The pros and cons of the legal forms that groups such as the Clevedon Pier Trust can choose

Such forms include the BenCom, or community benefit society

Clevedon Pier
Clevedon Pier

The Clevedon Pier Preservation Trust was formed in 1972 after the Victorian pier in Somerset collapsed into the sea. Two months ago, however, the trust, which still oversees maintenance of the now rebuilt structure, decided to shed its charitable status and become a community benefit society, also known as a BenCom.

BenCom is one of a number of legal forms available to social groups, including community interest companies, which can have looser purposes than charities and are not entitled to the same tax breaks, and charitable incorporated organisations, which get both tax exemptions and a simpler regulation regime.

The trust chose the BenCom model because it allows an organisation to issue shares, which it did for £150 each. It hoped this would help to fund a pier visitor centre and restaurant, which in turn would finance continuing repair work.

"Fundamentally, we were trying to be financially independent," says Colin Searing, the trust's director. "The shares will also give people a sense of ownership and a feeling they have got a say," he says.

Although they are regulated by the Financial Conduct Authority, not the Charity Commission, BenComs can have charitable purposes, can get some of the same tax benefits as charities and tend to be used for democratic, community-focused organisations.

So how do organisations choose between the different legal forms? Hannah Kubie, a partner at the law firm Stone King, says: "The big decision is whether their main concern is having their mission and assets held in the safest way possible, which will push them towards being a charity.

"But they might want more flexibility - for example, if a charity has grown beyond its founders' expectations and wants to start paying the directors."

The sports disability club All Ability Sports and Leisure had a choice between becoming a charity or a community amateur sports club, which can receive tax relief and Gift Aid. Helen Offord, a trustee, said: "We chose to become a charity because people understand what that is. There's a lot of confusion about CASCs - you get benefits, but would people support us?"

The Charity Commission and the Office of the Regulator of Community Interest Companies will offer advice, but both Offord and Searing said the most difficult thing for them was a lack of coherent guidance to help them through the transition.

Kubie advises organisations thinking of changing form to seek legal advice and take time to decide which direction to go. "One of the big pitfalls is that people think too short-term," she says. "They need to weigh up the pros and cons of certain forms. And it's not always as easy to change as you might think."

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