Motion to establish a Charitable Community Benefit Society, 25 April 2018

Kennington Park Community Centre

Motion for consideration by KPETRA meeting, 25 April 2018: Proposed by Joan Twelves, Chair, on behalf of the Executive Committee

 

We agree:

  1. That, subject to legal and other advice, the officers of the TRA establish a Charitable Community Benefit Society in the name of Kennington Park Community Centre with the following objectives –

to provide, manage and maintain a Community Centre on Kennington Park Estate for the use of the residents of the Estate and its environs without distinction of sex, gender, sexual orientation, race or of political, religious or other opinions by associating together the said residents and the local authorities, voluntary and other organisations in a common effort to advance education, community development and citizenship, and to provide facilities in the interests of social welfare and cohesion for recreation and leisure time occupation with the objective of improving the conditions, quality of life and well-being for the residents.

To advance all other purposes charitable under the law of England and Wales.

  1. That, subject to legal and other advice, the officers of the TRA set up a Board of Trustees to govern the KPCC Charitable Community Benefit Society.

The motion was agreed subject to the additions shown in italic above.

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Briefing on Charitable Community Benefit Societies

(from Charities Aid Foundation Options Analysis for KPCC)

Community Benefit Society

Community Benefit Societies were introduced in the Cooperative and Community Benefit Societies Act 2014 and replaced the Industrial and Provident Society (IPS) entity

A community benefit society is essentially run and owned by its members and operates to benefit or support the wider community.

Community Benefit Societies are regulated completely differently from charities and social enterprises, in that they are neither registered under the Companies Act nor regulated by the Charity Commission but regulated by the Financial Conduct Authority (FCA) (previously known as the FSA, Financial Services Authority).

A Community Benefit Society is a socially focused structure where the majority of surplus profits are retained by the organisation in order to maintain it.  It does not exist to make money, surplus made is used for its own growth to benefit its members.

Many housing associations, working men’s clubs, societies and social groups use the structure of a Community Benefit Society. It is also often used to form a legal entity for organisations looking to bring together a local community through ownership of a shared community asset.

Registration

Registration is via the FCA.  Approved model rules can be used as a template but you are also free to draw up your own.  Application fees vary from £40 to £950 depending on which rules are used. There is no need to register (to become a legal body) with a regulator other than HMRC to achieve exempt charity status.

Liability

A Community Benefit Society is a separate legal identity from its members and therefore liability should in most cases be limited.  The Community Benefit Society can own property, enter into contracts and take out loans in its own right.

Governance

A Community Benefit Society is governed by its members.  A Board of Trustees must be appointed similar to a charity and the same checks will be undertaken by the FCA to ensure the Trustees are eligible.  The minimum age for governing body members is 16.

All members must hold at least one share in the society.  Currently shareholding for individuals is limited to £100,000. There is also a limit to dividends or share interest and is limited to ‘what is necessary to obtain and retain enough capital to run the businesses’.  Such investments and buying of shares is therefore rarely done for financial gain.

An asset lock can be put in place in the rules so that upon dissolution the assets would transfer to a similar asset locked organisation rather than to its members.

Compared to a normal company the voting rights are also more democratic and protected.  For example in a Community Benefit Society each member is entitled to one vote regardless of how many shares are held.  Members also have the right to dismiss Directors and to change rules.

Taxation

A charitable community benefit society benefits from a wide range of tax relief and exemption, similar to a registered charity.  For example they are exempt from paying Corporation Tax on charitable trading profit, eligible for gift aid and eligible for some tax exemptions, for example a reduced VAT rate of 5% if involved in education, amateur sports or welfare services.

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