Some groups (even if they are registered charities or charitable trusts) are known as unincorporated associations, that is, in law they are not recognised as a legal entity or organisation, but as a collection of individuals. This is important, because it means that trustees can be held personally liable for the debts of the charity. If there is not enough money to pay creditors, trustees may have to pay the debts themselves.
Trustees should also be aware that failure to manage staff or treating staff unfairly also runs a risk of incurring liability, as disgruntled (ex or current) employees may take them to employment tribunal for discrimination, constructive or unfair dismissal (even in the case of redundancy). In discrimination cases, there is no ceiling on the amount that individuals may be awarded, if their case is upheld.
If your organisation:
• is still solvent and continuing to trade AND
• employs staff OR
• holds a lease on premises OR
• has obligations to a funder under a service contract OR
• has commitments under a lease hire agreement for equipment
then you need to consider incorporation as a matter of urgency.