Charity membership is a powerful model. By empowering a wide range of people around a specific cause, the membership model enables charities to grow stronger, impact society and have sustainable funding.
By explaining charity membership rules and their practical implications, this post will help you unlock the potential of membership for your organisation.
What Is A Charity Member?
In most charities, members are the foundation of the legal structure: the charity must have one or more members in order to exist. However, the nature of this membership varies dramatically.
The role of members in UK charities falls into the following three broad categories:
- members are the same people as the directors/trustees
- members are a wider group of people on whom the charity typically relies for revenue or for the carrying out of its work
- members are a small group of one or more people who set the charity up and wish to retain strategic control (rare)
The new charity structure called the Charitable Incorporated Organisation (CIO) calls the first category Foundation CIOs and the second category Association CIOs.
To the public, charities in which a wide group of members play a significant role tend to describe themselves as membership organisations, associations or societies. Prominent examples of charities with a wide membership are The National Trust, Royal Society for the Protection of Birds and The Scout Association.
Rules – Joining And Leaving
The core provisions for appointment of members and their relationship with directors/trustees will be contained in the charity’s constitutional documents (e.g. the Articles of Association for charitable companies). For charities with a wider membership, they are likely to also have a separate document governing the terms of membership. The terms of membership should include reference to the following items, some of which are discussed more in the remainder of this post.
- Who can join? If membership is not open to the public, what criteria must be met?
- What fees are payable?
- What benefits come with membership?
- How long does membership last and how is it renewed?
- In what situation can members be barred or removed?
- How are membership terms reviewed and amended?
What Role Do Charity Members Play?
The details of a member’s rights vary depending on the legal structure of the charity and the charity’s membership rules but in general members have the following powers:
- remove and replace directors/trustees
- amend constitutional documents (subject to Charity Commission consent)
- approve certain transactions between the company and its directors/trustees
- in some cases, control the destination of any remaining assets when the charity is wound up
It is the trustees who have day-to-day control over the charity’s operation so the membership power with the most impact is the election of charity trustees. The High Court recently clarified that this right must be exercised in the best interests of the charity.
Practically, these rights often boil down to an invitation to attend, and vote at, the charity’s Annual General Meeting (AGM).
Charity Membership Fees & Benefits
For charities seeking to engage with a wider membership, it is often necessary to incentivise prospective members with additional benefits. This is even truer if a membership fee is required.
A compelling membership offering may include:
- a meaningful role in the running of the charity
- participation in a like-minded community
- practical benefits, such as exclusive discounts and offers
However, charities should be mindful of some restrictions in this area.
Public Benefit Restrictions
If you set up a charity with a wider membership, it mustn’t be set up only for the benefit of your members unless:
- a sufficient section of the public can access those benefits by becoming members – for example, anyone can join
- the membership structure is a suitable way of carrying out your charity’s purposes for the public benefit – for example, members of an amateur sport club
HMRC Gift Aid On Membership Fees
The gift aid scheme allows charities to claim extra money from HMRC on donations from taxpayers. While it can generally only be claimed on gifts, it can in certain circumstances be claimed on membership fees.
To claim gift aid on membership fees you must demonstrate that the member does not benefit significantly from the fee they are paying. The rules on this are complex and you are best seeking expert advice if this is a question you are facing. Many of the large membership charities like The National Trust and English Heritage successfully claim back gift aid on many of their membership fees despite the fact that these membership offerings provide clear and desirable benefits.
Supporters Who Are Not Officially Members
Many charities seek to draw on the benefits of a membership scheme while maintaining the simplicity of a ‘foundation’ model of charity (where members are the same as trustees). In these situations, the scheme is sometimes referred to informally as a ‘membership scheme’ but care must be taken in setting this up. One way to avoid confusion is to call unofficial ‘members’ by a different name, such as ‘friends’ or ‘sponsors’.
Whatever such schemes are called, the same restrictions about benefits to members and gift aid still apply and it is prudent to set out the terms of the scheme clearly in written form.
