Foundations of Professional Bodies: The Significance of Foundation Documents

By Professor Andy Friedman - PARN CEO

Many take their foundation documents for granted and rarely consult them. Arguably they ought to guide and direct almost everything a professional body sets out to do.

The foundation document sets out the aims of the organisation. It can be an important touchpoint for introducing members and staff to the organisation. It can be used to frame away days and strategic planning. It can contribute to risk management in sensitising professional bodies to the key risk of going off piste with plans and activities. It can also be the basis for promotional materials, speaking to members and potential members as well as their clients/patients or their employers, the government and the general public.

All companies are meant to be made aware of their foundation aims. Foundation documents are usually called Memorandum of Association and Articles of Association, sometimes a Royal Charter, and a small number are contained in a dedicated statute. The Memorandum of Association sets up the organisation, the Articles of Association set out how it is run, governed and owned. The Memorandum or Charter typically begins by stating the ‘objects’ of the organisation; the legal term for the aims of the organisation. 
These objects are regarded as important by certain agencies with powers to grant and withhold legal and symbolic privileges desired by most professional bodies. According to the UK Corporate Governance Code 2018 of the Financial Reporting Council, Boards should ensure that company’s purpose, values and strategy are aligned with each other and with its culture. How effectively members work together to achieve objectives should be considered in annual evaluations of Boards. 

The significance of foundation documents is most clearly stated by the Charity Commission which requires ‘Every trustee should have an up-to-date copy of their charity’s governing document and regularly refer to it.’ Trustees ‘must make sure that the charity is carrying out the purposes for which it is set up, and no other purpose.’ It also cautions ‘checking whether your charity can lawfully undertake a particular activity, you should check against the objects clause rather than any other [less precise] statement of the charity’s mission or aims’ (2012 10). This is particularly important for the professional bodies sector as almost half (46%) of the 513 UK based professional bodies are registered charities according to the PARN database. 

In addition, a substantial minority are chartered organisations (23%). The Privy Council has strict requirements for granting Charters. Among them is the expectation that achievement of chartered status should be in the public interest, implying that at least some of the aims should be so formulated. Three quarters of chartered bodies are also charities. Therefore over half of professional bodies based in the UK are either charities, chartered, or both. 

For over two years we at PARN have been researching what professional bodies are meant to achieve according to their foundation documents. How are aims expressed? Do some aims appear most frequently? Are there systematic differences in the pattern of aims for charities or chartered bodies and other ways of classifying professional bodies? Are there particularly interesting cases that can spark ideas for how your foundation document can be improved? 

In upcoming blogs I will present key findings from the map we have created of foundation document for the professional bodies sector.  These will show the most common aims; surprising emphases found, and expected inclusions not found. Differences in aims among types of professional bodies and those with different titles will be explored. I will conclude the series with recommendations.

Look forward to the full results to be published in three months.