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Charity commission registration - Totally lost! Please help!

Lauren P Trustee at HS pca Posted 2 months ago

Hi all, 
Hoping for some advice please if possible. I think I must be asking for the impossible but haven't realised and wanted to ask if it is completely useless to continue on and if there is any other alternatives.
Our children attend a cheer and dance club who run the lessons as a Ltd company. They make no profits and it isn't the coaches main job so not sure why they chose this many moons ago but they did. Fast forward a few years and a move to a new building meant we did some fundraising for a new floor, and it became apparent that it would be best to separate that funding away from the main account that purely pays the rent and utilities etc, and so we created a group/committee of 5 trustees to plan and organise this. The goal was to decide where to spend donated/fundraised/tuck shop/event monies between us, to benefit athletes with additional equipment or opportunities and events etc that don't come as the basic service (eg purely just dance lessons), running very much like a PTA in a school for example. Allocating any monies from tuck shop or workshops etc back into the community and having us trustees decide where best to spend it together. I don't think this seems too wild.... however ...
I naively applied to be an unincorporated charity and was immediately declined, back to the drawing board to understand my mistakes, realised it shouldve been a CIO and reapplied. The commission came back twice and asked extra information and then I got the rejection email. I am going to ask for an independent review but had a bit of advice which is that due to the connection to a Ltd company it is just maybe too tall an order to get the charity agreed. Has anyone ever had any success in this situation? I've seen pta groups on the charity register but I think these were prior to all the recent rejections and the "tightening up" they seem to be doing. Or shall I give up now before wasting much more time preparing and asking for the independent review.
I'm guessing there aren't any other alternatives? We basically want a charity number as a parent wants to make a donation but not until we have the charity number confirmed. 
I wondered if I could apply for something else (casc?) so I can apply to hmrc for a charity no and if this would offer them the assurance the donator wanted (but obviously without the charity status no if it just isn't ever going to possible due to the Ltd company) 
My apologies for my naivety and rambling on, if you got this far, Thankyou, and any advice on any next steps I could take would be so very gratefully received 
Many Thanks 
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Stuart Davis

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Consultant at Stuart Davis Group 2 months ago

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Hello Lauren,
So, yes, the issue here could be the limited company, if it is limited by shares. There is another structure called a company limited by guarantee, which is easier to convert to a charity (in fact, before CIOs were a thing, this was the standard method of setting up a charity). So, I'm assuming that you're limited by shares.
If so, the problem the Commission will have is that the for-profit structure of the limited company isn't really comparable with the no-for-profit structure of the charity. But there is a way round this. Charities can have trading subsidiaries, which are for-profit companies that the charity owns. They're used for things like running charity shops.
So, I'd try reapplying to the Commission to create a CIO, and say that the current Ltd company will become a trading subsidiary. In other words, as part of the application, explain that the shareholders of the limited company will transfer the ownership of their shares to the charity, when the charity is formed. They should be happier with this.
It's important to note that you will have two legal entities at the end - you won't be converting the limited company, just creating a new owner.
Hope that helps.

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