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Start up process

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Summary

Setting up a development trust is a complex process likely to take a year and involve the very different complexities of creating both a successful small business and establishing a voluntary body.

The structure of a trust as a non-profit company is described in the information sheet Constitution .

In practice the setting up process must also build a team of committed individuals - the Board and staff of the trust - who have a shared vision of what they are seeking to do, and the skills and resources to do it. The Board sheet provides more details.

To be successful they will need assured funding for several years of operation, offices, ideas for projects and the support of a wide range of local interests. This will involve developing a Business plan - see this information sheet.

Trusts may be started 'bottom-up' by local groups or individuals, or 'top-down' through the support of a public or private sponsor. Whatever the starting point, an effective trust must deal with a number of tensions:

• The partners on the Board will come from different backgrounds with different priorities - there may be no initial team spirit.
• To stay in business when initial core funding declines the trust should rapidly develop projects which are income earners. These must help pay for the cost of running the trust and subsidise socially desirable projects which lose money.
• Projects and running the trust will demand a wide range of Competences from the small team of staff and Board.
• While struggling to set up the business and develop the first projects, the trust staff and Board must also gain the support of local groups and individuals.

Unless these issues are addressed in the setting up process the trust may spend many years dealing with internal conflict or facing criticism from local people and groups who resent the new-comer.

The process described in this and other information sheets is designed to bind together the 'hard-edged' tasks of incorporation, business planning and project development with 'softer' issues of team building and community involvement.

The building blocks

The three main building blocks in the process, bringing together the different strands, are:

• An initial vision of why the trust is being established, what it will do, and how it will operate. This will be sketched out by those involved at the start - the initial champions - but then developed with a wider audience. It may start life as a mission statement, become a leaflet and later emerge as a full marketing prospectus.
• A business plan which turns this vision into a portfolio of projects, identifies finance and other resources, and sets out an appropriate management structure.
• The formal constitution of the trust - its company memorandum and articles of association.

The next section outlines the process to develop these documents and launch the trust. It summarises the planning and development sections of the action plan which provides a step by step guide.

A Feasibility study or local audit may be necessary to gather information, but is not a satisfactory substitute for the process.

Finding the people

Developments trusts depend for their success on people - as staff, on the Board, as supporters and advisers, as funders, and as clients. There's no substitute for networking - going round and talking to people one-to-one, although later in the process it is important to bring key interests together in groups. A Steering group should be formed during the setting up process which is as near a 'shadow' of the eventual Board as possible.

Choosing the projects

The projects a trust undertakes may range from clean-ups to major building projects, from training courses to festivals. Some projects will come from professional studies - but the best way to encourage 'ownership' of the trust and gain people's commitment is to hold brainstorming workshops for different interest groups where people can make suggestions that can then be developed and costed in more detail.

The initial vision and seminar

From studies, 'networking' local contacts, and workshop discussions it should be possible to develop an initial vision of what the trust will do and how it will operate.
The principles of how a trust will operate, and its values, are likely to be as important to local people as the what - the projects it undertakes. Will it do everything itself, or help others? Will its style be open and democratic? Will it compete with existing organisations?

One way of crystalising the what and how into a 'picture of the future' is to hold separate workshops of public, private and community interests to prioritise projects and discuss principles, then bring people together in a seminar to share the vision and agree to set up a trust. This will ensure broad support for the rest of the process.

Before the seminar you may prepare some information sheets and a small exhibition - afterwards it will be possible to produce a more substantial newsletter, if you wish.

The business plan

Entrepreneurs starting up are advised to write a business plan, because to do so they must clarify their 'mission', identify markets, research and develop product proposals, plan their operations. Put more simply for a trust, the business plan is like a three legged stool, supported by projects and principles (the initial vision), resources, and a management structure and systems. Take away any one of these and the organisation falls over.

Writing the business plan is a major task, which is outlined on another toolsheet. At the heart of it is the relationship between core expenditure, core income, and projects which may make or lose money.

Resources

A trust getting started will need funds to cover its core costs of staff, office and other overheads - probably £50,000 - £100,000 a year depending on size. It will also need funds for projects, and may look for help in kind in the form of materials and advice.

Unless the trust is being sponsored 'top down' the steering group or Board will have to undertake the necessary initial fund-raising. To do this they should prepare a proposal or bid document as a first draft of the business plan to present to potential funders and supporters, setting out their vision and how they plan to realise it.

Management structure

When formed, the trust will have a Board of company directors who are also trustees if the trust company has charitable status. As a company limited by guarantee the trust will have members, not shareholders - but their rights will be limited. It is important to recognise:

• There should only be two tiers of management - the Board and paid staff. The Board make policy and staff carry it out.
• Tight financial and administrative systems are essential from the outset.
• Take the best professional advice. Use a solicitor familiar with development trust structures.
• High calibre staff are essential, and can only be recruited when the trust can evidently offer attractive employment with secure core funding.

The prospectus and launch

Prepare a prospectus or other package of promotional material to bring all information together for the launch and to present to funders and supporters. A good format is a folder bearing the trust design identity and including the business plan, project information sheets and any newsletters.

Milestones and resources

Overall the process is likely to take up to a year. The main milestones are:

• Initial planning sessions and informal discussions by those promoting the trust to develop a concept statement and action plan.
• Workshops to brainstorm and prioritise projects, principles, and find other steering group members.
• Steering group meetings.
• A seminar of all key interests.
• Preparation of the bid document or draft business plan.
• Presentations to funders and supporters to secure core funding.
• Staff recruitment.
• Legal incorporation and securing charitable status.
• The launch event.

During the setting up process you will need to find cash or help in kind to cover:

• Communication materials and events
• A development officer and temporary office
• Legal fees and project feasibility studies

Start up checklist

When starting the setting up process consider:

• Do you understand the nature of development trusts and how they differ from other organisations?
• Do you know who are the key interests in the area, and their concerns?
• Do you have a broad understanding of the local economic, environmental and social issues, problems and opportunities?
• Is there an obvious geographical area of operation for the trust?
• Do you have some initial guidelines and principles to suggest for the process and the trust?
• Are you prepared to be open about why you think a trust is worth setting up?
• Will you try and broadly define the type of projects - social, environmental, economic - you think the trust should tackle?
• Can you test your first ideas informally with others likely to be sympathetic and prepared to join a first steering group?
• Are they likely to promote or support a setting up process involving local public, private and community interests?
• Can you nominate or employ a development officer to run the process, and raise other setting up costs?
• Are you likely to be able to raise core funding to run the trust if other local interests support the idea of a trust?
• Are there fixed milestones in the setting up process - perhaps dates by which bid for funds must be made?