The constitution of an organisation serves two main functions:
(i) To define the aims of the organisation;
(ii) To describe how decisions are made in the organisation.
In the guarantee company (the most common legal form of the non-profit organisation), the constitution consists of the Memorandum & Articles of Association of the company. The former states the nature of the company and its aims. The latter acts as the internal “rule-book” governing decision-making, and dealing with matters including:
Membership of the company
The appointment and retirement of directors
The role of the directors
The convening of meetings, and voting rights
The audit and the keeping of accounts
Whatever the legal nature of the organisation, it is imperative that board members of the organisation are not merely acquainted with the constitution, but on intimate terms with it. The constitution should be up-dated, refreshed, re-modeled, and adapted as often as necessary to keep it in tune with the activities and aspirations of the organisation. It should govern freely and easily, giving plenty of room for the organisation to grow and develop, at the same time providing a sensible sub-structure of rules and boundaries to guide the activities of the board and executive.
Sometimes voluntary organisations are established on the basis of a “shelf company”, with a standard form constitution which has never been properly tailored to the particular requirements of the organisation. Often such constitutions are left, literally, on a shelf to gather dust, while the organisation proceeds to operate in a fashion which does not take account of its legal status and framework. This can have expensive consequences in the event of a dispute.
Whenever it is appropriate to do so, the board should initiate review of the constitutional documents of the organisation, to ensure that the legal status of the organisation is appropriate, and that the constitution is up to date and properly adapted to the needs of the organisation.
Linda Scales © 2010
