Community Benefit Societies
Community benefit societies explained, including registration costs, asset locks and applying for charitable status.
A Community Benefit Society (CBS) conducts business for the benefit of the community. They don't distribute profits to members or external shareholders but reinvest them in the community.
How Community Benefit Societies operate
Key characteristics of Community Benefit Societies include:
- They are set up with social objectives to conduct a business or trade.
- They are run and managed by their members.
- They must submit annual accounts.
- They can raise funds by issuing shares to the public.
- They can be established as charities, but only if they have only charitable goals that help the public. This lets them raise money from public grants and charities. If approved, they're called exempt charities. They report to the Financial Conduct Authority (FCA), not the Charity Commission.
Difference between a Community Benefit Society and a co-operative
Community Benefit Societies are not to be confused with co-operatives:
- Co-operatives operate for the mutual benefit of their members. They may or may not be a social enterprise, depending on their activities and how they distribute their profits. Community benefit societies reflect commitment to the wider community, with profits being invested back into the business.
- Co-operatives cannot be established as charities. Community benefit societies can be established as a charity as long as it has an asset lock.
The Financial Conduct Authority (FCA) provide an .
Community Benefit Society: registration and costs
To register as a Community Benefit Society, you must demonstrate your social objectives and your reasons for registering as a society, rather than a company.
The FCA has made the decision that from 2019/20 fee year, registered mutuals will no longer pay annual fees. The FCA provides more guidance on the .
If you want to start a Community Benefit Society, you should seek legal advice. This is especially true if you are creating your own rules. See choose a solicitor for your business.
Asset locks
An asset lock protects a company or society's assets. It stops them from being transferred to private individuals or other companies. Charitable CBSs must have an asset lock. Non-charitable CBSs can apply an asset lock, which protects their assets for the future benefit of the community.