An asset lock is text inserted within the organisation’s constitution or governing document which prevents the organisation’s assets from being used for personal gain. Where community benefits are concerned, the asset lock should state clearly that the resources available to the organisation should only be used for the public benefit of the community or communities for which they are intended, in line with the stated purposes of the organisation (as set out elsewhere in the governing document, and which should not be contrary to the purposes agreed with the donor of the community benefits). In addition, it should state that if the organisation is wound up, the assets must be transferred to a similar type of organisation (with a similar asset lock) and for similar purposes. This may be a named organisation.
Further, the governing document should prescribe that those involved in governing the organisation (i.e. directors, trustees or management committee members) cannot be remunerated for carrying out their governance duties; however, they may receive reasonable out-of-pocket expenses relating to things like travel to meetings. They may also be contracted by the organisation to provide other services (e.g. specific legal or financial advice, hire of a venue they own), where provision of those services is not part of their stated governance role, the organisation genuinely requires the service, and the rates charged are within the market norm. Such an arrangement should usually be the subject of a written agreement, entered into by the Board or Management Committee.
An asset lock is a standard feature of some organisational structures, for example a SCIO (see section 2 above) or other forms of registered charity. Sample asset lock wording is contained in some of the template governing documents referred to in this module. If the community is using a third party to hold and administer community benefits, check that it has the appropriate asset lock.
