Voluntary association

Annual General Meeting of a typical very small volunteer non-profit organisation (the Monaro Folk Society) Office bearers sitting are president, secretary and public officer.

A voluntary group or union (also sometimes called a voluntary organization, common-interest association,[1]:266 association, or society) is a group of individuals who enter into an agreement, usually as volunteers, to form a body (or organization) to accomplish a purpose.[2] Common examples include trade associations, trade unions, learned societies, professional associations, and environmental groups.

Membership is not necessarily voluntary: in order for particular associations to function correctly they might need to be mandatory or at least strongly encouraged, as is common with many teachers unions in the US. Because of this, some people use the term common-interest association to describe groups which form out of a common interest, although this term is not widely used or understood.[1]

Voluntary associations may be incorporated or unincorporated; for example, in the US, unions gained additional powers by incorporating.[3] In the UK, the terms Voluntary Association or Voluntary Organisation cover every type of group from a small local Residents' Association to large Associations (often Registered Charities) with multimillion-pound turnover that run large-scale business operations (often providing some kind of public service as subcontractors to government departments or local authorities).

Differences by jurisdictions

In many jurisdictions no formalities are necessary to start an association. In some jurisdictions, there is a minimum for the number of persons starting an association.

Some jurisdictions require that the association register with the police or other official body to inform the public of the association's existence. This could be a tool of political control or intimidation, and also a way of protecting the economy from fraud.

In many such jurisdictions, only a registered association (or in the UK an incorporated body) is a juristic person whose members are not responsible for the financial acts of the association. Any group of persons may, of course, work as an informal association, but in such cases, each person making a transaction in the name of the association takes responsibility for that transaction, just as if it were that individual's personal transaction.[4]

There are many countries where the formation of truly independent Voluntary Associations is effectively proscribed by law or where they are theoretically legally permitted, but in practice are persecuted; for example, where membership brings unwelcome attention from police or other state agencies.

History

Civil lecture at Budapest Brainbar

Voluntary groups are a broad and original form of nonprofit organizations, and have existed since ancient history. In Ancient Greece, for example, there were various organizations ranging from elite clubs of wealthy men (hetaireiai)[5] to private religious or professional associations.[6]

In preindustrial societies, governmental administrative duties were often handled by voluntary associations such as guilds. In medieval Europe, guilds often controlled towns.[7] Merchant guilds enforced contracts through embargoes and sanctions on their members, and also adjudicated disputes.[8] However, by the 1800s, merchant guilds had largely disappeared.[9] Economic historians have debated the precise role that merchant guilds played in premodern society and economic growth.[10]

In the United Kingdom, craft guilds were more successful than merchant guilds[11] and formed livery companies which exerted significant influence on society.[12]

A standard definition of an unincorporated association was given by Lord Justice Lawton in the English trust law case Conservative and Unionist Central Office v Burrell (1981):[13]

"unincorporated association" [means] two or more persons bound together for one or more common purposes, not being business purposes, by mutual undertakings, each having mutual duties and obligations, in an organisation which has rules which identify in whom control of it and its funds rests and upon what terms and which can be joined or left at will.[14]

In most countries, an unincorporated association does not have separate legal personality, and few members of the association usually enjoy limited liability.[15] However, in some countries they are treated as having separate legal personality for tax purposes.[16] However, because of their lack of legal personality, legacies to unincorporated associations are sometimes subject to general common law prohibitions against purpose trusts.

Associations that are organized for profit or financial gain are usually called partnerships.[17] A special kind of partnership is a co-operative which is usually founded on one person—one vote principle and distributes its profits according to the amount of goods produced or bought by the members. Associations may take the form of a non-profit organization or they may be not-for-profit corporations; this does not mean that the association cannot make benefits from its activity, but all the benefits must be reinvested. Most associations have some kind of document or documents that regulate the way in which the body meets and operates. Such an instrument is often called the organization's bylaws, constitution, regulations, or agreement of association.[18]

Common law

England and Wales

Under English law, an unincorporated association consists of two or more members bound by the rules of a society which has at some point in time, been founded.[19]

Several theories have been proposed as to the way that such associations hold rights. A transfer may be considered to have been made to the association's members directly as joint tenants or tenants in common. Alternatively, the funds transferred may be considered to have been under the terms of a private purpose trust. Many purpose trusts fail for want of a beneficiary and this may therefore may result in the gift failing. However, some purpose trusts are valid, and, accordingly, some cases have decided that the rights associated with unincorporated associations are held on this basis. The dominant theory, however, is that the rights are transferred to the members or officers absolutely, perhaps on trust for the members, but are importantly bound by contracts inter se.[20]

Accordingly, on dissolution, the distribution of these rights depends on how they were held. A purpose trust may by its nature survive the dissolution of the association, or it may not. If it fails as a result of the dissolution, then the rights will be held on resulting trust for the contributors, unless they can be shown to have renounced their right to such a trust in their favour. If the rights are held subject to contract, then they will be divided among the surviving membership upon dissolution, according to the terms of the contracts inter se or an implied term according to contribution. If, as a result of this contract or statute, no member can claim, the rights will pass to the Crown as bona vacantia. This conclusion has also been suggested where the association dissolves because only one member remains, although this has been doubted by some commentators who believe the last members should be entitled to the rights.[20]

Scotland

Scottish law on unincorporated associations is essentially the same as English law.[21]

United States

Each state sets its own laws as to what constitutes an unincorporated association and how it is to be treated under the laws. In the United States, voluntary associations which were incorporated were "pre-eminent" in collective action.[22]

Australia

In most Australian states and territories, a similar set of laws allows not-for-profit associations to become legal entities with a limit to the liability of their members. An example of such a law, the Associations Incorporation Act that is in force in South Australia, allows for the creation of a legal entity able to buy and sell land and in general, enter into legally binding contracts.[24] Many clubs and societies begin life as an unincorporated body and seek to attain incorporated status to protect its members from legal liability and in many cases to seek government financial assistance only available to an incorporated body. Clubs and societies wishing to incorporate must meet the provisions of the relevant state act and lodge their constitution with the corresponding state government authority.[25]

Canada

Under the Quebec Civil Code an association is categorized as a type of statutory specific contract set forth in a constitution. An association can become incorporated with its own legal identity so that it may, e.g., open a bank account, enter into contracts (rent real estate, hire employees, take out an insurance policy), or sue or be sued.

Civil law

Certain civil-law systems classify an association as a special form of contractual relationship.

France

In France, all voluntary associations are non-profit. They may count as unincorporated (association non-déclarée) or incorporated (association déclarée), public (association d'utilité publique) or private, and are created in terms of and governed by the Waldeck-Rousseau Act 1901. This is why association loi 1901 is subjoined to their name, except in Alsace-Moselle which is governed by local law in this regard (the area was German in 1901) and are therefore called association loi 1908.

Germany

The German Civil Code sets out different rights and rules for an unincorporated association (nicht eingetragener Verein) with legal identity (Vereine, art. 21-79 BGB) versus an incorporated association (eingetragener Verein) with full legal personality, which the law treats as partnerships (Gesellschaften, art. 705-740 BGB). Associations can be for-profit (wirtschaftlicher Verein), non-for-profit (Idealverein), or public (gemeinnütziger Verein).

Freedom of association

The freedom of association stands in the Universal Declaration of Human Rights:[26]

Article 11 of the European Convention on Human Rights also protects the right to freedom of assembly and association.

See also

Notes

  1. 1 2 Prins HEL et al. (2010). Cultural Anthropology: The Human Challenge. Cengage Learning.
  2. ↑ association Entry at Dictionary.reference.com.
  3. ↑ Bradburn B. (2009). The Citizenship Revolution: Politics and the Creation of the American Union, 1774–1804, p. 217. University of Virginia Press.
  4. ↑ Robert, Henry M.; et al. (2011). Robert's Rules of Order Newly Revised (11th ed.). Philadelphia, PA: Da Capo Press. p. 2. ISBN 978-0-306-82020-5.
  5. ↑ Politics on the Margins: The Athenian "Hetaireiai" in 415 BC. Historia: Zeitschrift für Alte Geschichte.
  6. ↑ Ascough, Richard S. "Greco-Roman Philosophic, Religious, and Voluntary Associations". In Community Formation in the Early Church and the Church Today. Edited by Richard N. Longenecker, 3–24. Peabody, MA: Hendrickson, 2002
  7. ↑ Kohn M. (2003). Merchant Associations in Pre-Industrial Europe. Ch. 16 in The Origins of Western Economic Success: Commerce, Finance, and Government in Preindustrial Europe.
  8. ↑ (1990). The role of institutions in the revival of trade: The law merchant, private judges, and the champagne fairs. The role of institutions in the revival of trade: The law merchant, private judges, and the champagne fairs. Economics & Politics.
  9. ↑ "The Rise and Fall of the Merchant Guilds: Re-thinking the Comparative Study of Commercial Institutions in Premodern Europe". Journal of Interdisciplinary History. Preprint.
  10. ↑ Review of Institutions and European Trade: Merchant Guilds, 1000–1800 published in Reviews in History.
  11. ↑ Starr M. (1919). A Worker Looks At History, Ch. 7: The Guilds. Plebs League. Google Books entry.
  12. ↑ History of London The Guilds and Livery Companies. History.co.uk.
  13. ↑ [1981] EWCA Civ 2, [1982] 1 WLR 522
  14. ↑ The definition was for tax purposes, but was expressed to be of general application.
  15. ↑ XU, Y. & Ngai, N. P. (2011). "Moral Resources and Political Capital: Theorizing the Relationship Between Voluntary Service Organizations and the Development of Civil Society in China. Nonprofit and Voluntary Sector Quarterly. 40(2), 247–269". Nvs.sagepub.com. Retrieved April 17, 2011.
  16. ↑ For example, in the United Kingdom an unincorporated association is assessable to corporation tax.
  17. ↑ In most common law legal systems, partnership is defined by statute as "the relationship which subsists between persons carrying on a business in common with a view of profit"
  18. ↑ Robert III, Henry M.; et al. (2011). Robert's Rules of Order Newly Revised In Brief (2nd ed.). Philadelphia, PA: Da Capo Press. p. 85. ISBN 978-0-306-82019-9.
  19. ↑ Pettit, Philip (2009). Equity and the Law of Trusts. Oxford University Press. p. 62. ISBN 978-0-19956102-5.
  20. 1 2 Pettit, Philip (2009). Equity and the Law of Trusts. Oxford University Press. pp. 62–65. ISBN 978-0-19956102-5.
  21. ↑ Report on Unincorporated Associations (Report). Scottish Law Commission. November 2009. SCOT LAW COM No 217. Retrieved 1 February 2014. We are not aware of any material differences between the law of Scotland and the law of England and Wales regarding unincorporated associations.
  22. ↑ Sacred Companies: Organizational Aspects of Religion and Religious Aspects of Organizations, p108. Oxford University Press.
  23. ↑ "Nonprofit Organizations". Texas Secretary of State. Retrieved 29 December 2012.
  24. ↑ "Associations Incorporation Act 1985". Government of South Australia, Attorney-General's Department. Retrieved 17 October 2012.
  25. ↑ "How to incorporate". The Government of South Australia, Consumer & Business Services. Retrieved 17 October 2012.
  26. ↑ "The Universal Declaration of Human Rights". The United Nations. Retrieved September 8, 2012.

References

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