Basic requirements for the formation of a consortium of Charities and Societies
Following the coming in to force of Charities and Societies Proclamation no. 621-2009, the executive organ has issued regulations and directives for the implementation of the law. The Council of Ministers, which is delegated with a general power of issuing regulations for the successful implementation of the proclamation, issued a regulation (Council of Ministers to provide for the registration and administration of Charities and Societies Regulation number 168/2009) providing for the basic rules of procedures and requirements governing registration and administration of charities and societies. However, the detail (in practical terms, these are the most important rules) are found in the directives issued by the Charities and Societies Agency. So far, the Agency has issued about eight directives (Unfortunately, all of them in the Amharic language only.)
- You can download seven of the eight directives from Consortium of Christian Relief and Development Association web site. Click HERE.
- Directive No. 2 is not available from the above link. You can down it from HERE.
The first directive of the charities and Societies Agency, (Directive No. of 2002) provides detailed rules of procedure and requirements necessary to form a consortium. The Charities and Societies Proclamation No.621/2009 generally gives recognition to the right of charities and societies to form a consortium to co-ordinate their activities, leaving the particulars to be determined by the Agency. (See Article 15 sub 3 and Article 55 sub 2 of the proclamation)
Similarly, Article 8 of Council of Ministers to provide for the registration and administration of Charities and Societies Regulation number 168/2009, lays down a general rule for the formation and registration of a consortium, which is also contained in the directive in a more detailed and elaborated manner.
The following brief note about the pre-conditions and procedures applicable to the formation of a consortium highly relies on the content of the directive. (Directive No. of 2002)
Who can establish a consortium?
Generally speaking, there are no restrictions on the types of charities and societies eligible to establish a consortium. However, the directive prohibits the establishment of a consortium as between charities and societies, if they are within a different category. Accordingly:
- Ethiopian Charities could not form consortium with Ethiopian Residents Charities or Foreign Charities
- Ethiopian Societies could not form consortium with Ethiopian Residents Societies
- Charities could not form consortium with Societies
The minimum number of members to establish a consortium is two. There is no legal limit as regards the maximum number.
Purpose of a establishing a consortium
Article 5 of the directive lays down the purpose of establishing a consortium, in broad and general terms. Accordingly, consortium may be established by charities and societies with a view to facilitate or co-ordinate their objectives and activities. When one compares the provisions of the proclamation and the regulation in this regard, they don’t employ the same language in describing the reason or ground of establishing a consortium. According to the proclamation, charities and societies may establish a consortium ‘to co-ordinate their activities.’ On the other hand, the regulation states that such a consortium may be established by charities and societies ‘in order to achieve their common objectives.’ This raises a question as to whether charities and societies not sharing any common objectives could be established simply to coordinate their activities.
In order to avoid any confusion in this regard, sub-article 2 of article 5 of the directives, lists down some of the acceptable grounds for establishing a consortium. Hence charities and societies mat establish a consortium to:
- Achieve their common objectives
- Share experiences, information and ideas
- Build capacity of members
- Developing ethical and professional capacity of members
- Tackle problems encountered by members, creating conducive environment, conduct consultation with relevant stakeholders
Pre-conditions for establishing consortium
The following requirements should be cumulatively fulfilled to establish a consortium
- Rules of the consortium signed by member constituting the consortium.
- Minute of members which contains their joint decision to establish consortium.
- Renewed license of each member issued by the agency or a regional agency authorized by law to issue license
- Minute of each member which contains a decision by its higher body to establish the consortium or a member of the consortium.
The content of Rules of a consortium
According to article 2(11) of the proclamation rules shall include the objects for which a Charity or Society is formed, or which it may pursue, or for which its funds may be applied; the qualifications for membership and for the holding of any office; the method of appointment or election to any office; the rules by which the Charity or Society is to be governed; and the method and manner by and in which any of the above matters may be amended.
Rules of a consortium should in the first place, contain the particulars listed down in article 6 of the registration and administration of charities and societies regulation no. 168/2009. Accordingly the rules of a consortium should contain the following particulars.
- Name, address and objectives of the consortium
- Organizational structure of the consortium
- Budget year
- The utilization and administration of the financial resources of the consortium
- Procedure through which officers of the consortium are elected or employed including their powers, functions and terms of office.
- The conditions on which membership or tenure of officers of the consortium cease
- Meeting and decision making procedure of the governing body and executive organs of the consortium
- Procedure through which the rules of the consortium are amended
- Sources of income of the charity
- Logo or symbol, if any
- Procedure to be applied in case of dissolution
The regulation authorizes the agency to prescribe additional particulars to be included in the rules of charities and societies. Similarly, such authorization also extends to the contents of the rules of a consortium.
Article 7 of the directive lists down additional particulars to be included by a consortium in addition to those required by regulation no. 168/2009.
Accordingly, the rule of a consortium shall contain the following particulars:
- Procedure for admission of membership
- Rights and duties of members
- Grounds of termination of membership
- Voting and meeting procedure of the general assembly
- Election and decision making procedure of the general assembly
- Contribution of members
- Conditions for dissolution of the consortium
Organizational structure and membership of consortium
Generally speaking, it is up to the members to device their own rules, regulations and procedures governing the internal matters of the consortium. However, the directive lays down some minimum requirements uniformly applicable to all consortiums as regards management and membership.
The management of any consortium should comprise of a general assembly, board of executives and an auditor. This is only a minimum requirement. A consortium could have additional organs, bodies or committee responsible for specific tasks.
The general assembly follows up and supervises the activities of the board of executives. The minimum number of the members of the board of executives is 5 (five) whereas, the general assembly should comprise of members twice the number of the board of executives. It is also possible to have more members on the general assembly. For instance, for a consortium having 8 (eight) members, the equivalent number of members on the general assembly is 16 (sixteen) or more than sixteen. But, it could not be less than sixteen.
All ordinary members of the consortium have equal voting right and representation in the general assembly. In additional to the ordinary members constituting the consortium, associate and honorary members who lack a voting right could also be admitted. The role and contribution of these members should not go beyond the objectives of the respective consortium or the spirit of the charities and societies proclamation.
Establishment and registration
Once a consortium is established by fulfilling the minimum conditions and requirements set by the proclamation and mainly by the directive, it has to be registered within three months by the Charities and Societies Agency. Registration endows the consortium a legal personality which shall be effective from the date of registration. The legal personality of the consortium is distinct from that of the constituting members. For all legal purpose, it shall be considered as having its own independent existence.
Revocation of Registration and Dissolution
Article 92 up to 94 of the charities and Societies proclamation is similarly applicable to a consortium as regards the grounds, procedures and effects of revocation of registration and dissolution. Members of the consortium may provide their own grounds and procedure for dissolution. However, at least 3/4th of the members of the general assembly should be present if a decision for dissolution is to be reached. Any such decision is void if the members present in the meeting are less than 3/4th of the total members of the general assembly. In case of dissolution, the higher authority of the consortium may decide for the partition of property, equally among members or transferring the whole asset and property to a consortium having similar objectives. In both cases, such decision has to be approved first by the Charities and Societies Agency to be effective.
Consortium of Consortiums
The directives allows for two types of associations. The first one is a consortium which is established by two or more individual charities and societies. Sometimes there might be a need to organize at a national level. Consortium of consortiums may become a preferred form of organization for such type wide-scale association. According to article 10 of the directives legally registered consortiums may again establish a consortium of consortiums “if it is proved that there is no other alternative other than establishing a consortium of consortiums.” The directive lacks clarity in the conditions that must be met before establishing a consortium of consortiums. It simply referes to the requirements, conditions and procedures of a consortium and makes them applicable mutatis mutandis to consortium of consortiums.
This is the recent directive issued by the Charities and societies Agency to determine the limit administrative costs of Charities and Societies to run their activities. Unfortunately, only the Amharic version is available.