What should we agree in writing with another organisation?

England and Wales: This page sets out the position in full. Scotland: covered — the same test decides whether a partnership forms, but a Scottish partnership would be a separate legal person, and OSCR sets out the same due-diligence duty for grants; see below. Northern Ireland: covered — the partnership statute is the same UK-wide Act, but CCNI publishes no guidance on collaborative working to match the Commission’s; see below.

The “unlimited liability” warning is not sourced

A charity partnership agreement does not need to guard against “unlimited liability”. That popular warning could not be sourced. Most pages on this subject open with it. Work with another organisation without a formal agreement, they say, and you may create an unincorporated association by accident. Then, they say, everyone involved faces unlimited liability for the joint work.

This page does not repeat that warning as fact, because it could not be sourced. It is not in the Commission’s current guidance on collaboration, Collaborative working (CC34).

The only published source found for it is one page from NCVO, last reviewed in May 2016. That page cites no statute and no case. Before that, it appears to come from the Commission’s 2013 model collaboration agreement. That model has been withdrawn. Do not use it, and be wary of any template built on it.

So the question for trustees is not “how do we avoid unlimited liability?” It is “what should we write down so nobody is surprised?” The answer is much the same in England and Wales, Scotland and Northern Ireland. But only the Charity Commission has published guidance on the agreement itself.

This page applies only when the charity works with another organisation. If yours does not, go on to set your rules for beneficiary stories and images.

Why an accidental partnership is unlikely

A legal partnership has a definition. The Partnership Act 1890, s.1(1), is in force across the UK. It says:

“Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.”

Two charities providing a service together, running a shared programme or pooling grant money are not doing it with a view of profit. So under the Partnership Act 1890 the ordinary charity collaboration is unlikely to be a partnership at all. That is a finding read from the statute, not a reassurance.

One case is left open on purpose. Two charities running a joint trading venture, aiming to make a surplus, are closer to the line. It may not matter that the surplus will end up funding charitable work. No case or official source was found that settles this either way. So this page does not settle it either.

The real exposure is what you agreed

If an accidental partnership is unlikely, the risk sits elsewhere. What follows is this guide’s own analysis. It is not a Commission finding and no single source states it.

• Contract. Each charity is liable for what it agreed to. In England and Wales, where two charities sign one contract as joint parties, each can usually be pursued for the whole of that obligation. That covers only that obligation, not everything the joint work does. Scots law treats joint obligations differently, and this page does not set that out.
• Negligence and similar claims. A charity answers for its own staff and agents. It does not automatically answer for a partner’s.

That is why the Commission’s advice is the right advice. CC34 itself never explains why. The exposure comes from obligations nobody defined. Defining them is the fix. How far the trustees themselves are exposed depends partly on the charity’s legal form. That is the question when you decide your liability position.

What CC34 says, in its own words

CC34 applies to England and Wales. These passages are verbatim and current:

“In all collaborations charities should consider what would happen if one of the parties was suddenly unable to meet its obligations. It is important to consider whether the remaining party or parties would be able to continue in the working arrangement. Should anything go wrong, issues of liability can have wider implications for the charities involved, with repercussions for their assets and reputation. For these reasons it is important to have a clear formal agreement proportionate to the potential risks.”

CC34 also asks for:

• “a clear definition of, and accounting for, what each of the relevant charities is responsible and liable for”
• “a termination clause in any formal contract”
• compliance with each charity’s own governing document

It also sets the level of effort: “Trustees must ensure that they properly exercise their duty of prudence when drawing up collaborative agreements. Agreements should be sufficiently robust to protect each party’s interests and take account of the risks, but not so burdensome as to hold back innovation or incur unreasonable administration costs.”

Some checklists attribute more than this to CC34. The current guidance does not say it. These items are still good practice, and you should cover them. But they are ours, not the Commission’s:

• who does what, and where the joint work ends and each partner’s own work begins
• how decisions are made
• how earned income, assets and intellectual property are shared
• how disputes are resolved

If your charity passes money to a partner

This is where the real legal content is. It is new. The Commission published Making grants to charities and other organisations on 3 June 2026. It applies in England and Wales, to grants to other charities and to organisations that are not charities.

The guidance tells trustees of the charity giving the money that they must:

• carry out appropriate checks before making a grant, with more checks where the risks are higher
• restrict a grant to a non-charity, or to a charity with wider purposes, so that it furthers your charity’s purposes
• be able to show the grant has been used to help carry out your charity’s purposes, which means monitoring it
• take immediate action if monitoring shows the grant is not being used as required, which may include reporting it to the Commission

It is blunt about delegation: “As trustees, you are still responsible for decisions you delegate.” How your board delegates in general is covered where you set up your decision and delegation framework.

Two things this is not. It is not a rule about restricted funds. The Commission’s fundraising guidance (CC20) covers funds a charity raises itself, not funds it passes on. And it is separate from any liability the receiving charity has if it misuses the money.

Whether money passed to a partner is a grant or a fee for a service decides what follows — restrictions, VAT, and which terms apply. The Funding hub works that test: see reading the grant agreement and handling an underspend or change of plan.

Scotland and Northern Ireland

The Partnership Act 1890 covers the whole UK. So the same test applies in all three nations. What changes is what a partnership would be, and what guidance exists.

	Scotland	Northern Ireland
Does a collaboration form a partnership?	The same Partnership Act 1890 s.1(1) test. Unlikely, for the same reason.	The same Partnership Act 1890 s.1(1) test. The Act has always extended to Northern Ireland; there is no separate Northern Ireland statute.
If one did form	Partnership Act 1890 s.4(2): in Scotland a firm is a legal person distinct from its partners. A partner can still be charged on a decree or diligence against the firm, and in Scotland partners are liable jointly and severally for the firm’s debts (s.9). A partner who pays is entitled to relief in proportion from the firm and the other partners.	As in England and Wales: no separate legal person.
Passing money to a partner	OSCR’s A brief guide to grant giving sets out the same model — checks on the recipient, a written agreement, then monitoring — under the trustee duties in the Charities and Trustee Investment (Scotland) Act 2005.	Not established for this step.
Guidance on the agreement itself	No OSCR checklist equivalent to CC34 was found.	No CCNI equivalent of CC34. CCNI’s “Mergers and closures” guidance covers a narrower subject. NICVA’s A Practical Guide to Collaborative Working is the nearest thing — useful, but not regulator guidance, and not read in full for this page.

The Scottish difference matters only if the line is ever crossed. In practice, that means the joint trading case.

Write the charity partnership agreement

A partnership or collaboration agreement is the written record of the joint work. It says what each organisation does, what it is liable for, and how the arrangement ends. Keep it in proportion to the money and the risk. A two-page letter can do for a shared event. A consortium bid with one lead partner holding the grant needs more.

1. Name the parties and the joint work. Say where it stops.
2. Say what each of you is responsible and liable for. This is CC34’s central point.
3. Plan for a partner failing. Who picks up the work, and what happens to the money.
4. Set out the money. Who holds it, who passes it on, on what terms, and how it is monitored.
5. Cover decisions, shared income and property, and disputes. Good practice, not CC34.
6. Cover data. Personal data shared between you needs a lawful basis — see mapping your data and your lawful basis.
7. Write the ending. A termination clause, and what happens to anything jointly held.
8. Check it against each governing document. The list under “Where this page stops” says when it needs a solicitor before anyone signs.

If money or resources will go to a partner overseas, screen them against sanctions before anything is paid. That is the next step in this part of the guide: screen partners and payments against sanctions before money leaves the UK.

Common mistake: relying on the “accidental unincorporated association” warning

The warning feels like the reason to have an agreement. But it is not in the current CC34. It traces to a withdrawn Commission model and a single uncited Tier B page. And an ordinary charity collaboration is unlikely to be a partnership at all.

What CC34 does say is enough reason on its own: “Should anything go wrong, issues of liability can have wider implications for the charities involved… it is important to have a clear formal agreement proportionate to the potential risks.”

Common mistake: using the Commission’s model collaboration agreement

It is still findable and it looks authoritative. The Commission’s 2013 model is withdrawn. Do not cite it or reuse it. Treat with caution any checklist that seems to repeat it. Several points still circulating as CC34’s appear to come from it.

Common mistake: leaving out how disputes are resolved and how a partner leaves

Nobody thinks about the ending at the beginning. CC34 asks you to consider “what would happen if one of the parties was suddenly unable to meet its obligations”. It asks you to define “what each of the relevant charities is responsible and liable for”. And it asks you to include “a termination clause in any formal contract”.

Dispute resolution and the terms on which a partner leaves are good practice on top of that, not CC34 requirements.

Worked example

Tollgate Youth CIO joins a consortium bid with two other local groups. Saltmarsh Trust is the lead partner and will hold the grant.

Before anyone signs, the four draft one agreement. The agreement says what each of them will provide and what each is liable for.

It covers what happens if one group cannot do its part halfway through. That means who takes on the sessions, and where that group’s share of the money goes. A termination clause goes in. Decision-making and a route for disputes go in as good practice.

Saltmarsh passes part of the grant down to Tollgate. That makes Saltmarsh’s trustees responsible, under the Commission’s June 2026 guidance, for checking Tollgate before the money moves and monitoring how it is spent.

Whether each payment is a grant or a fee for a service is the Funding hub’s test. The answer changes what the agreement needs to say. Tollgate’s volunteers will see the other groups’ attendance records. So the data sharing is set out too.

The outcome: a signed agreement covering money, data, decisions, liability and how it ends. A solicitor has reviewed it, and it is not built on the withdrawn 2013 model.