On 9 September 2023, Sistren Legal Collective attended the Life Affirming Organisational Practice Event at Watershed, Bristol, organised by Dark Matter Labs, Healing Justice London and the Transformational Governance Collective. The event explored ways in which institutions and organisations can be supported and held accountable by inclusive, open, transformational governance practices that invite change, redistribute power, and enable everyone to thrive. The guiding question for the day was: how do we build organising and governance systems that are conducive to life, dignity, thriving, safety and joy?
Keya & Samara were there running a drop-in clinic, where attendees could sign up for 20-minute individual chats with us to have exploratory conversations around legal structures or formal governance challenges. Our role was to talk through the structural and governance challenges that community members were grappling with and together explore potential solutions, within the legal and regulatory frameworks that people were operating in.
Some of the key questions and themes that emerged through the course of our conversations were:
- How can individuals participate in the organisation and have a voice or decision-making power, without becoming a director or trustee
In some circumstances, it does not feel safe for younger or more vulnerable community members involved in activism to take on the risk and responsibility of being a director, to have their information or address details listed on Companies House, to be the ‘face’ of an organisation as a director.
In other circumstances, directorship/trusteeship may adversely impact people’s benefits or immigration statuses. There need to be ways to enable participatory decision-making without the burden of directorship/trusteeship.
- How to resource people’s time for being a director/trustee, particularly where trustees can’t be paid
While there is a desire to diversify the board of a charity and enable a wider range of experiences to be represented on the board, many of the applicants who could become trustees can’t afford to provide the time commitment required of a board member on a voluntary basis where a charity is not able to pay its trustees. We need to engage with alternate legal structures or mechanisms which enabled directors or trustees to be paid.
- Understanding the governance requirements in different types of organisational structures and what funders often expect
Charities are required to have at least three trustees in place, usually on the date that they make an application for registration with the charity commission. However, a community interest company (CIC) can set up with just one director in place.
An organisation we spoke to incorporated as a community interest company limited by guarantee (CIC CLG) with its founder as its a sole director. However, it was struggling to access funding because some of the funders it had approached required it to have a minimum of three directors in place. Having three directors is not a legal requirement for CICs, yet funders often require this. Funders need to have a more nuanced understanding of when having more than one director is not good governance, but rather is a governance burden and a bottleneck for small organisations.
- Exploring legal structures that facilitate more democratic decision-making
Certain legal forms have more centralised forms of legal structuring and governance where directors/trustees make most or all decisions, but there are other more democratic forms where a broader membership body makes most key decisions. We need to ensure early-stage organisations understand the available options that facilitate more democratic decision-making.
- How to incorporate existing organisational practices into legal and constitutional structures
Unincorporated organisations, grassroots groups and collectives often practice radical governance as a matter of course. For example, it was organisational practice for one of the organisations we spoke to, for all major decisions to be made at a monthly all-staff meeting. We need to create space to incorporate existing practices into the organisation’s decision-making and governing documents once if they choose to ‘formalise’ or ‘incorporate’.
- Exploring distributed and networked decision-making structures
What potential legal structures could be conducive to setting up a decentralised, networked family of individuals and organisations, which operates for the wellbeing of all individuals and organisations within that network. We discussed cooperative legal models, the principles behind cooperative models and their ability to attract financial investment for the benefit of its members.
We also saw a need for organisations to receive legal advice on the transfer of employment contracts and the rights of employees who wish to take strike action.
Some of the other ideas that we discussed through the course of our exploratory conversations were:
- The role of a shadow board and both the possibilities and risks associated with this
- The possibility of different membership models, where the members of the organisation (and not just its directors/trustees) are responsible for making key decisions
- Different types of powers that could be attributed to members through an organisation’s constitutional documents, including the power to appoint or remove directors/trustees
- Director/trustee retirement provisions and different ways to balance the benefits of directors having longer terms in office (continuity, experience, confidence) with new directors regularly cycling through the organisation and shaking up decision-making
- Different ways to use delegation (the process of empowering someone else to act for you on certain matters) and committees and advisory groups in decision-making processes
- Different strategies for keeping more vulnerable decisionmakers within an organisation safe, including the role of delegated powers, advisory committees and shadow boards
- Legal structures that enable directors to be paid while remaining ‘fundable’ (including community interest companies limited by guarantee (CIC CLGs) and community benefit societies (BenComs))
- Circumstances in which charity trustees can be paid
- The possibility of entrenching certain governance provisions (that is, providing additional legal safeguards and requirements) on how or why decisions are made by an organisation, including by making it more difficult to change certain provisions in an organisation’s governing documents
We also discussed the role of ‘harder’ legal obligations and requirements – for example entrenching certain provisions or incorporating particular voting thresholds into organisational governance mechanisms – versus the role of ‘softer’ techniques, including developing organisational practices, guides, rules or regulations that are true to how an organisation like to make decisions and self-govern.
We strongly believe that legal frameworks should be built around the culture and practices of an organisation, and not the other way around. While there is a role for lawyers to play in explaining or clarifying legal requirements, there is a lot of room for organisations to develop better, more equitable and participatory governance approaches even within the constraints of currently available legal frameworks.