About
Ridgeway Playgroup Ltd is a non-profit company limited by guarantee and is a registered charity. We were formerly known as Eastcombe Playgroup. In 2007, management committee members were hard to find and those who did offer to stand as trustees were uncomfortable with the structure of the playgroup as it was an unincorporated association. This legal structure made the management committee personally responsible for any debts the group may end up with! Given the unpredictable nature of local requirements and successive government’s funding strategies for early years education, this liability was hardly likely to attract the volunteer effort needed to run a community charitable group.
So, we incorporated as a company limited by guarantee. We have directors under the terms of the companies act and those same directors are trustees for the purposed of charity legislation. Parents become members (the non-profit equivalent of shareholders) and in return for a maximum liability of just £1 in the event of the group being wound up, parent members get to stand as and vote for directors. They also get to vote on other important things such as changes to the rules (memorandum and articles of association) that the company operates by.
The directors are responsible for the company meeting it’s statutory obligations as required by OfSTED, Companies House and The Charity Commission. They decide fiscal policy, setting up of fund raising committees and such like (drawn from the membership) and they interview and appoint staff. The directors have all the same responsibilities as any company director and charity trustee but they are not permitted to be paid for their time.
It was an enlightening, challenging and often tortuous process changing from an association to a new legal entity but it was worth it if only because we have already found it much easier to attract new trustees than before. We’d encourage any playgroup to do it and we’re happy to answer any questions you have if this helps other groups thrive.
Use the comments feature to ask questions (please do not include confidential information, all questions and all answers will be published for the good of all) and we’ll answer them as soon as we can. Perhaps some others will benefit from our experiences!
Themocracy
I am a manager of a small preschool playgroup who is struggling to fine committee members. My tresurer has resigned and chair. the staff and I are willing to fight to keep the setting open, but dont know where to start. advice would be much appreciated.
Hi Kaye,
Sorry for the delay in replying, I’m sorry to hear you are having a problem with interest in your group.
You are in a similar position to the one we were in a few years ago. It’s great to have staff support but if you can find at least one other person unrelated to yourself who is willing to become a company director my personal opinion is that operating as a non-profit company is still the way to go.
To satisfy the charity commission you will have to adopt something close to their articles of association. This will mean you have to provide the opportunity to rotate directors each year but, if there are no takers then you just record that fact and continue with the current directors.
In the short term, this gives you and the other director absolute power to guide the direction of the group. No committees, no opposing view, just you and one other person with a common goal and a shared vision of what the group should be.
There are other considerations to doing this in a controlled and legitimate fashion so if you haven’t already I’d suggest you read my post http://www.ridgewayplaygroup.co.uk/2009/05/04/turning-your-playgroup-into-a-company/ and consider how it might apply to you.
I’m not providing advice, merely recounting my experiences. I would urge you to seek the advice of any lawyer or accountant perhaps that you can get in touch with, take a copy of the my post and explain your situation and ask their opinion. You might get a freebie if you give them a mention in all your publicity locally.
I would suggest caution about involving the staff as anything other than staff. If there is no option and, say the play leader was willing to be the other director then you have to make allowance for this possibility in your memorandum and articles because the standard charity commission ones will prohibit directors from being paid other than for out of pocket expenses.
Remember, if you do this, you have to be whiter than white. Make sure cheques have to be signed by you and another person not under your influence or a family relationship. You can get a parent to volunteer to be the second signatory if the other director is not suitable. In our case for example, my wife and I were the initial directors and though this was enough to setup and run the company we felt it prudent to get a 3rd director who was not related and not employed by us to be the co-signatory. If you leave a potential for misdeeds then rumnour and suspicion will always be a possibility even though you are well meaning and innocent.
If you have good staff that you want to retain, you have the hardest problem solved. You just need one other like minded person. You are likely to find that after a year or two as the current crop of disinterested parents have moved on, new parents coming into a well organised group that is not bogged down by committees or rules that say they must have one will be all the more willing to get involved. Also of course, you are able to explain to those new parents that their liabilities are limited unlike a committee run association and this will also have a bearing on parents’ willingness to get involved.
I hope something of our story proves useful and wish you the very best of luck. Do let us know here how it works out for you.
Regards
Les Gray