Are you thinking of setting up a community project?
Whether it’s a sports club, art project, community hub, green initiative, property rescue or retail concept there are different options for you to get it off the ground.
One way to bring the dream to reality is via a ‘registered society’. All projects carry risk, but the special advantages of registered societies are:
- the compliance and regulatory burden is less than that of ‘ordinary’ companies
- a society can convert into a limited company, CIC or charity,
- up-front clarity on member rights,
- potential for asset lock, and
- potential distribution of interest and dividends to members / shareholders.
Another way to launch your project is by forming a Community Interest Company limited by shares or guarantee, which has scope for higher reward and may also opt for asset lock. You can also consider forming a charity – charities recognised by HMRC don’t pay tax on most types of income.
You can consider peer to peer and multi-stakeholder funding opportunities too, which have their own unique advantages typically involving cost savings, market testing and speed. Crowd funding is rapidly becoming the first port of call for community projects who are finding that not only are they benefitting from a wider spread of interested and supportive investors, they are also discovering that corporate social investors are increasingly turning to such platforms which offer a welcome transparency and democracy to their funds earmarked for community projects.
Whatever form you decide for your community here are some things to consider
- Should you consider the type of structure best suited for your project?
- Can you maintain ‘bona fides non-profit status’ if your project grows quickly?
- Have you considered the ongoing legal requirements of your project?