Winding up an Organisation

The term ‘winding up’ refers to the process of dissolving an organisation (or ceasing to trade). The details of what this process entails for community groups will depend largely on their structure, their constitution and whether or not they have charitable status.

There may be various reasons why the members may decide to wind up or dissolve a community group or organisation. The group may have effectively served the purpose for which it was originally set up, and now there is no need for the services or activities it provided. It may simply be unable to carry on because of a lack of funding, or the members may consider it in the best interests of the group to change things – perhaps take on a different approach or adopt another structure.

Dissolution Clauses

Your group’s constitution (also referred to as your governing document, Articles or Trust Deed depending on your group’s structure) should include a clause that sets out what your group needs to do in the event of a decision to wind up or dissolve the group. What you include in this clause will usually be agreed at an early stage in the group’s development –usually when you are first setting up.

If your group is intending to apply for charitable status and/or is looking at an incorporated structure (including becoming a Scottish Charitable Incorporated Organisation), your dissolution clause will need to be worded so that it demonstrates your group’s compliance with charity legislation and Company Law.

Use template constitutions suitable for charitable status and Articles for incorporated organisations as a basis when you are drawing up (or reviewing) your constitution.

Winding up an Unincorporated Association

If your group is a basic unincorporated association without charitable status, the decision and process to wind up will be relatively simple. The group is unlikely to have any major asset. It will not have legal obligations to a regulatory body. However, the committee will need to ensure that any funding conditions are honoured, and that any requirement of the group’s constitution is met.