: www.electoral-reform.org.uk


4499

�� EEtthhnniicc MMiinnoorriittyy FFoouunnddaattiioonn ((EEMMFF)) aanndd tthhee CCoouunncciill ooff EEtthhnniicc MMiinnoorriittyy VVoolluunnttaarryyOOrrggaanniissaattiioonnss ((CCEEMMVVOO))

EMF and CEMVO develop resources for black and minority ethnic organisations, these includenetworking and training opportunities and a trustee register.

Boardman House64 BroadwayStratfordLondonE15 1NG

Tel: 020 84320 307Email: [email protected]: www.emf-cemvo.co.uk

�� HHMM CCuussttoommss aanndd EExxcciissee

For information relating to VAT queries refer to your local telephone directory for the contactdetails. General information is available from:

Tel: 0845 0109000Website: www.hmce.gov.uk

�� IInnssttiittuuttee ooff CChhaarrtteerreedd SSeeccrreettaarriieess aanndd AAddmmiinniissttrraattoorrss ((IICCSSAA))

ICSA provides information and good practice guidance on governance issues affecting the sector.They also have a trustee register available to charities needing new trustees.

16 Par CrescentLondonW1B 1 AH

Tel: 020 7580 4741Email: [email protected]: www.icsa.org.uk

5500


�� IInnssttiittuuttee ooff FFuunnddrraaiissiinngg

The Institute of Fundraising aims to promote the highest standards of fund-raising practice.

Market Towers1 Nine Elms StreetLondonSW8 5NQ

Tel: 020 7627 3436E-mail: [email protected]: www.institute-of-fundraising.org.uk

�� MMeeddiiaattiioonn UUKK

Mediation UK is a national voluntary organisation dedicated to developing means of resolvingconflicts in communities.

Alexander HouseTelephone AveBristolBS1 4BS

Tel: 0117 904 6661Website: www.mediationuk.org.uk

�� NNaattiioonnaall AAssssoocciiaattiioonn ffoorr CCoouunncciillss ffoorr VVoolluunnttaarryy SSeerrvviiccee ((NNAACCVVSS))

The NACVS network provides a wide range of information and support for charities.

National Association for Councils for Voluntary Service3rd Floor Arundel Court177 Arundel StreetSheffieldS1 2NU

Tel: 0114 278 6636Email: [email protected]: www.nacvs.org.uk


�� NNaattiioonnaall CCoouunncciill ffoorr VVoolluunnttaarryy OOrrggaanniissaattiioonnss ((NNCCVVOO))

Information available on fund-raising and governance issues and a range of general supportservices. The NCVO plans to publish a Good Membership Guide later this year.

National Council for Voluntary OrganisationsRegent's Wharf8 All Saints StreetLondonN1 9RL

Tel: 020 7713 6161E-mail: [email protected]: www.ncvo-vol.org.uk, www.askncvo.org.uk

�� WWaalleess CCoouunncciill ffoorr VVoolluunnttaarryy AAccttiioonn ((WWCCVVAA))

WCVA supports charities and the voluntary sector in Wales.

Baltic HouseMount Stuart SquareCardiff BayCardiffCF10 5FH

Tel: 029 20431700E-mail: [email protected]: www.wcva.org.uk

JJoouurrnnaallss,, mmaaggaazziinneess aanndd nneewwssppaappeerrss

�� CChhaarriittyy FFiinnaannccee

3 Rectory GroveLondonSW4 0DX

Website: www.charityfinance.co.ukSubscriptions tel: 020 7819 1200E-mail: [email protected]

5511


5522

�� CChhaarriittiieess MMaannaaggeemmeenntt

Mitre House PublishingThe Clifton Centre110 Clifton StreetLondonEC2A 4HD

Subscriptions tel: 020 7729 6644

�� CChhaarriittyy TTiimmeess

Website: www.charitytimes.comSubscriptions tel: 020 7426 0496/0123

�� TThhee GGuuaarrddiiaann//SSoocciieettyy

The Society section in Wednesday's edition of The Guardian is particularly useful.

Website: www.SocietyGuardian.co.uk

�� TThhiirrdd SSeeccttoorr

Website: www.thirdsector.co.ukSubscriptions tel: 020 8606 7500Email: [email protected]

Annex D - Bibliography

Adirondack. S et al., (2001) The Voluntary Sector Legal Handbook, 2nd Ed. Directory Of SocialChange. London.

Rt. Hon. Blunkett, David, MP., Home Secretary (June 2003), "Civil Renewal: A New Agenda",Speech made at the CSV Edith Kahn Memorial Lecture. London.

Bremridge. T., (2003) Outsourcing the servicing of supporters. Charities Management Autumn2003.

Cabinet Office, (2002) Private action, Public Benefit: A Review of Charities and the Wider Not-For-Profit Sector.

Canavon. M., and Smith. P., (2001) Representing the People - Democracy and Diversity. LGAPublications. London.

Charity Commission, (2003) The Charity Commission and Regulation.

Charity Commission, (2002) Charities and Commercial Partners (RS2).

Charity Commission, (2003) Collaborative Working and Mergers (RS4).

Charity Commission, (2000) Charities and Meetings (CC48).

Charity Commission, (2003) Model Memorandum and Articles of Association for a CharitableCompany (GD1).

Charity Commission,(1998) Model Constitution for a Charitable Unincorporated Association(GD3).

Charity Commission, (2000) The Recreational Charities Act 1958 (RR4).

Charity Commission, (2002) Responsibilities of Charity Trustees (CC3).

Charity Commission, (2002) Trustee Recruitment, Selection and Induction (RS1).

Charity Commission, (2000) Users on Board: Beneficiaries who become trustees (CC24).

Deakin. N., (2001) In search of Civil Society. Palgrave. London.

Hayes. D., and Slater. A., (2003) From "social club" to "integrated membership scheme": Developingmembership schemes strategically. International Journal of Non Profit and Voluntary SectorMarketing. Volume 8 No 1 February 2003.

Jas.P., et al (2002) The UK Voluntary Sector Almanac. NCVO Publications. London.

5533

BBiibblliiooggrraapphhyy

Morris. D., (2003) Disputes in the Charitable Sector. Charity law Unit, University of Liverpool.

NCVO (in partnership with the Centre for Effective Resolution), (2003) You're not listening to me.NCVO. London.

Pharaoh. C., (2003) Charity Trends 2003 24th Ed. CAF, London.

Picarda. H., (1995) The law and practice relating to charities, 2nd Ed., Butterworths, London.

Powell. F., and Guerin. D., (1999) Civil Society and Active Citizenship: The role of the voluntarysector. Association for Voluntary Action Research in Ireland.

Travers.T., (2003) A trip down memory lane. Public Finance July 18-24.

Warburton. J., (1995) Tudor on Charities, 8th Ed., Sweet & Maxwell. London.

Warburton. J., (1992) Unincorporated Associations; Law & Practice 2nd Ed. Sweet & Maxwell.London.

WCVA, (2002) Faith and hope don't run charities (trustees do): a practical guide to voluntarymembers of management committees. Cardiff.

Wilson. A., (1993) Friendly Societies - A Guide to the New Law (1993) Butterworths, London.

5544

5555

Acknowledgements

We would like to thank all the charities who gave their time to contribute to the research for thisreport.

Special thanks also to Dr Helen Cameron and Professor Jean Warburton for their help and valuableinsights.

Notes

5566

Documents

RS7 - Membership Charities · Introduction Membership of a charity can bring real benefits both to the work of the charity and for society more generally. When a charity's members