This is the charity regulator in England and Wales. Most charities must register with the Commission and file their accounts and a financial summary with it. Some groups of charities aren’t required to do this – the main exceptions are for charities with incomes of less than £5,000 a year and Community Benefit Societies. The Commission’s website includes the charity register and copies of charities’ accounts and financial returns.
Charitable Incorporated Organisation (CIO)
This is a relatively new legal structure that only charities can use. The main advantage is that (like charitable companies) they provide protection for trustees from personal liability for contracts but (unlike charitable companies) they only have to register with and send accounts to the Charity Commission. You can find out more about how they work from the Charity Commission’s website.
Charitable Purposes (or aims)
The Charities Act describes the purposes which can be charitable if they are carried out for the public benefit. The ones that are most likely to be relevant to a charitable CLT are:
- the prevention or relief of poverty;
- the advancement of citizenship or community development;
- the relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage;
A CLT choosing to be a charity must undertake aims and activities that further one of these or the other purposes listed in the Act.
Community Benefit Society (formerly known as an Industrial and Provident Society for the Benefit of the Community)
A Community Benefit Society is an organisation which conducts an industry, business or trade for the benefit of the community and which is registered under the Co-operative and Community Benefit Societies Act 2014. This can be charitable or non-charitable.
Asset Lock: A non-charitable Community Benefit Society that does not seek to become a Registered Provider can choose to adopt the Statutory Asset Lock. It is not a requirement of registration that the Rules contain this but it would be important for a CLT to adopt the Statutory Asset Lock to ensure that the assets of the CLT are protected for community benefit in perpetuity. The Statutory Asset Lock was introduced in response to concerns around the de-mutualisation of various Industrial and Provident Societies (building societies) in 2002/3. Once adopted within the Rules the Statutory Asset Lock cannot be removed. The FCA also has powers to make sanctions for improper use of the CLT’s assets.
Community Interest Company (CIC)
This is a limited liability company which is designed for Social Enterprises and which has the specific aim of providing benefit to a community. A CIC must use its income, assets and profits for the community it is formed to serve. A CIC can be a company limited by shares or by guarantee but must satisfy a community interest test. You should seek legal advice if you want to adopt the company limited by shares model because this could affect whether the statutory definition of a CLT is satisfied. The usual company model is the company limited by guarantee.
Asset Lock for a CIC: The very essence of a CIC is its Asset Lock. A Company Limited by Guarantee can only take on the mantle of a CIC by incorporating the Asset Lock required by the CIC Regulator as a minimum, although a more stringent asset lock could be used instead.
Community land trust (CLT)
A CLT is a non-profit, community-based organisation run by volunteers that develops housing or other assets at permanently affordable levels for long-term community benefit.
It is one of the kinds of English Body that can register with the Regulator of Social Housing. The definition from section 79(2)-(5) of the Housing and Regeneration Act 2008 is “a body corporate that satisfies the following conditions:
- the body is established for the express purpose of furthering the social, economic and environmental interests of a local community by acquiring and managing land and other assets in order:
- to provide a benefit to the local community, and
- to ensure that the assets are not sold or developed except in a manner which the trust’s members think benefits the local community;
- the body is established under arrangements which are expressly designed to ensure that:
- any profits from its activities will be used to benefit the local community (otherwise than by being paid directly to members),
- individuals who live or work in the specified area have the opportunity to become members of the trust (whether or not others can also become members), and
- the members of the trust control it.
In these conditions, “local community” means the individuals who live or work, or want to live or work, in a specified area.
Whilst a community land trust might be able to register with the Regulator of Social Housing this will not guarantee that the Trust can be registered as a charity. To be a registered charity a Trust must have aims that are exclusively charitable which are carried out for the public benefit. Not all activities that benefit communities and the people who live and work there are exclusively charitable. There may be elements to these purposes that give private benefit to those in the community which may fail the charity registration test for public benefit.
Company Limited by Guarantee (CLG)
A CLG offers its members limited liability, as the outside world deals with the company as a separate entity and not the Company Members on an individual basis. Should the company fail, the governing documents state how much the members are personally liable for (usually a nominal £1). Directors also enjoy a level of protection from personal liability. A CLG can apply to become a registered charity with the Charity Commission.
This is a member of a Company Limited by Guarantee who has a specific obligation written into the governing document to protect the company Articles, for example by vetoing any changes to the asset lock. They may be the local authority or a third party organisation, such as a local church.