Can you pay yourself a wage in a non-profit?

(8 Posts)
neepsntatties Fri 27-May-11 15:56:48

I want to start a drama group for young people and hope to keep the cost as low as possible to make it accessable. I was hoping that in the long term, if it takes off, I could make it a non-profit so that I could try and apply for some money to give some young people bursaries to join the group. I would also like to be able to make a wage from it however as it would be a bit of a dream to build it up so it could become my job. It would also mean that I might be able to take on other workers one day or have someone cover me if I was away or ill.

Is it possible to pay myself the going freelance rate and still have it as a non-profit organisation or would I be expected to run it for free?

TalkinPeace2 Fri 27-May-11 18:03:44

Look at the accounts of any of the big charities - they pay their top staff up to £250,000

neepsntatties Fri 27-May-11 18:26:15

Ha - well I wouldn't be looking for that much smile

Watersign76 Fri 27-May-11 23:20:41

The simple answer is that yes non profits and charities do pay staff if they have the money to. However, how your organisation develops will have some bearing on what you can and cannot do.

A "non profit" tends to be an organisation declaring they are non profit, there are not the same sort of checks and balances like charities have to go through outside what you do for Companies House.

So, it sounds like you could start doing that straight away if you aren't already...

A charity is clearer, but it is time consuming and complicated registering to be a charity, a number of orgs are turned down and they have to re-apply which is very costly. But naturally there are both perception (in the eyes of the public, your beneficiaries & your donors) and tax/discounted services benefits to being a charity. Plus some funders will ONLY fund charities, this might also apply to local authorities/PCTs.

If you receive restricted income (ie must be spent on a particular project, so an eg for you "drama for those that were homeless"), through a grant/donor that may have a bearing on staffing allocations Although you should be able to manage this as you'll be applying for the funding!

You could opt for a Commuinty Interest Company, which is between the two. I believe there the regulator "check" that the salary of the lead person is reasonable. Have a look at this link - www.socialenterprise.org.uk/pages/frequently-asked-questions.html

I am guessing that being (and acting like) a non profit would be your first step, and a way to ensure that there are checks and balances is to establish a small Board/committee of external people in the same way as a charity has trustees - www.charity-commission.gov.uk/publications/cc3.aspx - so that it isn't just you and the money! Lots of non profits I know "act" like charities, even if they are not registered charities.

Good luck, sounds really good.

WS

neepsntatties Sat 28-May-11 02:30:24

Wow, brilliant reply! Had not heard of community interest so I will check that out. Think getting a board is the first step though. Anyone know what they have to do?

Watersign76 Mon 30-May-11 21:33:41

To create a Board I would suggest you need a) a sound reasoning for starting the non profit which others will buy-into/others will fund in the future and b)a business plan which shows how the org is going to run. If you want to "copy" the Charity model of Governance you will need "a minimum of three trustees need to be appointed from the outset; of these one must agree to act as chair and another as company secretary/treasurer." Maybe a good place to start would be a similar org based in a different place? They might be willing to share their documents etcs?

But if you go for a CIC not sure you'll need that.

There is lots of stuff out there to support social enterprises - http://www.sel.org.uk/uploads/New_BusPlanGuide.pdf
and http://www.knowhownonprofit.org/basics/setting-up-an-organisation

Hope that helps.

neepsntatties Wed 01-Jun-11 14:21:42

Thank you, I will check out the link. I wonder if I should just start the class and see if anyone turns up first of all then start looking at trustees etc. I wouldn't want to get people involved only for the whole thing to fall flat on its face!

Watersign76 Sun 12-Jun-11 10:44:41

Definately.

You need to check there is a market/interest. Profit/non profit - the form doesn't matter - but it needs "legs" if it is going to succeed.

A place to start might be to see what your "competiton" is, as potentially that is where your target client group is spending time/money now. What is it that young people in your area already do? If you are imaging having referals from the Local Authorities/other charities for "hard to reach" young people, then maybe a friendly person in those organisations could guide you as to what sort of service they think is needed - and longer down the road has a chance of being funded if you think that is something you want.

If you are looking for a more "open" service, then look around and see what young people are spending their time doing, what is your service going to offer to tempt them away?

I also wonder if schools might have views, they probably have interested drama students that can only do so much in school time etc.

Not suggesting you only move forward until you have a big thumbs up from all above but it might help with you research. Hiring a hall, doing some advertising/online promoting and waiting (eeek!) will also give you a very good sense if there interest.

Good luck!

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