Analysis: What is a Charitable Community Benefit Society?

The work to establish Chilbolton Community Land Trust (CCLT) is underway. Community Land Trusts are an international phenomenon, that started in the United States. Here in the UK there are various ways of incorporating one, but the SWG have indicated that “CLT will be a charity (but regulated by the Financial Conduct Authority, rather than the Charities Commission)”. This suggests that CCLT will be what is known as a Charitable Community Benefit Society (CCBS).

In the UK, we are familiar with co-operative societies - businesses that are owned and controlled by their members. They have been in existence since 1844. Their purpose is to benefit their members.

Community Benefit Societies (CBS) are more recent entities whose purpose is entirely for the benefit of the wider community, not just their members. In fact they are specifically forbidden from undertaking activities which preferentially benefit their members. They are also expected to run democratically on the basis of one member, one vote.

Any profit that a CBS makes has to benefit the wider community and cannot be distributed to members. If it is sold or merged, its assets must continue to be used for the benefit of the community.

The Parish Council has opted to form a Charitable Community Benefit Society (CCBS), which imposes further constraints on its operation. It must only undertake activities that further its exclusively charitable objects, and it must have what is known as an “asset lock”. This means that if the society is dissolved, any assets must be transferred to another charity with similar objectives.

A CCBS is not registered with the Charities Commission. Instead it applies to HMRC to be recognised as an exempt charity for tax purposes. As part of this process, the Financial Conduct Authority (FCA) checks that the proposed trustees are not disqualified from acting as charity trustees.

The directors of a CCBS must act in the interests of the society and should not use its assets for their own benefit. They must provide annual accounts, but only need a full professional audit if turnover is more than £250,000 or total assets are more than £2.8m.

So is a CCBS the right entity to build and run affordable housing in Chilbolton? One of the largest CCBSs in the country is the Peabody Trust, now known simply as “Peabody”. It is one of the UK’s oldest not-for-profit housing associations, with 108,000 homes with 220,000 residents. Its mission is to “help people flourish by providing great homes and services and making a positive impact in communities.” Chilbolton’s ambitions might be on a smaller scale, but CCLT’s purpose could be similarly noble.