With sporting fever growing as events unfold in London today, we thought it might be a good idea to look at some ways to structure sports clubs and sporting activities.
Community Amateur Sports Clubs
Community Amateur Sports Clubs or CASCs are sports organisations which meet the following key criteria:-
- the club must have a constitution
- the club must be open to the whole community
- the club's main purpose must be to provide facilities for eligible sports (based on a Sports Council list which includes rugby, association and gaelic football as well as dragon boat racing), and to encourage people to take part in them
- the club must be organised on an amateur basis
- the club is set up and provides its facilities in an eligible location (UK, another country in the European Union, or in Iceland or Norway)
- the club is managed by "fit and proper" persons (see our Febuary 2012 Update on this concept)
If the CASC tests are met then HMRC will allow the organisation tax reliefs similar to that of a charity. Non-domestic rates exemptions will also follow. Meeting the CASC tests can therefore be very valuable for a club.
While key reliefs are available other fiscal advantages and funding sources for charities may not be open to CASCs. CASCs are not charities. Some funders will only support registered charities.
A charitable club
The advancement of sport is a charitable purpose. So, using a charity is possible for e.g. clubs, public sector organisations, grant giving foundations wishing to encourage sporting endeavours. The benefits of using a charity being that the full suite of tax reliefs, rates relief, partnership working opportunities and funding application sources will be available. As above, some funding sources will only support registered charities.
In 2009 there was an interesting attempt connected to a Scottish Football League club to set up on a charitable basis (no sniggering at the back please!). Dundee FC in the Community Association sought to establish themselves on a community charitable basis. In what was described by Third Sector magazine as regulatory work "par excellence" on OSCR's part, the application for status was refused. We do not know the detail of that application, but we do think that the barriers to such a sporting venture having Scottish charitable status are not insurmountable. What may be a more interesting challenge would be the attitude of HMRC applying English charity law. The advancement of sport is one where Scots and English law are not at one. It would be fair to summarise the English law approach to the advancement of sport as being more restrictive.
Community Interest Companies
As Dundee FC in the Community Association found out, not all community focussed activities are charitable. In some cases a non-charitable organisation, but with a community "asset lock" may be appropriate. Community Interest Companies ("CICs") provide a mechanism which seeks to blend a community focussed vehicle with the ability to be more commercial and even provide limited amounts of private income and capital return. CICs are regulated by the CIC Regulator and crucially must satisfy the Regulator as to the "community benefit" provided by the CIC's activities.
CICs have a place. However, in our view they do not offer a panacea for community projects and often charities or non-CIC "normal" companies with carefully crafted Articles and an appropriate governance regime are the right legal vehicles. In addition, using something other than a CIC avoids the need to deal with the CIC Regulator.
For further information on Charities and Third Sector law, please contact:
0141 271 5375
For queries and advice on wider sports law issues,
0141 271 5685
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This briefing is written as a general guide only. It is not intended to contain definitive legal advice which should be sought as appropriate in relation to any particular matter.