Starting an as­so­ci­ation: How it works

Whether a sports club, teachers’ as­so­ci­ation or nature con­ser­va­tion club - very different purposes and goals can lead to the found­a­tion of an as­so­ci­ation or club. But are there re­quire­ments for forming an as­so­ci­ation? What about in­cor­por­ated or un­in­cor­por­ated as­so­ci­ations? What is the exact defin­i­tion of an as­so­ci­ation? Are voluntary as­so­ci­ations and clubs the same thing? These questions are some that you’ll need to look into if you want to start your own or­gan­isa­tion. There are good reasons for the pop­ular­ity of as­so­ci­ations. They offer their members a reliable, demo­crat­ic or­gan­isa­tion, relieve the in­di­vidu­al members and the board of the con­trac­tu­al liability and are com­par­at­ively simple and cost-saving to start.

Starting a sporting, cultural, social or char­it­able as­so­ci­ation can be hugely rewarding, but it also comes with its chal­lenges. You’ll want to consider whether the found­a­tion of a re­gistered as­so­ci­ation is the best choice. Or have you already made up your mind and would now like to know what the pre­requis­ites are, what steps are necessary and what costs you have to expect when founding a club? Find out everything you need to know about founding an as­so­ci­ation here.

According to en­cyl­o­pe­dia.com, an as­so­ci­ation can be defined as: “a group organised for the pursuit of one interest or of several interests in common. As­so­ci­ations are usually con­tras­ted with in­vol­un­tary groupings serving a greater variety of ends, such as kin groups, castes, social classes, and com­munit­ies.” This shows the history of an as­so­ci­ation: before even being part of a legal system, as­so­ci­ations were an integral part of society, showing in­di­vidu­als’ col­lect­ive interest in a topic or their con­nec­tion to one another. This article will not focus on the an­thro­po­lo­gic­al and so­ci­olo­gic­al origins of as­so­ci­ations, and instead look at them in a business context. It is good to know, however, that as­so­ci­ations have been part of our society for years, long before they were in­sti­tu­tion­al­ised.

Nowadays, however, an un­in­cor­por­ated as­so­ci­ation is still a group of in­di­vidu­als who gather for a certain purpose. This can be quite varied, but the im­port­ance is that there is a par­tic­u­lar goal or mo­tiv­a­tion behind the gathering; a group cannot just be an as­so­ci­ation if there isn’t a clear link between them. In the UK, an as­so­ci­ation is also sometimes called a voluntary or­gan­isa­tion, or un­in­cor­por­ated as­so­ci­ation. We will look at the dif­fer­ence between an in­cor­por­ated or­gan­isa­tion and an un­in­cor­por­ated as­so­ci­ation below, as it may influence which form your business takes.

The legal structure of your business is important. It in­flu­ences things such as how you employ people and taxes so it is important to get it right. Limited companies are in­cor­por­ated busi­nesses and are for-profit. This means that the profits a business makes will go to the share­hold­ers and investors of the business, rather than back into the or­gan­isa­tion itself.

What makes an as­so­ci­ation un­in­cor­por­ated rather than in­cor­por­ated has to do with its legal status. An in­cor­por­ated or­gan­isa­tion can enter into legal contracts and if the or­gan­isa­tion accrues debts, it is the or­gan­isa­tion that is seen to be in debt, rather than the in­di­vidu­als who run it. In an un­in­cor­por­ated as­so­ci­ation, the debts accrued or profits gained are the re­spons­ib­il­ity of the people running the as­so­ci­ation because the as­so­ci­ation itself does not count as an entity in a court of law.

Some forms of as­so­ci­ations in the UK include char­it­able trusts (un­in­cor­por­ated), char­it­able in­cor­por­ated or­gan­isa­tions (in­cor­por­ated), and un­in­cor­por­ated as­so­ci­ations (un­in­cor­por­ated). But does your group fulfil the re­quire­ments to be any of the above? And does it make sense to choose an as­so­ci­ation as your business’ legal structure?

As mentioned in the previous section, one of the benefits of being an un­in­cor­por­ated as­so­ci­ation is that you are able to make use of a tax-exempt status within the UK if it is char­it­able or a non-profit. This is helpful for as­so­ci­ations which are just starting out, because it minimises the amount of book­keep­ing that is required.

Fur­ther­more, you are not obligated to register with any gov­ern­ment de­part­ments because an un­in­cor­por­ated as­so­ci­ation will not be bound by reg­u­la­tions. This makes sense when you think about it: starting an as­so­ci­ation is different to starting an in­cor­por­ated business because they have different aims. You don’t have to register your business because tech­nic­ally, it isn’t one.

One final benefit is that you are in some way much more flexible as an un­in­cor­por­ated as­so­ci­ation. As long as they are regularly updated, and of course lawful, the reg­u­la­tions of an un­in­cor­por­ated as­so­ci­ation can be freely chosen. As mentioned before, although these rules can be whatever you want them to be, your con­sti­tu­tion may be required to have certain clauses, phrased in a certain way.

Generally speaking, therefore, the ad­vant­ages of being an as­so­ci­ation can be cat­egor­ised as the benefits of flex­ib­il­ity and sim­pli­city, which allow for greater freedom. Not being bound by as many reg­u­la­tions, you’ll have more time to focus on what matters, and you can save money on ac­count­ants and taxes, for example.

Sadly, not all aspects of being an un­in­cor­por­ated as­so­ci­ation as mentioned above are a bed of roses. There are certain dis­ad­vant­ages to the legal status of being an as­so­ci­ation. One par­tic­u­lar dis­ad­vant­age is due to the very essence of being un­in­cor­por­ated, which is that the as­so­ci­ation doesn’t represent a separate legal entity. This means that the as­so­ci­ation is not legally distinct from its members, so the committee members them­selves have to hold assets or enter into contracts for the as­so­ci­ation. For example, if there is a swimming team which has re­gistered as an as­so­ci­ation and rented a swimming pool, and for some reason there is a breach in the rental contract, the claims made would be against the in­di­vidu­al members of the committee.

Another issue of being un­in­cor­por­ated is the matter of trans­fer­ring assets. Because the as­so­ci­ation itself is not a legal entity, it cannot hold property. Any assets that the as­so­ci­ation has will be held by the members of it, and once a person leaves the as­so­ci­ation there is the matter of trans­fer­ring these assets to another in­di­vidu­al. This could be com­plic­ated, if, for example, someone leaves on bad terms. Good advice to prevent this is to maintain good com­mu­nic­a­tion in the workplace.

If these dis­ad­vant­ages turn you off from starting an as­so­ci­ation, it is worth bearing in mind that you can always start out as an un­in­cor­por­ated as­so­ci­ation and in­cor­por­ate further down the line. That way you can monitor how long you are truly taking advantage of the benefits of being an as­so­ci­ation, but as soon as the drawbacks outweigh these benefits, you can consider in­cor­por­at­ing. This will most likely save you money in the beginning.

There are lots of things to consider when starting an as­so­ci­ation, but two of the most important things are how the man­age­ment will be struc­tured, and how you want to draw up the mem­ber­ship rules.

For most clubs, it is im­prac­tic­al for every member to have a vote on every decision. Therefore, a man­age­ment committee is usually elected to run the or­gan­isa­tion on behalf of the members. The authority of this man­age­ment committee should be written into the rules of the as­so­ci­ation, and because every member has agreed to those rules when they sign up as a member, the structure of man­age­ment is fairly simple. The committee should be voted in, so that even though members agree to follow the rules by signing up, they still have some authority them­selves because they can decide who rep­res­ents them. That leaves the committee as rep­res­ent­at­ives for all the members.

When starting an as­so­ci­ation, you will no doubt want to attract members to join your worthy cause. You should, however, consider the criteria or eli­gib­il­ity for becoming a member, how a person becomes a member and im­port­antly, how and under which cir­cum­stances mem­ber­ship ends. This should be con­sidered right from the beginning. You may consider giving committee members the power to end the mem­ber­ship of those who behave in ways which are in­con­gru­ent with the rules and/or values of your or­gan­isa­tion.

All living things change, and you’ll want to make sure that your or­gan­isa­tion is vibrant and lively. For that reason, you might need to have a process by which you or the committee can amend the rules. It might also be the case that, over time, the members them­selves may see fit that the rules change, or that the or­gan­isa­tion’s purpose is amended. Change is a good thing, but it needs to be carried out with caution and respect.

It can be par­tic­u­larly difficult to come to an agreement on how to change the purpose of an or­gan­isa­tion if every member has to agree in order for the change to become effective. It should, therefore, be part of your or­gan­isa­tion’s planning to see how future structure can be im­ple­men­ted. Giving a committee the right to make certain decisions or allowing a majority vote to make decisions in certain cir­cum­stances could be a place to start.

An annual general meeting might be a good idea, not just for morale and community spirit of the group, but to give your as­so­ci­ation the time to make important decisions. Meeting in person is always prefer­able, but it is also possible to have more frequent gath­er­ings with all members thanks to online meeting software such as Skype or Zoom. These are an option where meeting in person is not.

An annual general meeting might be a good idea, not just for morale and community spirit of the group, but also to give your as­so­ci­ation the time to make important decisions. Meeting in person is always prefer­able, but it is also possible to have more frequent gath­er­ings with all members thanks to online meeting software such as Skype or Zoom. These are an option where meeting in person is not.

Starting an as­so­ci­ation will most likely feel like setting up a business. For this reason, coming up with a sound business plan is a good idea, even if the or­gan­isa­tion itself won’t function like an in­cor­por­ated as­so­ci­ation. A business plan will put you on the right track and help maintain pro­fes­sion­al­ism in the early days. We often speak of ‘forming an as­so­ci­ation’, but it should have become clear that you don’t really need to form an un­in­cor­por­ated as­so­ci­ation – truly forming one would change its structure into an in­cor­por­ated as­so­ci­ation and that is another matter entirely. What is necessary to start an as­so­ci­ation is what we have outlined above: man­age­ment rules and man­age­ment selection. You decide on the formal im­ple­ment­a­tion of these rules, but it’s worth starting off with a good found­a­tion, and official documents can save you hassle down the line.

Please note the legal dis­claim­er relating to this article.