Charitable organisations play a vital role in society, supporting communities and driving social impact. The governance of these organisations is a critical aspect of their effective operation. One essential governance tool is the Annual General Meeting (AGM). This article serves as an introductory guide for AGMs in the charity sector, suitable for beginners looking to navigate this crucial event successfully.
Definition and purpose of AGM
An Annual General Meeting (AGM) is a yearly gathering traditionally hosted by businesses for their directors and shareholders. In a business context, directors often present an annual report at the AGM that outlines company performance and strategy. Shareholders use this opportunity to vote on critical decisions, such as the appointment of directors or auditors.
However, in the charity sector, an AGM takes a slightly different form. It’s a formal meeting between the charity’s trustees and its members. Because charities typically do not have shareholders, the focus is often on accountability, strategic direction, and engagement with the charity’s broader membership base.
Understanding charity members
UK charities usually fall into one of three categories:
1. Foundation Model: The charity’s members and trustees are the same.
2. Controlled Model: Members are a separate group who set up the charity and retain control, though this may change over time. Academy schools often operate this way.
3. Membership Organisations: Members are a broader group relied on for revenue generation or volunteering. These organisations typically refer to themselves as membership organisations, associations, or societies.
Only members have voting rights; therefore, understanding who constitutes a member from a legal perspective is crucial. A charity’s constitution should clarify who the members are.
Holding an AGM
The rules for holding an AGM are outlined in the charity’s constitution. Some charities, particularly those using the foundation model, may not require an AGM. The constitution usually includes a section on how to conduct general meetings, applicable to AGMs as well. This section addresses issues like:
– Notice period for members
– Whether communications can be electronic
– Quorum definition (minimum number of members needed to hold the meeting)
– Required percentage of members present to pass a motion
– How proxy voting might work
Unless explicitly prohibited by the constitution, charities may conduct AGMs electronically, especially in the wake of the pandemic which has normalised digital gatherings.
Typical AGM Agenda
A typical AGM agenda might include:
– Apologies for absence and approval of the last meeting’s minutes
– Chair’s report, detailing key events, impacting factors, and plans for the next quarter
– Secretary’s report, including governance-related issues, such as changes to legal structure, audit details, and significant changes in trustees, internal systems, or key staff
– Treasurer’s report, detailing the financial performance and health of the charity
– Election of committee members
– Election of auditor (if applicable)
– Any other business
Each point in the agenda is important as it ensures transparency, efficient communication and effective operation of the charity.
Learning more
Monahans, a firm specialising in accounting for charities, recently worked with the Wiltshire Community Foundation to produce a helpful video on this topic. This video can be found here.
Conclusion
AGMs play an essential role in the smooth operation and governance of charitable organisations. They provide an opportunity for members to engage directly with trustees, gain insights into the charity’s progress, and make decisions about its future. A well-organised AGM can be a powerful tool for enhancing transparency, accountability, and member involvement. We hope this guide will serve as a useful reference for those new to the charity sector or anyone looking to understand the basics of AGMs in the context of charitable organisations. Remember, every charity is unique, and it’s vital to tailor your AGM to meet the specific needs and legal requirements of your organisation.
