NCVO and Social Enterprise UK
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Case Studies

Amnesty International UK


Name of organisation

Amnesty International UK Section

Legal form

Company limited by guarantee (CLG) without charitable status

Where, what and how

Amnesty International UK Section is a company limited by guarantee without charitable status. Historically, Amnesty has not been able to register as a charity because the promotion of human rights, until recently, was not recognised as a charitable purpose. In recent times, this purpose has been recognised by the Charity Commission as a charitable purpose but with certain restrictions. It is also an area where the law is being tested and the position may change. Amnesty has an associated charitable trust that undertakes educational activity.

As an incorporated entity, it is able to appropriately deal with the risks associated with a large and complex organisation. It has provisions included within its Articles of Association which prevent the distribution of profits so that all of its assets are used for the purpose of promoting human rights.
Amnesty is a democratic organisation with a large membership. Each of the members have different voting rights depending on their role. There is a sophisticated system of governance to ensure the appropriate balance of power between the different stakeholders.

Why the form fits

As a company limited by guarantee Amnesty International UK section is able to be a democratic organisation giving each member a vote, as well as protecting its social mission. As a non-charity it is not obliged to comply with sometimes restrictive charity regulation.


Big Art Trust

Case Study: Big Art Trust, BWB, Base Creative

Name of organisation

The Big Art Trust

Legal form

A company limited by guarantee (CLG) without charitable status.

Where, what and how

The Big Art Trust was set up in 2005 to promote public art across the UK, focusing in particular in engaging local communities and other stakeholders in the commissioning process.
It was established by the producers of a major 2009 arts documentary series on Channel 4 – The Big Art Project, and was funded by The Arts Council for England, The Art Fund [Arts and Business and the Northern Way] as well as a number of local authorities and other statutory bodies.
The organisation is an oligarchy – that is, its directors are also its only members. These are made up of various stakeholders including a representative from Channel 4, Carbon Media (the television production company), a charity lawyer, an arts curator, and other specialists and consultants within the arts world. Only one staff member was employed by the trust.
Whilst it was not possible for this organisation to have charitable status the founders wanted the organisation to offer limited liability status for its directors and to have the recognised not-for-profit form that a company limited by guarantee offers. This was particularly important to enable it to attract grant funding from the bodies mentioned above.

Why the form fits

A company limited by guarantee with an asset lock allows the Big Art Trust to demonstrate to funders its not-for-profit status.


 

Blenheim CDP

Case Studies: Blenheim CDP, BWB, Base Creative

Name of organisation

Blenheim CDP

Legal form

Company limited by guarantee (CLG) with charitable status.

Where, what and how

Blenheim CDP is the charitable company formed by the merger of two separate charities – The Blenheim Project and Community Drug Project.

Both worked in similar fields dealing with drug rehabilitation and treatment and the merger was mutually beneficial. They chose to merge their operations by transferring the activities of one company into the other and then closing the non-operational company. They then adopted a new name.

The organisations wanted to retain limited liability status as they operate in a field with relatively high risk and by retaining one of the pre-existing companies, not all staff and activities had to be transferred.

Why the form fits

A CLG provides Blenheim CDP with limited liability. Charitable status allows it to protect its social mission and provide its core services.


 

Diabetes UK

Case Studies: Diabetes UK, BWB, Base Creativ

Name of organisation

Diabetes UK and Diabetes UK Services Limited

Legal form

Charitable company limited by guarantee (CLG) with a wholly owned company limited by shares (CLS) as a trading subsidiary

Where, what and how

Diabetes UK is the largest organisation in the UK working with people with diabetes, funding research, campaigning and helping people live with the condition.
Diabetes UK is a company limited by guarantee with charitable status. Given that it is a large organisation with many activities and a large number of staff, it has chosen an incorporated legal form. The company limited by guarantee is the most common incorporated form for large charities. It obtained charitable status because it has exclusively charitable objects and operates for the benefit of the public.
Diabetes UK also has a trading subsidiary. This is a wholly owned company limited by shares called ‘Diabetes UK Services Limited’. It carries out activities, which Diabetes UK, as a charity, is not legally able to carry out itself. For the most part these are fundraising activities, working in partnership with businesses.

Why the form fits

A group structure allows Diabetes UK to carry out its charitable activities and its controlled subsidiary company to carry out certain fundraising activities which a charity cannot carry out directly.


 

Groundwork

Case Studies: Ground Work, BWB, Base Creative

Name of organisation

The Federation of Groundwork Trusts

Legal form

A federation of charitable companies limited by guarantee (CLG) with one national ‘umbrella’ or charity (‘Groundwork UK’) and a number of local or regional independent charities (‘Groundwork Trusts’) many of which have associated subsidiary trading companies limited by shares (CLS).

Where, what and how

The umbrella charity, The Federation of Groundwork Trusts, or ‘Groundwork UK’ is a major national charity which works through its federation of independent ‘Groundwork Trusts’ to build sustainable communities in areas of need through joint environmental action.
The Groundwork Trusts operate in distinct and separate geographical areas of the UK in partnership with other private and public sector bodies for example local authorities. Often those partners are company members of the Groundwork Trusts. Groundwork UK is a company member of all Groundwork Trusts and has a right to nominate a trustee to the board of every Groundwork Trust.
The federation operates democratically such that all the local and regional Groundwork Trusts are company members (and the only company members) of Groundwork UK. As members they have rights to appoint trustees for three year terms to the board of Groundwork UK on a partial regional electoral college basis. Groundwork UK is able to protect the quality of operations and the Groundwork brand through the membership contract which all Groundwork Trusts are required to sign.
Groundwork Trusts are social enterprises which derive most of their income from primary purpose trading. Some Groundwork Trusts have opportunities to earn income from trading more commercially, these opportunities are channelled through and exploited by trading subsidiaries of these Groundwork Trusts. Each trading subsidiary operates under a licence and at arm’s length from its parent Groundwork Trust.

Why the form fits

A federation allows Groundwork UK to protect the organisation as a whole while allowing local organisations to freedom they need to succeed.


 

HCT Group

Name of organisation

HCT Group

Legal form

Charitable company limited by guarantee (CLG) with community interest company (CIC) subsidiaries

Where, what and how

HCT Group is an award winning provider of public transport and related training services in the UK. Founded in Hackney, east London, in 1982, it has depots in London, Yorkshire, Bristol and the Channel Islands. Its vision is social justice and equality for all and aims to contribute towards this goal through the conduct of its activities, by reinvesting generated surpluses within the businesses, increasing employability, promoting community transport concepts and applying the social enterprise business model.
HCT Group is the holding company for all the operations. For example, it wholly owns a leading subsidiary called CT Plus CIC which is a community interest company. CT Plus in turn owns CT (Yorkshire) which runs its services in Yorkshire.
The group structure allows HCT Group to separate the risks associated with its business in different limited liability companies. The social mission of each of those companies is protected (either through charitable status or through being CICs), which sends a clear message to the public that the organisation is a social enterprise.

Why the form fits

A group structure allows HCT Group to separate risk.


 

Land Data CIC

Name of organisation

Land Data Community Interest Company

Legal form

Community Interest Company limited by shares

Where, what and how

Land Data CIC is the leading authority on electronic land and property information and is committed to making this available to all. Through the National Land Information Service (NLIS), Land Data provides electronic access to official sources of land and property information, across the whole of England and Wales via a hub and a number of electronically accessible channels.

Land Data became a community interest company in recognition of its commitment to making authoritative property search information accessible to the general public and at the same time improving the home buying process. Its commitment to the community is reflected by the number of Committees on which representatives of its stakeholder groups sit. The Committees, chaired by a senior member of the Land Data executive, meet at least six times a year.

These formal meetings give Land Data the opportunity to consult and receive feedback from stakeholders on issues relating to Land Data’s own business and its impact on the property search industry. Where appropriate, issues raised by these Committees are tabled at Land Data Board meetings. In addition, Land Data hosts web forums through which it consults with and communicates to larger groups in a more informal way. Land Data also has a paid board of directors and every director is also a shareholder.

Land Data operates in the highly commercial world of property transactions and so a company limited by shares is a very recognisable vehicle for its stakeholders. However, as it wishes to be a social enterprise, it needed a legal form that reflects its social mission. The community interest company features allow it to continue to be a company limited by shares but also to have an asset lock.

Choosing a community interest company rather than a charity allowed the board of Land Data CIC to receive reasonable remuneration. This was again necessary in the market in which Land Data operates.

Why the form fits

As a CIC limited by shares, Land Data can pay its board and use a recognised legal vehicle while still protecting its social mission.


 

Westmill

Case Studies: Westmill, BWB, Base Creatives

Name of organisation

Westmill Wind Farm Co-operative Limited.

Legal form

Co-operative Society.

Where, what and how

Westmill Co-op was established in 2004 for the purpose of constructing and operating a community-owned wind farm at Westmill Farm in Oxfordshire and was the first opportunity in the South of England for local people to own and operate a substantial wind farm.

Funding was raised through a public share offer which attracted £4.6m from nearly 2,400 members; they receive annual share interest payments from the project. The Co-operative Bank loaned an additional £3.8m to complete the financing. As a co-operative society, Westmill Co-op exists for the benefit of its membership – a very broad cross-section of the public who benefit from the social, environmental and financial benefits generated by the wind farm operated by the society – and does not therefore have charitable status.

However, as with other registered societies, Westmill Co-op does enjoy the benefits of limited liability, which is appropriate given the large size of its contractual and operational commitments and the risk necessarily involved in its activities. Westmill Co-op conducts all its trading activity directly and does not have a trading subsidiary or belong to a group. However, as the co-operative wishes to support environmental initiatives in its local area it has established a charity for this purpose.

Westmill Co-op itself is one of a family of co-operatives established by Energy4All Limited – a social enterprise consultancy owned by the co-operatives it creates – which managed the project development, ran the share offer and provides on-going management services.

Why the form fits

Using a co-operative society means Westmill can raise equity finance but also ensure it is established democratically and for the benefit of its members.