Charitable Status for TARS

Now that Signals for May has arrived, may I draw members' attention to the articles on pp.5-7 about the resolutions proposed for the AGM.  This is a very important decision, and needs to be voted on by a large number of members.

PLEASE send in your Proxy Form in good time to allow your vote to be counted. If you read my article, you will see I would prefer you to vote against, but whatever your opinion, it is vital that the decision is not made by only a tiny minority of members.

Alan’s note is a timely reminder.

 

As I am not able to be present at the AGM, my view is that we should not decide to become a charity.

 

Currently the Society is an AR Fan Club – whether we like the nomenclature or not. Should we seek to become a charity, our primary object must be governed by the need to provide a demonstrable public benefit. This shift in focus may well run contrary to the interests of many members who may well decide to leave TARS.

 

I am not sure if we would be able to publish Mixed Moss, Signals or Outlaw on a restricted basis and if they are to be made public then the permissions from the literary executors (and presumably Random House/Cape) to quote and use illustrations from AR’s works might well be withdrawn.

Also if they are to be made publically available – for many people it would not be worth being a member of TARS.

 

The quoted plus side of the conversion to being a charity is to save tax. In the last two years accounts, the corporation tax has been £5 a year, not a great saving to be made. The other major area is gift aid on donations. Our treasurer has quoted an average of £2,000 a year, what is not quoted is how much of this was donated by living basic rate paying UK tax domiciled donors. Probably we do not know the percentage, or would expect to know at this stage. However based on my experience from other sources the figure could be as low as 40%.

This could mean that with the gift aid benefit at 20% then the saving could be as low as £160. If we lose 8 adult members, as result of the changes, then that benefit disappears.

 

The advice any good accountant will give you (and I am a poor one) is that you should NEVER do anything solely for tax reasons, especially if there is a likelihood of damaging your business. The reporting to the Charities Commission is more onerous than that to Companies House for small organisation such as TARS. I would not willing load additional work on our board.

 

Quite rightly the TARS board are looking to improve the Society’s financial position. May I suggest that meeting expenses be abolished? This would save around £2,500 a year. All efficient organisations with a wide geographical spread now conduct meetings using VoIP protocols. Examples such as Skype and Logitech are used by many firms and you can even have video if you would like to see other participant’s faces. Let your computer do the work.

 

Doubtless others unable to make the AGM will also have views which may well be contrary to mine. At least this forum allows us to discuss this topic prior to the AGM.

 

Dear friends

All this misinformation about "public benefit" is not helping the Society at all.

There are thousands of charities which provide public benefits only to their paid-up members. The National Trust won't let you into most of their properties unless you join - or pay at the gate.  The RSPB is the same at their nature reserves.  The Cyclists' Touring Club will only send you their excellent magazine if you join up and pay the subs.

The Charity Commission does NOT expect registered charities to hand out magazines, learned journals or even car stickers free of charge.

What the Charity Commission expects is that the beneficiaries of the TARS Charity will not be rstricted to (say) "Arthur Ransome's personal friends and relations - or their descendants". Any Trust for those beneficiaries would be a Private Trust and not a Charitable Trust.  But TARS lets anybody join.  They let me join.  They let you join.   They let THE PUBLIC join. So the benefit of TARS does already go to The Public.

And before anyone asks what happens if some obnoxious individual wants to join TARS and has to be kept out - or what happens if an existing member of TARS becomes obnoxious or dishonest and needs to be ejected, DO NOT WORRY.  The Charity Commission understands that situation and our decision to reject or eject a few individuals, each for a clear reason or reasons and with due process, would not mean that the TARS charity would fail the public benefit test.   It would just mean that we are being careful about protecting our charity from villains.

I am certainly voting in favour of charitable status.

Nick Hancox

TARS Trustee  

As Treasurer, and representing the Trustees who unanimously agreed to propose with the minor technical changes to the TARS Constitution to enable us to test an application for a CIO (Charitable Incorporated Organisation) to the Charities Commission, I cannot let the misinformation contained in the previous posts go unanswered.   The following summarises some of the more detailed points made in my original article in last Autumn's Signals and my response to Alan's letter in the last Signals. 

Why do it anyway?

There would be several financial advantages. TARS finances are about evenly balanced through careful and restrictive budgeting, eg limiting stipends to the Regions, limiting traveling expenses to Committee members to fuel costs only, etc.  We would like to make our publications more attractive by greater use of colour (eg for Outlaw) but this would drive us well in the red.  We would like to fund more research, eg on the Ransome archives.  As Treasurer, I tried to encourage Regions that do not donate the S&A Books to schools to do so, by a special grant.  We would like to do more, to encourage the Society's outreach. What we are proposing is that we could lift these financial restrictions if we could take advantage of charitable status to enable us to:

1) Recover tax on donations.  This could approach £500 on our current level of donations.  (Alan is not correct in his estimates of the scale of donations to TARS. They have been running around £2,000 for the past few years  eg 2009: £2,300 and 2010: £1,815.)  Furthermore, several Trustees do not claim the expenses to which they are entitled in order to help balance the books.   They could instead claim their expenses and donate them.  This would add very substantially to the donations figure.

2) Reduce accountancy costs.  These are currently in excess of £2000 p.a.  A real advantage of a CIO is that the financial demand is reduced to Income and Expenditure Accounts I already prepare for the Trustees and our "auditor".  See http://www.charitycommission.gov.uk/Start_up_a_charity/Do_I_need_to_register/CIOs/cio_accounts.aspx

3) Take advantage of better savings rates for our Reserves.  We have been prevented this year from taking advantage of a new scheme proposed by our Bankers, simply because we are not a charity.

4) Administrative advantages:   Registration would be with the Charity Commission only; not with Companies House; not therefore subject to regulation under Company Law.  Reporting: only one Report, to the Charity Commission required; our existing Annual Report would suffice; no fee.

 

But would it change our ethos, and what about the Public Interest Requirement?

I disagree strongly with Owen that TARS is a "Fan Club".  TARS is a serious Literary Society, as its publications attest, as well as seeking to encourage youngsters to explore their world responsibly.  All of the Society's 5 objects satisfy the educational criteria of the Charity Commission; in fact, the Society's constitution appears to have been written for or borrowed from that of a charitable body.  Thus, "to promote the wider readership..."; "to help young people to widen their experience..."; "to educate the public..."; and especially "to encourage research..." (eg the newly established Red Slipper Fund) would all match the charitable purposes set out in the 2006 Charities Act.  Both the Jane Austen and the Tolkien Societies, for example are charitable.  The emphasis is on education of the public in an accessible manner, ie by modest subscriptions, publications and meetings aimed at increasing public knowledge together with geographically accessible functions.   Through our publications and regional structure, we amply fulfill those criteria.   ("Public" means our members as well as the wider community - as all our meetings are open.)  Furthermore, Books for Schools and Ship's Baby Fund are clearly for the outside membership public benefit. 

Members' Concerns voiced at previous AGMs

a) TARS would lose its present ethos or focus, by having to concentrate its efforts outside its membership.  This is probably based on the mistaken belief that we could Gift Aid our subscriptions.  This is not the case. To obtain tax relief on subscriptions (as against donations) we would have to ensure that the bulk of our subscription income supported activities from which our members did not directly benefit.  This is not the intention.

b) TARS could not continue in trading operations (eg the TARS Stall).  Most charities trade (eg Nancy Blackett Trust, RSPB, National Trust etc) so long as the trading is not the sole aim of its activities, and the Society remains non-profit making.

c) TARS could not pay Trustees for services, eg IT, legal (ie in addition to expenses).  This would be allowed providing the remuneration is decided at "arm's length" from the individual.  In our Cruising Club, (a CASC - allowing it to enjoy charitable status) we have a group including members outside the Committee to decide any remuneration/honoraria of committee members.

d) TARS could not campaign in furtherance of its objectives.  Again, look at the RSPB!

e) The charitable status could never be reversed.  It can, providing any financial gains resulting from charitable status are repaid.

f) TARS administration would become prohibitively complex.  This is the main reason for adopting the CIO route to charity registration.  See 2c above.

The charity Commission has just announced (28/3/11) that the CIO scheme is coming on stream.

So we call on all TARS of goodwill who want to see their Society further its existing aims to use your vote (personal or proxy) at the IAGM to allow the trustees to put the CIO concept to the test and help put the Society on a sounder financial footing.   I cannot see how this would lose us members.  The alternative - raising subscriptions - would surely do so.

 

Ted Evans

 

This is an important debate, and it is useful to examine points in greater depth before the vote at the AGM.

Ted mentions reduced accounting costs as a benefit of becoming a charity. But under Company law, with a turnover under £6.5 million, we don't need an audit and we don't need to pay for our accounts to be looked at as we do now, at a cost of over £2,000 - we could simply agree to accept Ted's figures which I'd be very happy to do. So could we if we reverted to a simple membership society.

Conversely there is an accounting cost to being a charity: with over £25,000 of income we would need an Independent Examination which would cost money, probably more than wiping out any gain from Gift Aid. So simply stopping the present payment to accountants would save 5 times more than Gift Aid might raise - and save 10% of our membership fees we currently pay unnecessarily.

I find the lack of awareness of what current charity law requires quite surprising if the issue of TARS applying to be registered as a charity has been discussed fully at the Board. I would recommend looking at the Charity Commissions website – indeed it says groups applying should have read their guidance first. 'Public benefit' is nowhere near the same as member-only services, and an affordable membership fee is irrelevant. In fact, it's the reverse. The Charity Commission is quite stringent about this: member benefits have to be incidental to undertaking charitable work for the public benefit.

A charity can have a membership, and it can support members with for example a supporters' magazine. But TARS spends more than half its national income on magazines that go only to members, and indeed because of their copyright content can only go to members. That's not 'incidental', and it's not public benefit.

The Charity Commission is clear about what they expect the role of members to be: to fundraise, undertake administrative work, and to be a source of Trustees. They can also help fulfil the public benefit functions. I illustrated this in Signals using our Birthday parties as an example. We could enjoy ourselves at them, but their focus would have to be fund-raising so TARS can buy more sets of books for schools or give SBF grants to members of the public who apply. So there might be a raffle, a book sale, charges for tea and cake.

Looking at Nick's examples, National Trust membership is effectively a way the NT raises money through a large annual fee, while the marginal cost of each visitor to a property is virtually nil. Their website says that by joining: “Best of all you’ll know that you are helping to protect the places you enjoy for ever, for everyone” - supporting their core aim of protecting our heritage. But “Memberships and visitor entry fees only cover a third of our costs, and so we are dependant on donations for the remainder“. As Nick says though, anyone can visit by paying at the door. However, I wouldn't like TARS to have to open up Birthday parties to non-members on payment of say £3.

The Cyclists' Touring Club is even more interesting. If you look at their website, they decided that while they did have some charitable aims, they couldn't register as a charity because of their non-charitable membership functions, so they hived off the charitable bits into a separate 'CTC Charitable Trust'. Now TARS could also do this for the SBF, books for schools and red slipper grants – but for the sake of £400 of Gift Aid? And these would then have to be opened up to the public to apply.

But the debate isn't about us deciding we're a charity, it's whether we even bother applying to the Charity Commission for them to decide if we're one. They would examine what we actually do, not just what we say our aims are; they would assess whether these aims are charitable (I'm not sure they all are, and they all do have to be); what public benefit we provide in fulfilling these aims; and to whom. I don't believe for a minute we'd be accepted.

In the meantime, there are some real issues facing TARS: declining membership, vacant posts, how to reduce expenditure, lack of content on the website: and conversely, nearly £50,000 in various bank accounts and investments that could be used in part to fund various things to promote the books while increasing TARS membership. A discussion on these points would help the Society.

 

Rob Boden

Some interesting replies to my thoughts on not becoming a CIO.

 

Nick Hancox quotes the NT and RSPB as examples, where non members can pay to enjoy the facilities. Also worth noting that all their literature is for sale to the general public.

 

I mentioned that I was unsure as to whether we would be able to publish Mixed Moss, Signals and Outlaw on a restricted basis and Nick’s examples would appear to indicate that we would not. This would not really matter if we had specific written assurances from both the Literary Executors and Random House that the existing permissions to use AR’s works free of charge would not be affected by their public availability. I assume the Trustees would already hold these and would be grateful if Nick could confirm this. Otherwise even proposing the CIO concept must be a non starter.

 

It would also be useful to see the Board’s calculations as to the membership loss when members realise that the can access publications without being a member. (I assume we are going to tell members.)

 

Expulsion of obnoxious individuals. We are assured by Nick that the Charity Commission understands this problem. Doubtless this written assurance will be available at the AGM for individuals to inspect. This situation, I understand, has been a problem area in the past – do we want to give fresh ground to any like minded individual? It does appear to be easier for problem individuals to cause troubles with the Charities Commission that would be the case in a company situation.

 

I am not sure whether I can agree with some of Ted Evans’ assumptions of the financial benefits of becoming a CIO. Looking at the points in detail :-

 

1. Recover tax on donations. Ted has quoted figures for the last 2 years of around £2,000 per annum. I assume he has analysed all these donations to see whether we could be able to claim tax relief and that the donations would have been validly beneficial to TARS for tax purposes.

I did quote a figure from other sources that the actual benefit could be as low as 40% of all donations. On confirming this figure I was reminded that many people cannot or will not sign a gift aid form which accounts for a low figure. I still think the benefit is more likely to be about £160 than £500. Ted may be able to disprove this from his analysis confirming that they were all received from living, basic rate paying, UK tax domiciled donors for the benefit of TARS.

There is also some thinking that if people are pressed to sign a gift aid form that they will not donate at all.

 

I am still puzzled as to the idea that Trustees could claim their full expenses and donate them back to claim tax relief. I have already suggested that meetings could be conducted using VoIP and save the whole £2500 – a far greater saving. Unless the meeting include some mystic clasping together of hands which is necessary to be a TARS Trustee – I suggest, like all organisations with a wide geographic spread, that meetings are held online – otherwise nowadays it seems more like a jolly than a serious business need.

 

2. Reduce accountancy costs. I do not understand this point at all. At least since the 6^th April 2008, we have been able to file abbreviated accounts without audit. I refer you to

http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1073791917&r.l1=1073858808&r.l2=1085093907&r.l3=1073979850&r.s=sc&type=RESOURCES

We do not need currently to spend any audit fees now to comply with company law. Presumably we have been advised on this by our “auditor” and it should be general knowledge to any businesslike member of the board. Therefore there is no saving as presumably we pay “audit” fees because we so choose, not because we need to incur them..

 

We may wish to continue with an independent third party check to provide some form of moral limitation on any possible fraudulent future treasurer or other national or local official.. This will be the same whether we are a company or a charity.

 

There are no costs quoted or mentioned for the winding up of the company and obtaining a corporation tax clearance from HMRC.

 

3.  Take advantage of better savings rates. This seems to be a possible plus. I am sure that Ted can estimate what we would have earned against what we have earned so we can gauge the benefit. We must bear in mind that at 31.12.2010 our national cash plus investments stood under £35.000. We would not put all our cash in a special account and banks usually only start to pay better rates over £50,000.

 

4. Administrative advantages. I have difficulty in seeing any advantages; we still have to file our accounts and a report with either Companies House or the Charities Commission. As they will be the same sort of accounts - where is the advantage? Indeed with the more benign atmosphere at Companies House to smaller companies compared with the more questioning approach by the Charities Commission especially to newer charities – there may be an administrative disadvantage.

 

I will not comment further on our ethos and whether or not we are a fan club, which is more a matter of sentiment than fact.

 

With reference to the members other concerns, the only one that has not been partially answered above is trustee remuneration.

It is a basic tenet of trust law that NO TRUSTEE MAY BENFIT FROM A TRUST. There are no exceptions. I have worked for firms of solicitors and when they billed a trust for work done, all work done by a partner trustee was struck out and adjusted for billing purposes.

Any third party remuneration committee is fudging the issue and may be illegal and lead to a charity being struck off. Ted’s sailing club should check with a good trust lawyer and may need to obtain a written clearance from the Charities Commission.

 

There seems to be a general assumption by the TARS Trustees that “being a charity is a good thing”. It would appear from some of the replies based above that some or most of the good thing is based on misconceptions. Perhaps no real investigation yet has been done to quantify the real advantages and disadvantages.

 

As with the Iraq war, I do not want to see TARS enter into something with the best of intentions but based on false assumptions.

 

The Board and Trustees are totally correct in their aim that they need to save money and try to increase income. Publications and the distribution thereof are a major expense. Perhaps the next issue of Signals could include a questionnaire to see how many members could receive information digitally. It must be worth considering that at least the recipients of Outlaw could do so and in colour. It might also be worth asking the members if they would be prepared to pay more to receive printed communications in colour.

In a mature organisation such as TARS it is often easier to save money than raise possible new money. To do this effectively does require research to gain more knowledge about the membership to provide them with a cost effective reward for their membership.

Here is some helpful advice on charging fees to members. It comes from the Charity Commission's own website; I have added some asterisks for emphasis: "Charities charging low fees: where a charity charges low fees that most people can afford, then the fee-charging is unlikely to give rise to public benefit difficulties. In most cases it will not be necessary for those charities to demonstrate any further opportunities to benefit since the low fees do not prevent people from having the opportunity to benefit from the charity's services or facilities. "The following are examples of where charities charge low fees that the majority of people can afford: *a local village hall charging membership fees of a few pounds to local residents to hire out rooms; *a community centre that charges a small entry fee to attend an event; ***the annual cost of a library card to enable borrowers to use books or reading rooms for free whilst ensuring that the charity can administer and monitor their use; *low charges, perhaps low hourly costs for use of a charitable public internet terminal; ***a small subscription fee to join a playgroup, scouts, guides, a youth club or after school club, or small charges to fund their activities, or charging low entry fees for trips, or offering assistance with fees though hardship funds; and *mobile units (such as a medical boat, or food and clothing vans) touring deprived areas in developing countries providing services, equipment, goods or facilities at low cost to local people. Nick Hancox TARS Trustee

Correction: The Cyclists' Touring Club is not a registered charity yet. They had a long and bitter debate about it and finally resolved this year (by about 75% to 25%) that the CTC WILL become a charity. Sorry that I got ahead of myself there. Nick Hancox TARS Trustee (and CTC member)

I am not sure how your last post advances the argument about if or whether TARS should become a CIO, Nick. Perhaps I have missed something.

I did ask if the Trustees had obtained permissions from the Literary Executors and Random House regarding putting copyright material into the public domain as we would be required to do by our change of status.

As there was no reply to this, may I assume the answer is no?  As I said without these permissions even proposing the CIO concept must be a non starter.

 

Are the Trustees aware that even if they achieve becoming a CIO they would then have to convince HMCR that the TARS CIO was eligible to be exempt from Corporation Tax and could claim Gift Aid? It is by no means automatic that if an organisation becomes a CIO it will be exempt from tax. It is highly likely that this exemption would be refused by HMRC for TARS.

 

I have carried out the type of analysis that HMRC would carry out on our accounts. From the 2010 accounts, of our income of £26,684, readily identifiable charitable expenditure (NBF,SBF & school books) amounts to £1,514. This is 5.67% of our income. I suspect HMRC would be looking for a figure of around 90% before we were granted any type of tax exemption.

Doubtless Ted can find some areas that I have missed in my calculations, but I would be very surprised if this would total more than 10%.

 

We could easily end up with the double whammy of losing our permissions from the Literary Executors & Random House and still being a taxable organisation.

 

I am not sure how much real research the Trustees & Board of TARS have put into the implications of becoming a CIO. Possibly CIO initiative is becoming a smokescreen for lack of other action in addressing the future financial problems of TARS. So far any other suggestions for saving money have been met with silence.

 

It would engender more confidence and perhaps support, if specific answers were given to the questions posed.

 

TARS Trustee Nick Hancox replies, for the last time on this Forum: 1. Any organisation registered as a CIO will automatically be a charity. The clue is in the name, "Charitable Incorporated Organisation". 2. Nearly everything that TARS does now could be done instead by a TARS Charitable Incorporated Organisation. 3. There are many financial benefits of being a Charity. 4. There is, quite rightly, a bit of a hassle getting any organisation registered as a charity. There are hoops to jump through. I have lost count of the number of charities I have helped to jump through those hoops into registered charity status. 5. Everything a TARS CIO does will be charitable. 6. If the people running a TARS CIO were ever to want to do something commercial, such as setting up a big shop in Coniston, selling Arthur Ransome novels for profit, they would know that a TARS CIO simply cannot engage in that sort of enterprise - and that is yet another good reason for supporting a CIO; it will stop future trustees from engaging in daft money-making enterprises. This is my last word on the subject: TARS should become a Charity. Nick Hancox

I understand that the Board did not vote 'unanimously' for these resolutions, but 'nem con'. Nobody voted against, but not everyone voted for. A small distinction, but important. Also I really don't understand why Ted has said, both here and in Signals, that my figures for donations are 'incorrect'. The accounts don't separate subscriptions and donations – hindsight suggests it might have been better if they had – so I took my figures from Ted's AGM reports. In 2008, reporting on 2007, he said "donations amounting to about £1,000 p.a.". In 2009, no figure was quoted, only "substantial". Last year, he again said "donations amounting to about £1,000 p.a." adding "nearly £2,000 has already been received for 2010." So I took £1,000 to be a regular figure, with a favourable blip last year. Now he says (above) "2009: £2,300 and 2010: £1,815." so it is possible we are seeing the rise forming a settled pattern, but this is information which we did not know until this discussion. I tried to find a documented figure to quote, and that was £1,000.

From the TARS Secretary - a note for information.

Alan Hakim has a much clearer record of the Board voting on the resolutions than I have ! These days, voting at Board meetings is not an exact science, but the Minutes of the meeting clearly state that the resolutions were 'approved' so that's that. I can't see that a possible abstention or vote against (if there was one) has any relevance. 

 

Alan is right in stating that the accounts as published in the AGM Papers do not separate subs and donations, but I have the detailed TARS Income and Expenditure for 2009 and the donations figure entered there is £1,012. 

 

 

The proposal to apply to be a charity seems to be driven by financial concerns. No-one has said, 'this will enable TARS to further the public's knowledge about AR', or 'we can have a fund that any young person can apply to to undertake activities they can't afford'. But even these financial benefits only seem to total £253 in 2009 of Gift Aid plus £5 of tax. However, there are some significant additional costs in being a charity which I think far outweigh this somewhat minor benefit, and I would like assurance that the Board considered them fully.

• Cost of an Independent Examination of our accounts – has the Board got any quotes for this? Currently as a Company Limited by Guarantee (CLG), or if we revert to an unincorporated membership organisation, we don't need to spend anything on accountants (yes we do pay accountants at the moment, but could stop this and save over £2,000 a year). As a Charity we would need an Independent Examination. The Treasurer's accounts, acceptable as a Company, wouldn't do, nor could a member examine them. The Tolkien Society which has a £28k income, paid £1,684 for theirs.

• Cost of insurance: at the moment we only need insurance for our members. When we have to open up meetings and events to the public to meet the public benefit requirement, we would need insurance for the public as well. Has the Board sought a quote for this? Currently we pay £1,770 and it looks as if we pay based on numbers of members. Therefore it is bound to go up. But by how much? Will it double?

• Conversion costs. Have the Board considered whether there will be any costs associated with ceasing being a CLG operating under company law and becoming a CIO operating under charity law? One possible cost that occurs to me, unless we change precisely at the end of our financial year, is whether we will need to pay our existing accountancy arrangements and for an Independent Examination in the one year i.e. an extra £2,000 or eight years of Gift Aid benefit. As I say above, we don't need such arrangements as a CLG with under £6.5 million turnover, but we do.

So the financial costs of being a charity would seem to greatly outweigh the financial benefits from Gift Aid and tax. There are further points which I would like assurance that the Board have fully considered.

• Has the Board had any preliminary discussions with the Charity Commission, or received an analysis of their guidance, to get an early indication of whether this proposal is worth pursuing? To be fair, it may be that with changes in the way TARS operates we could be eligible to be a Charity. I personally however would want TARS to remain a membership society that basically aims to benefit its members, not the wider public, not least because it seems significantly cheaper!

• Applying to be a Charity is linked by TARS Trustees to becoming a CIO. The Charity Commission website states that CIOs must use one of their two model constitutions – see 'Must I use one of the model constitutions' at http://www.charity-commission.gov.uk/start_up_a_charity/do_i_need_to_register/cios/must_i_use_cc_model.aspx For TARS, it would be the Association model constitution. Has the Board thoroughly examined this model, yet only identified the two small changes to our Memorandum of Association we are being asked to vote on?

• Copyright permissions when our publications have to be available publicly at a reasonable charge. Has the Board checked this with the Literary Executors, and the Brotherton and others whose photos we currently are allowed to use?

Unless the answer to these issues is affirmative, that the Board has fully considered them (though people may still disagree with their conclusions), I would suggest that at the AGM the Charity motions are withdrawn, and instead, in this our 21^st year, the time is used to discuss the Board setting up a proper and thorough review to refresh TARS, looking at different important issues we're facing:

• declining membership and attendances, and reducing subscription income

• officer vacancies
  

• finding ways to promote the Society and AR by judiciously spending some of our large reserves

• - especially activities designed to attract young people when a new film is likely to be released
  

• in the meantime seeking ways of reducing costs

• consider thoroughly what the best structure for TARS is – charity, staying the same, or reverting to a simple unincorporated membership society.

This should be completed as soon as possible, with anything needing the membership's approval coming to next year's IAGM.

Rob Boden

 

Nick, I am surprised that you have chosen not to reply to any of the questions that have been posed on this forum, but have decided to make a series of pronouncements  some of which are  questionable.

 

Looking at your assumptions :-

1. Any organisation registered as a CIO will automatically be a charity. I think most people will have understood this already.
2. Nearly everything that TARS does now could be done instead by a TARS Charitable Incorporated Organisation. What can not be done and how is the fact that it is being done by a CIO, going to bring any added benefit to the members?
3. There are many financial benefits of being a Charity. Actually in TARS situation it may cost us more as we will need to have a financial inspection of our accounts (income over £25,000) that we do not need under existing Company Law (although we actually do have one at the moment when we do not need one). Any benefit from Gift Aid may be marginal as no body has produced hard figures relating to donations received and from whom.  There is no guarantee that HMRC will allow us to be tax exempt anyway especially as we are converting from a corporation tax paying body. Can you please quantify with real figures what you think the financial benefits will be?
4. There is, quite rightly, a bit of a hassle getting any organisation registered as a charity. There are hoops to jump through. I have lost count of the number of charities I have helped to jump through those hoops into registered charity status. This would appear to be a one answer fits all solution.  This is no mention of what the benefit will be to TARS members and how it will help TARS address future problems. Being a CIO is not an answer to organisational problems. Can you please tell us, in factual terms, why a TARS member will be better off being a member of a CIO? What is going to be the cost to TARS in going through all the hoops?
5. Everything a TARS CIO does will be charitable. It will have to be otherwise it risks being struck off. But again how is this going to benefit either the individual members or TARS? But I do not think the scale of our membership activities compared with our charitable activities is going to make them charitable. Also with the CIO concept still evolving might not what we decide now run counter to future to future evolutions of the documentation.
6. If the people running a TARS CIO were ever to want to do something commercial, such as setting up a big shop in Coniston, selling Arthur Ransome novels for profit, they would know that a TARS CIO simply cannot engage in that sort of enterprise - and that is yet another good reason for supporting a CIO; it will stop future trustees from engaging in daft money-making enterprises. Does this mean that the present trustees do not trust any future trustees that they appoint? If there is a rogue element at any time it will not be deterred by the fact that we are a CIO. As a Limited Company there is more force in having a prohibtion to this in our memorandum and articles which are likely to be inspected by our bankers and a third party before engaging in a transaction. We will probably be much weakened by becoming a CIO, as people mistakenly trust charities. Perhaps with your vast amount of work in setting up charities you might like to comment on the work of The Fraud Advisory Panel in this area? How is a TARS member going to be better protected against the consequences of fraud or stupidity than they are at the moment?

 

You have said that you intend to say no more one this forum. This may be a wise move as you seem unable to provide any facts or answer any questions. From what you have said it may be that you are allowing your enthusiasm for setting up charities to run away without thinking what the benefit or the cost will be for TARS or its members.

 

Perhaps another board member or trustee would kindly try to answer the following questions :-

1. What is the reaction from the Literary Executors and/or Random House regarding the permissions under which we currently operate to use AR’s works on a non public basis, which might well disappear if we move to being a CIO.
2. What are the costed financial benefits in becoming a CIO? Evidence so far would indicate that it would cost more. Also what is it going to cost to convert to a CIO and what is it going to cost to close the existing Limited Company?
3. What steps are being taken to gain some form of clearance from HMRC that if we are to become a CIO that we will enjoy a tax exempt status? There are a number of charities who have failed to gain a tax exemption. From the look of our accounts, which HMRC already have, it seems unlikely that we will be tax exempt as less than 6% of our income is devoted to charitable purposes.
4. How is becoming a CIO going to provide a better membership experience to avoid falling numbers other than by mortality? Also how is the legal liability of members to be protected?
5. I have mentioned areas such as meetings where costs could be saved. As there also seems to be a lack of trustees, it may be that the calibre of people you are trying to attract are put off by having to attend meetings rather than deal with them simply on line in the now normal businesslike manner. How will becoming a CIO enhance the management structure of TARS to make it more attractive to new entrants and also to effect necessary savings?

 

Ted Evans has given a good summary, in his reply 13^th May, of what TARS would want to achieve in spreading the word on AR. However it has not yet become apparent how the change to CIO status will provide any additional funding in the absence of any costed replies to the questions that have been posed.

 

There is real concern that the supposed panacea of becoming a CIO is masking any real resolution to the problems the trustees face.  Are the trustees becoming beguiled by the miasma of supposed benefits which may leave the trustee and members exposed possibly without protection to the realities of the world?

I would suggest that more investigation needs to be made, especially regarding the necessary clearances from the Literary Executors and HMRC, before any move to start becoming a CIO is instigated. Indeed it might be prudent to wait until the CIO legislation is finalised before proceeding any further.

 

 

In view of the confusion, misinformation, but also genuine queries appearing in the above posts, I have withdrawn the Resolutions 3 and 4 from the AGM Agenda on 28/5/11.

This will give the Trustees time to digest the situation, explore the uncertainties with the Charities Commission and explore ways of bringing down our accountancy costs.  

To correct one issue common to many of the posts, we do not audit our accounts (see Accountant's Note at the foot of p.1 of the balance Sheet).

 

Ted Evans, TARS Treasurer

Thank you for advising us of this change to the AGM Agenda, Ted.

At this stage, whilst it was probably a difficult decision to make, it is undoubted the correct one.

It may be that a CIO is the route we may eventually take - but I think it will have to be proved beyond all doubt that it is of benefit to both the members and TARS itself and is superior to other alternatives.

I am not sure that anyone was talking about an audit of accounts. Both you and I used the word in inverted commas. Certainly what Rob and  I were querying was whether we needed any third party intervention by our reporting accountant before submitting the accounts to HMRC.

Perhaps we ought to look ahead to the screening of the S&A film. To my mind this presents the opportunity of the decade for TARS to move ahead by recruiting younger members on the back of the film showing.

I agree with Owen - there are so many important things for TARS to discuss that the charity issue was a time-consuming distraction: I have listed my view of what these are in a previous post.

My point about employing external accountants is the complete reverse of what Ted is implying: I have said that it is precisely because under Company law we don't need our accounts audited that we could simply cease doing this and save £2,100 a year. HOWEVER as a charity with over £25,000 income a year we WOULD need to have our accounts Independently Examined.  Now we might find someone to do this for free or for a reasonable fee, though I don't think it can be a member. More likely is that we will end up paying £2,100 a year which hugely outweighs any benefits from becoming a charity - and this cost will increase with inflation whereas Gift Aid depends on the level of donations which could even reduce.

In light of this alone, and no matter what the different views on public benefit and other points are, I can't see it's worth spending any more time looking at the issue.

Guidance would be easily found: the Charity Commission's guidance, available online, especially about the need to demonstrate public benefit; the HMRC site about their separate requirements in order for a charity to receive gift aid, especially the amounts allowed to be spent on member benefits; and the Literary Executors and other copyright owners about their views on the public accessing material. But I feel right now TARS needs to be addressing other more important issues.

In response to Owen's final point, while I agree with him entirely, this requires serious thought. TARS in many ways is not geared towards Junior members at the moment - for example, as I understand it does not even have a modern safeguarding policy, and only one region has a Junior Co-ordinator. Financially, I calculate we subsidise each Junior membership by about £5, because Juniors receive Outlaw and Signals. An extra 200 Junior members would cost TARS £1,000 and possibly tip us over the financial edge. I want more Juniors, but we need to prepare for this as soon as possible.