Charitable Community Benefit Society (Bencom)
At the Board meeting in August, Trustees unanimously agreed that Farfield Mill can best thrive and move forward in the future by converting from a Charitable Trust to a Charitable Community Benefit Society.
Frequently asked questions...
Here are some questions relating to the Charitable Community Benefit Society followed by the answers which we believe are either factually correct or represent our considered views – with some quotes from various documents.
Q 1. Just what exactly is a Bencom – Community Benefit Society?
A. Community benefit societies are set up to conduct a business or trade for public benefit. Instead of being distributed among members or external shareholders, profits from these social enterprises are returned to the community. They raise funds by issuing community shares to the public, and are run and managed by their members.
Q 2. Does the Society have to pay interest (a dividend) to the people who purchase shares?
A.No. ‘the interest payable on shares must be limited to what is "necessary to obtain and retain enough capital to run the business". Those people investing in societies usually do so for socially motivated or philanthropic reasons rather than for the prospect of a financial return’
Q 3. Can we pay interest (dividend) in the long term?
A. Yes, if we were making a substantial surplus over time. Under the Rules of the Society - interest may be payable on share capital out of any accumulated surplus. It may be many years before the Society is able to pay interest.
Q 4. Can a charitable Bencom trade?
A. No. It will be necessary for our trading arm (which runs the cafe, weaving and shop) to continue in its present form.
Q 5. What will happen to SDAHT (the Sedbergh and District Arts and Heritage Trust) and its members?
A. SDAHT will be renamed the Farfield Mill Community Benefit Society (FMCBS) which will be a charitable Community Benefit Society. It will be necessary for the members, at an EGM, (Extraordinary General Meeting) to dissolve the current charity and, in effect, cease to be members. However, each member can instead elect to become an owner member in the new organisation by buying at least the minimum amount of shares.
Q 6. What will be the maximum and minimum holding?
A. We haven’t yet made the final decision on this. The minimum is likely to be £100 but this might be able to be paid in instalments. The maximum has not been decided yet but is likely to be in the range of £10,000 to £20,000.
Q 7. How much money do we need to raise?
A. We will most likely set the target at between £200,000 and £300,000 and the money will be then used to pay off the mortgage of £130,000, invest in the building and infrastructure, restructure our finances to reduce outgoings to a sustainable level, upgrade some of our facilities for visitors, improve our marketing operations and initiate a number of projects which we have planned with the aim of increasing our visitor numbers.
Q 8. Can the mill be viable in the future if we are successful?
A. Yes. Since the Trust opened the Arts and Heritage Centre in 2001, supported over the years by the trading activities of Sedbergh Enterprises as well as by donations and grants it has never been possible to build up any reserves to cover emergencies or to use for further developments. Once we have paid off the mortgage and restructured our finances we will have reduced our outgoings to a sustainable level. We can then focus on the most important task of all, which is to increase our footfall. By marketing Farfield Mill more effectively and by improving the facilities and offer, to attract more visitors to this wonderful place, the business plan shows that Farfield Mill can have a bright future.
Q 9. Will we still be able to apply for grants once we are a CBS?
Yes we will be in exactly the same position as we are now to raise money for specific purposes from grant awarding bodies. We may also, at a later time, launch a second share offer to raise more money with various projects and improvements in mind.
Q 10. Could we not just put out an appeal for funding instead of all the complications involved in changing status, rules, management, etc?
A. In the past the Trust has used appeals as well as grant applications to fill the need from time to time to undertake such things as minor repairs or to refurbish the heritage exhibition. These were for relatively small sums of money. What is required now is a major relaunch in order to accommodate an increased number of visitors will require many thousands of pounds. We need to do this without being saddled with the high cost of borrowing through a mortgage or bank loans. We believe that to do this it will require something in the order of £200,000 to £300,000.
Perhaps even more important is that through changing the Trust’s structure from a company limited by guarantee to a Bencom with the advantages of charitable status, we will be able to give people an opportunity to have a personal stake in the Farfield project, so they can feel they have played a vital part in its future success.