Charity Trading Company Advantages/disadvantages

gingerdad

I am a volunteer with a small charity which currently runs one shop. We are looking at opening a 2nd much larger shop. We are looking at mitigating as much risk to the charity and one of the options is to run the shops under a separate trading company.

One advantage is with gift aid you can wait longer to contact donaters of goods.

One disadvantage is the possible loss of 80% rates rebates.

We are taking legal advice but would like any real world issues there might be.

paddyrg

Keeping multiple sets of accounts, multiple directors and how they relate to charity committee come to mind.

Not that it isn't the way to go, but as you've already highlighted there are potential pitfalls too. Paid (ie insured professional) expert advice is essential here.

gingerdad

Agree on the professional advice. Would be the same directors/trustees as the charity.

Seanymph

You can now set up a CIC (Community Interest Company) This Limited liability company can be in reality an 'arm' of the Charity, linked to it, and able to trade in ways the Charity cannot (ie not linked to the main objective of the charity/sell alcohol, whatever).

The CIC can have seperate directors, run independently, but is 'asset locked' to the 'Root charity'.

So it can reinvest it's own profits, or pay staff, run it's own company - but any profit is 'kicked back' to the main charity.

It's fairly new (couple of years old legistlation) - but would from the little you've put serve your purposes because it is an incorporated body.

http://en.wikipedia.org/wiki/Community_interest_company

https://www.gov.uk/set-up-a-social-enterprise