Community Benefit Society for Sports Clubs: Is a CBS the Right Structure for Your Club?
- Admin
- 2 hours ago
- 8 min read
Could a community benefit society be the right structure for your sports club? For clubs with ambitions to raise capital from their supporters and community, operate on genuinely democratic principles, and embed a clear commitment to community benefit into their governance, a CBS offers a distinctive and powerful model. But it is not the right choice for every club, and understanding where it works best is essential before making this decision.
What Is a Community Benefit Society for Sports Clubs?
A Community Benefit Society (CBS) is an incorporated legal structure that exists specifically to carry on business for the benefit of the wider community rather than for the personal gain of its members. Often referred to as a BenCom, it is registered with and regulated by the Financial Conduct Authority (FCA) rather than Companies House, and its governing document is a set of Rules rather than Articles of Association.
A community benefit society for sports clubs is used where the club wants to operate as a genuine community enterprise, with community benefit written directly into the structure of the organisation. Profits cannot be distributed to members and must instead be reinvested into the club or used to further its community purposes. The CBS operates on a democratic one member one vote basis, meaning that regardless of how much any individual has invested in the society, every member has an equal say in how it is run.
The CBS has existed as a legal form for many years under various names. Before the Co-operative and Community Benefit Societies Act 2014 came into force, these organisations were known as Industrial and Provident Societies. The 2014 Act modernised and renamed the framework, and since August 2014 new societies must register as either a co-operative society or a community benefit society. For most grassroots sports clubs, the community benefit society model is the relevant one.
Why Some Sports Clubs Choose a Community Benefit Society
Community Shares. This is the feature that makes the CBS genuinely distinctive and the main reason sports clubs tend to consider this structure above others. A CBS can issue community shares to supporters, fans and local investors, allowing the club to raise capital directly from the people who care most about it. These shares carry a capped rate of interest, and it is for the board to decide each year whether the club can afford to pay that interest based on its financial performance. Crucially, regardless of how many shares a person holds, every member retains just one vote. This prevents any individual or organisation from accumulating control through investment, keeping the club genuinely democratically owned.
This model has been used to great effect by a number of community owned football clubs and other sports organisations that have raised significant sums from their supporter base to fund ground improvements, buy assets or sustain operations during difficult periods. If your club has a loyal and engaged community behind it, community shares can be a genuinely transformative fundraising tool.
Democratic Governance. The one member one vote principle is embedded in the CBS structure and is one of its defining characteristics. For clubs that want to put meaningful community ownership and democratic control at the heart of their organisation, this is one of the strongest available frameworks for doing so. Members can participate in elections to the board and vote on significant decisions, giving the wider community a real stake in how the club is run.
Limited Liability. Like other incorporated structures, a CBS is a corporate body with its own separate legal identity. It can own property, enter into contracts, employ staff and take on liabilities in its own name rather than through individual committee members. Members' personal liability is limited to the amount unpaid on their shares, providing meaningful protection for those involved in running the club.
Asset Lock. A CBS can adopt a statutory asset lock, which provides a strong and legally binding guarantee that the club's assets will be used for the benefit of the community and cannot be distributed to members for private gain. If the society is ever wound up, the assets must be applied for community benefit rather than returned to shareholders. This gives funders and grant makers confidence that the club genuinely exists for community purposes, which can strengthen applications for grant funding.
Potential for Charitable Status. A CBS can apply for charitable status if its purposes are wholly and exclusively charitable. This opens the full range of charitable tax benefits including Gift Aid, business rate relief and access to charity only funding. For clubs that meet the requirements for charitable status, the combination of a CBS structure and charitable registration can be a powerful arrangement.
Can Convert to a Company or CIC. If a club's circumstances change, a CBS can convert to a company or a Community Interest Company. This provides a degree of structural flexibility that some other legal forms do not offer.
Which Clubs Is a CBS Best Suited To?
A community benefit society for sports clubs is most compelling in a specific set of circumstances.
Clubs planning a community share issue. If your club has a clear plan to raise capital from supporters, fans or the local community through a share offer, the CBS is the natural home for that activity. The community shares framework is well established, there are model rules and support organisations available to help clubs run successful share offers, and the structure provides the right governance framework for the ongoing management of that investment.
Community owned clubs with a strong supporter base. Clubs where fans and community members want genuine ownership and democratic control will find the one member one vote principle of the CBS a particularly good fit. It prevents the concentration of power in the hands of a few large investors and keeps the club accountable to its wider membership.
Clubs making the transition from unincorporated association where property transfer costs are a concern. In some circumstances, a CBS can offer technical advantages over other incorporated structures where the transfer of property from an unincorporated association to a new company or SCIO would involve disproportionate costs. If your club holds significant property and is considering incorporating for the first time, this is worth exploring.
Clubs with a genuine community enterprise model. The CBS is well suited to clubs that operate sporting facilities open to the community, run programmes for health and wellbeing, and see themselves as active contributors to their local area rather than simply a members club.
The Limitations You Must Understand
The CBS structure has real strengths in the right context, but it comes with significant limitations that clubs must weigh carefully.
The FCA is a more demanding regulator than Companies House. The Financial Conduct Authority is a substantially less user friendly regulator than Companies House. Formal processes at the FCA can be considerably slower, registration typically takes between three and four weeks rather than the few days a company registration takes, and the documentation requirements are more onerous. Submitting the application requires two printed and signed copies of the society's proposed rules, along with a detailed application form that requires the club to cross reference every relevant rule number against a table of required provisions.
Registration costs can be high if you are not using model rules. The registration fee charged by the FCA ranges from £40 to £950 depending on whether the society adopts model rules and how many modifications are made to them. If your club's rules are not closely aligned with a model already registered with the FCA, the process can become significantly more expensive and may take several weeks or months to complete. An annual periodic fee is also payable to the FCA to maintain registration.
The benefit to the community test requires a demonstrable special reason. To register as a community benefit society, the FCA must be satisfied that there is a special reason why the club should not simply incorporate as a company instead. The commitment to conducting the business for the benefit of the community can itself be accepted as that special reason, but this needs to be clearly and convincingly articulated in the application. There is no strict legal definition of what constitutes a special reason, and each application is assessed on its individual merits.
Community shares remain at nominal value. Unlike shares in a company, shares in a society do not increase in value over time and do not give the holder any share in the underlying value of the organisation. Investors should understand clearly that the return on community shares, if paid at all, is a modest fixed rate of interest determined by the board each year. This is an important difference from conventional investment that clubs must communicate honestly to anyone considering buying shares.
No automatic tax advantages. A CBS does not in itself carry any preferential tax treatment. Unless the society also holds charitable status, it is subject to standard taxation like any other incorporated body. The combination of CBS with charitable status can unlock the relevant tax benefits, but charitable status must be applied for separately and the club must meet all the relevant qualifying conditions.
Amending the rules is more restrictive than amending articles of association. A CBS must operate strictly in accordance with its registered rules. Amending those rules is more constrained than changing a company's Articles of Association. Any amendment must be consistent with what could reasonably have been in the contemplation of the members when the society was set up, must be made in good faith, and must be registered with the FCA to take effect. For clubs that anticipate needing to evolve their governance arrangements significantly over time, this inflexibility is worth factoring in.
For clubs not planning a share issue, a CLG is usually simpler. If your club has no firm plans to raise capital through community shares, the additional complexity, cost and regulatory burden of the CBS structure rarely justifies itself. A standard Company Limited by Guarantee will almost always be simpler to set up and maintain, more familiar to banks, accountants and local authorities, and sufficient for the club's governance needs.
CBS vs CLG vs CIC: Where Does the Community Benefit Society Fit?
The CBS occupies a specific niche in the landscape of sports club legal structures. Compared to a CLG, it offers the community shares mechanism and a more explicit democratic governance model, but adds significant regulatory complexity and cost. Compared to a CIC, it provides a stronger democratic ownership framework but without the ability to pay directors from profits in the same way. Compared to a CASC or charitable structure, it offers no automatic tax advantages unless charitable status is also obtained.
The CBS is genuinely the right structure when community share fundraising is a live and realistic plan. It is rarely the right choice when a club simply wants an incorporated structure without that specific intention.
How Club Development Solutions Can Help
At Club Development Solutions, we help sports clubs assess all of their structural options and make the decision that is genuinely right for their circumstances. We work with clubs to understand whether a community benefit society is the right fit, whether a community share offer is a realistic and well founded ambition, and how to approach the registration process in the most effective way.
We also help clubs compare the CBS against the full range of alternatives, including CLGs, CICs, CASCs and charitable structures, so that the decision is made on the basis of your club's specific situation rather than general guidance that may not apply to you.
Email Andrew directly at andrew@clubdevelopmentsolutions.com to arrange an initial call to discuss your club.
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