The growth in the number of community shares issues has led more community ventures to decide to incorporate themselves as ‘bencoms’ (societies for the benefit of the community) under the Industrial and Provident Societies Act rather than as companies limited by guarantee (CLGs), traditionally the usual route which many not-for-profits chose. Bencoms can raise money from supporters as withdrawable member share capital, something that’s not available for CLGs.
But there’s lots of quirks about Industrial and Provident Societies regulation, and one is that bencoms cannot at the moment become registered charities with the Charity Commission. They can be charities, but they can’t be registered charities. (I’m talking about England and Wales here. Scotland and Northern Ireland have their own regulators for charities, but for the moment I’m trying to keep this simple.)
So charitable bencoms instead apply to HM Revenue and Customs to have their charitable objects recognised and to be able to benefit from all the usual tax concessions. They’re known as exempt charities.
What happens when a community initiative set up as a company limited by guarantee and already with registered charity status wants to hold a community share issue? It has to change to be a bencom, of course, but what happens if it does so to its status as a charity? Well, thanks to Hastings Pier Charity which has just done exactly this, we now know the answer. My article about this issue went up yesterday on the Guardian’s social enterprise webpages.