6. How is a CDA Structured?

A CDA is an independent, not-for-profit organisation. As such there are four key issues regarding its structure: membership, management, staffing and legal status.

6.1 Membership:

An independent organisation may or may not have a membership beyond those people who serve on its governing body. When it does, we call this a "participating membership". An organisation which claims to represent a particular group of people—such as a community association or trade union—will inevitably have a membership drawn from the people represented. An organisation with a clear, limited task to achieve—such as a disaster relief fund—will usually not have a membership beyond the fund's trustees.

A CDA falls somewhere between these two poles, and therefore it is a matter of choice for the founders whether or not it has a participating membership; but the majority will have.

The fundamental rights of an organisation's members are: to elect and remove members of the governing body; to receive reports from the governing body, at least annually; to make amendments to the organisation's governing document (constitution); and to wind the organisation up. Consequently the composition of the membership is a matter of some importance.

The standard structure for a CDA encourages membership by local co-operatives, with a view to their forming a majority both within the membership and upon the governing body, although naturally many CDAs start life in an area where there are too few co-operatives for this to be an immediate reality. Other members may be drawn from the local authority (especially where this is providing core funding), business support agencies, trades unions, the voluntary sector, and relevant private sector organisations such as banks. Members will often include representatives of local co-operative retail societies. Some CDAs may offer individual membership to people who have an interest in the agency's work, including agency staff.

6.2 Management:

Whether or not an organisation has a participating membership, it must have a governing body, which will commonly be called the "management committee", "board" or similar. If the CDA is incorporated as a limited company (see 7.4, below), the members of the governing body will be company directors.

The governing body is responsible for the proper management of the organisation's resources, in particular money and staff time. It is also responsible for ensuring that the organisation adheres to any statutory or contractual obligations.

Comments on the composition of the membership, above, apply equally to the composition of the governing body. Where a CDA is established primarily under the aegis of the local authority, it may well be that local authority members and officers will constitute a substantial proportion of the governing body in earlier years of operation. Indeed, a CDA may start life as a council sub-committee before becoming an independent agency.

6.3 Staffing:

A CDA's primary (and most expensive) resource is its staff. Most CDAs will employ staff directly, on contracts of employment which may be permanent or may be fixed-term if it is known that funding will expire on a given date.

An alternative is for the CDA to contract out its labour requirements to self-employed consultants or consultancy businesses—especially where these are structured as co-operatives. The CDA then has the job of managing contracts rather than managing staff. This model is less common but may be appropriate in some instances, especially when funding is uncertain and intermittent.

6.4 Legal status:

The primary choice in terms of legal status is between an incorporated structure and an unincorporated one. Incorporation means creating a legal identity for an organisation, separate from its members. In an unincorporated organisation, all legal responsibilities and liabilities lie with the members of the governing body as the organisation itself is not legally recognised as a distinct entity. However, incorporation brings additional administrative burdens and formalities and so may be avoided while the organisation's exposure to risk is small.

A CDA which is unincorporated will in law be an association. Its governing document will be a written constitution. There is no statute governing associations, but there is a body of case law relating to them. This provides a number of default positions, some of which are not very helpful: for example, unless the constitution says otherwise, then in order for a new member to be admitted, all existing members must consent. Thus it is important that an association's constitution is carefully constructed.

A CDA which incorporates will almost invariably do so as a company limited by guarantee. This provides corporate status, limited liability and perpetual succession. It is a common legal form for voluntary organisations and charities. All companies are governed by the Companies Acts which lay down administrative and other requirements in great detail. These may be augmented by the contents of the company's governing document, called "memorandum and articles of association". (There is an alternative form of incorporation under the Industrial & Provident Societies Acts, but it involves certain restrictions and to date no CDA has adopted this legal status.)

In either case, the basic legal requirements of a governing document need to be enhanced by provisions reflecting the ethos and values of the co-operative movement.

6.5 Adopting a legal structure:

As explained above, a CDA is normally a non-profit Company (limited by guarantee) and with a management Board elected by an associated membership of local co-operatives, supportive individuals, and affiliated organisations.

ICOM's legal department can provide a full service, either to incorporate a CDA or to provide it with a suitable constitution. A model set of memorandum and articles is available (see Appendices), which can be modified to reflect local conditions.

Alternatively, there are other consultants and agencies offering a specialist service to non-profit organisations. Engaging a commercial solicitor is not recommended, as they are unlikely to understand the values and ethos which a CDA will wish to have enshrined within in its legal structure, and they will also probably charge more.

In the first year or two, the CDA might be unincorporated association. It is only when serious funding is attracted and the likelihood of hiring staff becomes a strong possibility that incorporation is really necessary.