Legal Structures in the Voluntary Sector

Scottish Charitable Incorporated Organisations (SCIO)

A Scottish Charitable Incorporated Organisation is a legal structure which has been purpose-built for the voluntary sector in Scotland. It provides limited liability and a separate legal identity to organisations that want to become charities but do not want or need the complex structure of company law. This means that even the smallest charity can access the benefits of incorporation – including limited liability and legal capacity.
It is only available to charities with a principal office in Scotland and is regulated by OSCR and subject to the Charities and Trustee Investment Act (Scotland) 2005.

SCIOs
Writing an SCIO Constitution (Single and Two-Tier formats)

Unincorporated Voluntary Association (UVA)

A voluntary or unincorporated association is a group of people who have decided to work together to accomplish a common agreed non-commercial purpose, such as a club, society, local group or community association.
A voluntary association is the simplest form of legal structure and is often appropriate for small scale activities which do not involve leasing premises or employing staff.
This structure is not regulated by an external regulator or subject to specific legislation, although some case law does exist. If it is charitable it will be subject to charity law and regulated by OSCR.

UVAs and Writing a UVA Constitution

Company Limited by Guarantee (a.k.a. a “Guarantee Company”)

A company is a membership organisation formed and registered under the provisions of the Companies Acts. It is incorporated and benefits from limited liability for its members.
It’s a structure that can be chosen by voluntary sector organisations that employ staff, regularly enter into contracts, manage investments, and/or own property and other assets, because limited liability helps to minimise the threat of personal liability for the directors.
It is regulated by Companies House and subject to the Companies Acts and other legislation. If a company is charitable then it will be subject to charity law and regulated by OSCR as well.

Co Ltd by Guarantee and Drafting the Memorandum and Articles of Association

Trusts

A trust is usually set up where assets (e.g. property, investments) are given by one person (the Donor) to another (the Trustees) with the intention that it should be applied for the benefit of a third party or the public (the Beneficiary). Once this occurs, the trustees own the asset, but can only apply it in accordance with the trust deed for the benefit of the beneficiaries.
A trust is not regulated by an external regulator (unless it is a charity), but is subject to various legislation, e.g. Trusts (Scotland) Acts 1921 and 1961. If it is charitable it will be subject to charity law and regulated by OSCR.

Trusts and Drafting a Trust Deed

Other Structures

These are other, less common formats within the voluntary sector. It should be noted here that the term “Social Enterprise” refers to a business model employed by an organisation and does not (as some people think) constitute a legal format. This being the case, any type of organisation within the voluntary sector that operates on such a model could be described as a “social enterprise”
There are various definitions of what identifies an organisation as a “social enterprise” but the most commonly accepted one is applied to any organisation that derives at least half (50%) of its annual income from earned sources, e.g. through the supply of goods, or services, or both.

Social Enterprises CICs Co-operatives IPS and Friendly Societies