Setting Up the Nursery as an Organisation
Extract from Coram Family and Childcare Trust report
Early in the process of setting up your nursery will need to set up as an organisation listed with Companies House or registered with the Charity Commission, or both. This is necessary so that the organisation can set up a bank account, receive and spend money, take on a lease and hire staff.
What is the best organisational structure to support your aims?
There are a number of different structures that could be adopted for your nursery which recognise its social purpose and bring organisational benefits including being able to receive grants and donations as well as being treated as a charity for tax purposes. These structures include:
Cooperative Society
Consortia Cooperative limited by Guarantee
Consortia Cooperative limited by shares
Community Interest Company Limited by guarantee (CIC)
CIC limited by shares
Charitable Incorporated Organisation (CIO)
For Friendly Families Nursery, we chose to set up as a charitable incorporated organisation (CIO). This arrangement allowed for charitable and commercial activity and protected trustees from personal liability for the organisation. The format was also more straightforward in allowing a change of Directors, something we expect to happen every few years as children move on to school and new parents become Directors.
What do you need to do before you can register as an organisation?
In order to set up the organisation, It will be necessary to define the charitable purpose of the organisation and what it is aiming to achieve. Deciding these can be a useful activity for engaging local parents and deepening the understanding of your nursery’s aims. You will also need people to be Parent Directors as they must be named on the governance documents. Additional directors can be added at a later date.
Do you need to set up a new organisation or can you work under the umbrella of an existing one?
Some groups looking to set up a new early years setting may already be registered as a community business, social enterprise or charity. In this case it may work better to have a working group of parents and existing directors to lead the development of the new setting, without needing to register as a new organisation. Groups of parents who are looking to set up a new nursery may want to approach existing local community groups, to explore if it is possible for them to act as a mentor/ umbrella to support the establishment of a new setting.
Summary
There are a number of different organisational structures that you can chose for your nursery. It is important to understand the pro’s and con’s of each before deciding which is most suitable. You may also be able to begin your nursery under the umbrella of an existing organisation. Friendly Families Nursery chose to become a CIO, with a representative group of three local parents as Directors. As the nursery has grown we have expanded our number of Directors to six.
What is the best organisational structure to support your aims?
There are a number of different structures that could be adopted for your nursery which recognise its social purpose and bring organisational benefits including being able to receive grants and donations as well as being treated as a charity for tax purposes. These structures include:
Cooperative Society
- Governing Act: Co-operative and Community Benefit Societies Act 2014.
- Members may hold more than one share in the co-operative, but voting is limited to one member, one vote.
- Board composition: elected Board.
- Options to include a common ownership or co-ownership dissolution provision.
- Governing document
Consortia Cooperative limited by Guarantee
- Governing Act: Companies Act 2006
- Members hold one vote on any business to be decided in general meetings
- Board composition: elected board
- Options to include a common ownership or co-ownership dissolution provision.
- Governing document
Consortia Cooperative limited by shares
- Governing Act: Companies Act 2006.
- Members may hold more than one share in the co-operative, but have one vote only on any business to be decided in general meetings.
- Board composition: elected Board.
- Includes an option for a common or co-ownership dissolution provision.
- Governing document
Community Interest Company Limited by guarantee (CIC)
- Governing Act: Companies Act 2006.
- Members have one vote only on any business to be decided in general meetings.
- Board composition: elected Board.
- Includes the required statutory asset lock.
- Governing document
CIC limited by shares
- Same as above but members may hold more than one share in the cooperative.
Charitable Incorporated Organisation (CIO)
- Governing Act/ Constitution Information (includes information on requirement to register with the charity commission)
- Is a charity that is incorporated by law. This means it has its own legal personality and enters into contracts etc. in its own right. This limits trustees or committee members from having any personal liability.
- Annual accounts/reports must be submitted to the Charity Commission yearly
For Friendly Families Nursery, we chose to set up as a charitable incorporated organisation (CIO). This arrangement allowed for charitable and commercial activity and protected trustees from personal liability for the organisation. The format was also more straightforward in allowing a change of Directors, something we expect to happen every few years as children move on to school and new parents become Directors.
What do you need to do before you can register as an organisation?
In order to set up the organisation, It will be necessary to define the charitable purpose of the organisation and what it is aiming to achieve. Deciding these can be a useful activity for engaging local parents and deepening the understanding of your nursery’s aims. You will also need people to be Parent Directors as they must be named on the governance documents. Additional directors can be added at a later date.
Do you need to set up a new organisation or can you work under the umbrella of an existing one?
Some groups looking to set up a new early years setting may already be registered as a community business, social enterprise or charity. In this case it may work better to have a working group of parents and existing directors to lead the development of the new setting, without needing to register as a new organisation. Groups of parents who are looking to set up a new nursery may want to approach existing local community groups, to explore if it is possible for them to act as a mentor/ umbrella to support the establishment of a new setting.
Summary
There are a number of different organisational structures that you can chose for your nursery. It is important to understand the pro’s and con’s of each before deciding which is most suitable. You may also be able to begin your nursery under the umbrella of an existing organisation. Friendly Families Nursery chose to become a CIO, with a representative group of three local parents as Directors. As the nursery has grown we have expanded our number of Directors to six.