Ringing Forums

I think a smart approach to this would be to fin a person who is either
a) familiar with, or
b) is willing to spend time and effort to become familiar with
the legal framework within which charities are legally bound to operate.
There are many "ready made opinions" about this but unfortunately many of them are not in accordance with the Charities Act 2011.
E.g. - there is a question being raised in your text above about "named trustees". This is what the Charities Act 2011 has to say about "who are the trustees in a charity":
"About charity trustees
Trustees have overall control of a charity and are responsible for making sure it’s doing what it was set up to do. They may be known by other titles, such as:

- directors
- board members
- governors
- committee members

Whatever they are called, trustees are the people who lead the charity and decide how it is run. Being a trustee means making decisions that will impact on people’s lives. Depending on what the charity does, you will be making a difference to your local community or to society as a whole."

I know that there is a belief that as long as we have named a few trustees, those are the only ones that can be landed with any form of liability. Reading the definition above, maybe not......

Also - depending on what type charity you are, your organization may not even be able to legally own anything. And I have seen questions around whether certain types of charities can enter into contracts (e.g. buy insurance) with legal effect.

Just a few examples - the entire framework can be quite a quagmire to wade through. Whatever choice you make - you really should be able to explain to the membership in a clear and coherent manner what the "charity" stamp on your group really means and how it should operate.

Stephanie, we're currently in the process of registering the Winchester School of Bell Ringing as a CIO as we wish to employ a part-time administrator like the Mancroft Ringing Discovery Centre and teaching centre at St Clements Cambridge do.

However in terms of your Association I wonder whether it is really necessary to convert to a CIO. There are not the same risks of owning/leasing property or employing staff. I think it also depends on what you see the roles of the Trustees to be, and what the roles of the Association Officers are, and how they should interact.

The former Central Council Bell Restoration Funds Committee used to encourage Guilds and Associations to register their whole society as a charity. They also carried out a triennial survey of BRF's, the last of which was 1994-6. The Charity Commission encourages trustees to spend their funds on delivering their charitable purposes, not accumulate large reserves, and in the 1996 survey of BRF's there was about 5.3 years worth of reserves held in BRF's

Income and expenditure figures for each registered charity are now published on the Charity Commission website, and since 2009 I have been working with Simon Linford and others on the Ringing Foundation and CRAG to maintain a spreadsheet with these figures, and to research what is happening. The two thirds of societies where just the BRF is a registered charity are easier to analyse and in the latest three year period there was an average annual income of £290,439, and an average spend of just £200,614. This trend has been going on for so long that there are now 20.2 years of reserves locked up in those BRF's without any more money coming in. Much of that surplus is invested in short term deposit accounts with poor investment returns.

As so many ringers are pensioners, or saving for retirement, I am surprised that so many BRF trustees do not invest their reserves elsewhere for better returns, or spend them on their charitable purposes, or take proper external investment advice, as the Charity Commission requires them to do (Perhaps a role here for the CCCBR to help). The ageing ringing population is also giving rise to five and six figure bequests, adding to the accumulation of reserves, whilst the amount spent is relatively static and going down in real terms. The Keltek Trust spends its bequests as soon as practical and the Association of Ringing Teachers has a policy to hold only 1 - 2 years worth of expenditure in reserve.

Charity trustees are also required to keep the objects of their charity under review, and at a time when we have a surplus of bells and shortage of ringers, they ought to be spending more resources on recruitment and training initiatives. A typical £5,000 grant for a restoration/augmentation project at one tower could benefit many more towers instead.

Therefore I think it important that you need to be clear on what the most important issues affecting your association going forward are, what the risks are, where resources are best deployed and what the respective roles of the trustees and officers need to be. You also ought to talk to the other societies where the whole Guild/Association is a registered charity to see how they operate. I see for example that the Essex Association has 15 Trustees and the Gloucester and Bristol has 20 Trustees. Their annual returns are published on the Charity Commission website, with the following reference numbers:

Carlisle Diocesan Guild 512111
Chester Diocesan Guild 1148441
Essex Association 292250
Gloucester and Bristol Diocesan Association 281431
Lichfield & Walsall Archdeaconry Society 1095998
Peterborough Diocesan Guild 258271-1
Suffolk Guild 266869
Truro Diocesan Guild 268122
Sussex County Association 268588
Bedfordshire - Association 263781
Durham and Newcastle Diocesan Association 507497
East Derbyshire & West Nottinghamshire Association 513642
East Grinstead and District Guild 280023

Thanks both. We are already aware of the various points you have made, and myself and the Treasurer (particularly the latter!) are already very familiar with the revant Charity Commission guidance and rules. Our entire Association is a charity (and has been for decades), not just the BRF, which I agree is probably slightly unusual. I suspect more associations/guilds with the same arrangement might have the same issues and concerns if their trustees actually realised what their potential liability is, but from what I've gathered, it sounds like some officers aren't aware that they are trustees.

It's not that unusual. About a third of Guilds and Associations are Charities, the other two thirds just the BRF. As you don't own or lease property or employ staff, there are not the same risks.

However, what is concerning is, as you say, many Trustees are not aware of their duties, particularly in respect of not accumulating large reserves, investing money wisely (and with professional advice if necessary) and keeping the objects of the charity under regular review.

This an education issue, and something that the CCCBR Bell Restoration Funds Committee used to cover well. However, this is something that is not covered by the current workgroups, even though the CCCBR is still run on a shoestring, yet there are large piles of cash accumulating in Guilds and Associations, which could be put to far better charitable use.

From our research we know that one of the best managed bell-related charities is the ODG one, who take professional investment advice from the Diocesan Financial Adviser to invest surplus cash for capital growth. They are now able to offer 20% grants for eligible works. The Coventry Diocese also manages the investment of a large bequest on behalf of its Guild.

Hi Steph,

We formed an SCIO for Inveraray Bell Tower in 2020. An SCIO is a Scottish Charitable Incorporated Organisation, so the Scottish parallel of a CIO. An SCIO reports to OSCR rather than the Charity Commission but otherwise my understanding is that they are otherwise very similar. Everything I say will be about a SCIO but it should relate to a CIO as well.

You and Roger are correct in that they limit the liabilities of the organisation to third parties to the assets of the charity rather than leaving any personal liability with the trustees and/or members.

If this limitation of liability is desirable then the two obvious options are a Limited Liability Company, which is then covered by your charitable status, or a CIO. The advantage of the CIO is that it is just a single entity to manage, reports to a single regulator (Charity Commission), and has simpler reporting requirements. An Ltd Company Charity will need to be registered with Companies House as well as Charity Commission, report to both and has more stringent accounting requirements (requires accruals based accounting).

A CIO can have two different membership structures. The first is where the members are the trustees, in this case you would have a handful of trustees and they would have all of the decision making power. Trustees would usually be appointed somehow, perhaps by external organisations. This might work for a community hall for example where a number of different bodies are represented in the SCIO that manages/owns the hall. The second is a two tier structure where there are members and the members elect trustees. The trustees have the legal responsibilities and day-to-day decision making but can be held to account by the members (at an AGM for instance). Ultimately the members have the decision making power (within the constraints of what is legal).

For Inveraray we chose the two-tier structure to ensure that the members were involved in the decision making. This seems like the obvious setup for guilds and associations as it mirrors existing structures where everyone is a member of the organisation and elect officers to carry out the work and take on the responsibilities.

For an SCIO the continuation of the charitable status and the existence of the incorporated entity are intrinsically linked. If the charitable status is lost then the SCIO is wound up, it can't continue without its charitable status. With a charitable ltd company then the ltd company could continue having lost its charitable status (without the benefits of charitable status obviously). We didn't feel that this was a concern for Inveraray. This is one area where I believe CIOs and SCIOs are different, I think there is a route for a CIO to lose its charitable status but I don't know anything about it.

For day-to-day running a CIO is very much like a charitable unincorporated association. There is a constitution, there is an AGM, trustees are elected. Gift-aid can be reclaimed on donations, there are exemptions from corporation tax for primary purpose trading. Annual accounts and a trustees report must be submitted each year. Your work must further the charitable objectives.

Forming the SCIO was pretty straightforward. We formed a new organisation rather than incorporating an existing one as we didn't have any assets to transfer but I don't think incorporating a new one is much different. We completed an application form for OSCR that described our charitable objectives along with detail of the activities we intended to undertake and how they would further the charitable objectives. This was submitted alongside a constitution (lightly modified from a model document) and a business plan covering the first few years of operation. The submission is made by the founding trustees (minimum of 3 for an SCIO). The charity was incorporated a few weeks after submission of the application.

Over the past 5 years the SCIO structure has worked well for us and I would recommend it to someone setting up a new charity.

I agree somewhat with Roger that the incorporation is only really necessary where there is risk of liability to the organisation. A BRF charity which solely gives grants for example operates with extremely low risk of liability. An organisation that leases property, employs people and allows access to the public clearly has much more need for limited liability. Its not immediately obvious to me that incorporating a guild/association is necessary, but as guilds/associations (hopefully) do more it is a structure which gives you options (for example the ability to employ someone even for a few hours, to take on a lease, etc).

For completeness I should mention that a CIO doesn't remove absolutely every personal liability from trustees. There is a small scope in which trustees remain personally liable for the serious, deliberate financial mismanagement of a charity of which they are a trustee. I don't think this should be a concern for anyone who is serious about being a trustee.