Topic: Loans

[ceres]

Our allotment site has the opportunity to obtain funding from a charitable organisation.  The committee members working on this have decided to structure the application (for a large capital project) as 50% non-repayable grant, 40% loan repayable over 10 years and 10% cash from our bank account.  Our only guaranteed source of income is from plot rents which covers running costs with a small surplus which is saved for small improvement projects.  Our enabling document doesn't mention finance at all except for the peppercorn rent we pay for the site and our constitution just talks about how money should be used and accounted for.  Can the committee commit us to a 10 year loan that amounts to £100 per member? 

[flowerofshona2007]

I would call an extra ordainary meeting of all members, that will cover you :)
Why not see if you can get a lottery grant ?

[saddad]

Why not organise a plant sale? End of May is our best time, we raise over £1000 pa. Or get the rents put up a bit!!  ::)

[Trevor_D]

Personally, I wouldn't commit my signature to a 10-year loan without the backing of the members at a General Meeting. Call a meeting asap and put it to them.

[kt.]

What happens if you cannot make future payments?  Would the land be sold?  Would you lose your allotments?  Who is going to be liable for deficits - Plotholders, committee or whoever signs?   I would look very carefully before committing to this.  What if a plotholder disagrees with getting a loan?  My thoughts are the same as Saddad - raise rents a bit. 

[djbrenton]

An unincorporated society cannot enter into legal agreements such as leases or loans. Such a loan must be entered into by Trustees and it is at their risk. The committee cannot legally enter into a loan agreement on behalf of the membership/association.


*An unincorporated association is a group of people agreeing to abide by certain rules to further the interests and activities of the group. It is not a legal entity in its own right, but a collection of individuals. As such it cannot own property, take out loans or raise funds as an organisation. Because of this individual members may be exposed to risk, for example any monies borrowed on behalf of the organisation would have to be repaid by the person who organised the loan, should the group cease to exist or run into financial difficulties. It is possible to spread any risk by agreeing that all members of the management committee carry any risk for the group as a whole.

[ceres]

Thanks djb!  That's exactly the info I needed.

Thanks to everyone else too.  I just couldn't commit plotholders to a loan without their say so, even if it was legal.  We actually have a really good chance of an outright grant from the charity.  The application process has kind of got de-railed by personal agendas.  Hopefully we can get it back on track.