Company Limited by Guarantee with Charitable Status 

If a CLG has charitable purposes it has the option of applying for charitable status.

To meet the charity test and achieve charitable status, an organisation must have only charitable purposes and must provide public benefit in Scotland or elsewhere. In addition, it must:

• not allow its property to be used for non-charitable purposes

• must not allow Ministers to direct or otherwise control its activities

• must not be a political party, and not have as its purposes the advancement of a political party

Advantages

• tax relief on surpluses and donations

• access to funding only available to charities

• rates relief for premises

• special vat concessions

• allows you to apply for certain funds only available to registered charities

Disadvantages

• restrictions on spending

• cannot engage in party political activities

• must adhere to charity legislation and company legislation

• trustees have specific duties under legislation

• governing document (constitution) must be approved by OSCR

• Required to notify any public register of the people serving on the management committee/ trustees

• Register and reporting requirements that are monitored by OSCR and Companies House (e.g. annual accounts and returns).

Gaining charitable status also has the potential to increase confidence of stakeholders in governance, financial management and it the funding marketplace due to the regulatory requirements.