I was at a meeting recently – the steering group of a partnership. Partnership governance was on the agenda and a wise owl said ‘don’t rush to constitute – work our what your values and mission are first.’ Another wise owl chipped in with the maxim coined by architect Louis Sullivan: ‘Form Follows Function.’ Music to my ears.
Too frequently, guidance documents on for-purpose business zoom in quickly on the technicalities of legal forms. They’re not wrong to address this – it’s really, really important to get governance and structure right. And being a bit of a social enterprise geek I’m easily drawn into conversation about the distinctions between a CIC and a CIO.
However, no Social Enterprise Governance guidance has much value until you have clarity about some fundamentals, for example:
- Central purpose: your mission
- Some personal stuff, if you are the founder and this is your passion – be honest with yourself, do you have the appetite to share control? or are the kind of person who tries to hang on to it?
- Principles or values that you’ll commit to
- The kinds of things your organisation will be doing, for example the services you’ll deliver
- Where you anticipate the money will come from – be it funders or investors or customers paying for what you offer
- What risks are associated with the things you want to do
Getting these things right first will help you decide on a legal structure that will support rather than hinder you.
There are some great tools to assist you in the getting these things clear. I’m a great fan of the Social Enterprise Business Model Canvas – various versions exist, they all have something to offer. There’s lots of benefit to working through one of these tools with ‘critical friends’ – people who are supportive of your mission but bring complementary skills and a willingness to challenge your assumptions.
Once you’ve gone through this thinking process, you’ll find it much easier to make sense of the governance options. And you might find that:
- You can achieve your purpose through a straightforward community group, just getting together to organise something low risk, with a small amount of resource that you can pull together between you.
- You’re the kind of person who will just get on with doing some small scale activities yourself, you want to retain control rather than partner with others, you don’t need investment or grant funding and you’re willing to put your personal assets at risk. You’re willing to trade that risk for the ease and low set up cost of operating as a sole trader.
- Your mission calls for significant financial or legal obligations, you want to build a strong leadership group around you and you really do need to set up an incorporated organisation. There’s a range of options, and at this point you might want support in selecting the right model.
