Set up a social enterprise

Unincorporated associations

The unincorporated association form is usually chosen when a number of individuals agree or 'contract' to come together for a common purpose - which may be of a social nature.

How unincorporated associations operate

Unincorporated associations are relatively straightforward to run and cost nothing to set up. They make their own rules for running the organisation and set these down in a democratic constitution. A management committee is elected to run the organisation on behalf of the members (if it has any).

Unincorporated associations do not need to register with or be regulated by either Companies House or the Financial Services Authority. They enjoy greater freedom of operation than a company. For example, they don't have to submit annual returns.

If an unincorporated association has exclusively charitable objects (or aims), and those objects are for the public benefit, it should apply to the Charity Commission to be registered as a charity. All charities must follow the requirements of charity law, and most registered charities must also submit annual returns to the Charity Commission. Read frequently asked questions on registering a charity on the Charity Commission website - Opens in a new window.

Unincorporated associations may also have trading or business objectives or carry on commercial activities.

Although an unincorporated association cannot own property, it may be able to set up a trust to legally hold ownership of property and assets for the community they are intended to benefit. See the page in this guide on trusts.

Personal risk

Unincorporated associations have no separate legal identity. This means that their members will have to sign loans and contracts as individuals and carry the risk of personal liability.

This form is unlikely to offer a long-term solution if you intend to sign contracts or expand the enterprise. You should consider incorporation if you intend to:

take on employees
raise finance, apply for grants or open bank accounts
issue shares
enter into large contracts
take on a lease or buy freehold property

This should help you to gain access to a wide range of financing sources that will not put your personal assets at risk.

Read about good governance and leadership on the National Council for Voluntary Organisations (NCVO) website - Opens in a new window.

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