Who's in control - working out your governance structure
The basis of most legal forms is a two-tier power structure whereby a small group of individuals is responsible for the running of the organisation (called a board of directors, board of management, management committee, or board of trustees), but is accountable to a wider group of individuals (often called members or shareholders or owners).
This basic structure may be developed in many different ways to suit the particular organisation, but the structures adopted by most divide into the following five types:
The individuals who make up the board are the same people as the members, and new appointments to the board are made by the board. When someone ceases to be on the board, they also cease to be a member of the organisation. This is a straightforward structure and is common to many charities and social enterprises. It should always be considered by those that are new and still small. For CIOs, the foundation structure is called the Foundation model.
This is used by organisations that wish to have members who are organisations instead of individuals. For example, the members may be local authorities, charities, etc. Each member then appoints an individual to serve on the board.
A version of this model can also be used for 'joint ventures' where two or more organisations (which may be charities, co-operatives and/or private companies) wish to establish a legal form to run a joint project. Each 'owner' of the new legal form has the right to appoint an individual to the board.
This is a useful model to adopt where it is important that a number of individuals or organisations have rights in relation to the organisation. It is sometimes used by community organisations who wish to involve local individuals and organisations. It is also used by national organisations who wish to adopt a democratic structure. For CIOs, the membership structure is called the Association model.
The International Co-operative Alliance (ICA) Statement on the Co-operative Identity describes a co-operative as ‘an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise’. All co-operative organisations operate under the ICA co-operative values and principles. While the co-operative organisation is usually first thought of as a registered society (formerly called industrial and provident society), there are many different legal forms that can be used to create an organisation which falls within this definition. One of the key features is usually 'one member one vote'.
Here board members may or may not be members of the organisation, and are appointed to provide particular knowledge or skills to the board. Recruitment of board members in this way should be treated with the same care as recruitment of staff, and a number of organisations provide guidance on good practice.
Boards can also take a hybrid form with, for example, a section of the board elected by the membership and further places available to co-opt appointed members with particular expertise.