Unincorporated Association

An unincorporated association (UA) is not required by law to seek approval of any kind before setting up, nor does it have to register with any regulatory body unless it is legally charitable.

A UA with a small income, which does not intend to employ staff, enter into contracts or acquire property, may need only a set of basic rules. These should state the association’s aims, the powers it has to achieve them and its management procedures.

Advantages

• It is quick and cheap to set up (unless you are applying for charitable status). An UA is essentially a membership organisation and can draw up its own democratic constitution setting out the rules by which it will be run.
• It is simple and cheap to run. You do not have to submit accounts (unless the organisation is a charity, or accounts are required by a funder).
• It can generally be wound up more easily than companies, charitable incorporated organisations (CIOs) or cooperative and community benefits societies.
• UA can register as charities and gain all the advantages of charity status. They must generally register if their objects are charitable and their annual income is over £5,000.

Disadvantages

An UA has no separate legal existence, and remains for most purposes a collection of individuals. As a result, in most cases:

• It cannot acquire property in its own name; property must be held by individuals or incorporated body acting on its behalf.
• Legal proceedings cannot be taken by the association in its own name, but must be taken by individuals representing it.
• Its activities may be restricted as funders may prefer to donate larger sums to organisations with a more formal structure.
• It may find it difficult to borrow money. Many banks and other financial institutions will insist on incorporation before providing loan finance.
• Individual members of the management committee can be held personally responsible for the association’s obligations and debts.

Of note, only incorporation will protect committee members against being personally responsible, in most situations, for the association’s liabilities and debts. If liability of management committee members is a concern, you should seriously consider forming an incorporated organisation.