Community benefit societies

GGI has carried out governance reviews and governance development programmes for ‘BenComms’, but what are they and what governance issues do they face? CEO Andrew Corbett-Nolan explains.

Sometimes known as ‘BenComms’, community benefit societies are a very particular kind of incorporation with a community interest flavour to how they are constituted, which provides a particular nuance to their governance arrangements.

When their boards and stakeholders miss these distinctive points often their true value is not realised.

The formality of a community benefit society is that it is a ‘registered society’ and a mutual whose purpose is to serve the broader interests of the community. This makes them distinct from co-operative societies that aim to serve the interests of members.

They are incorporated under the provisions of the Co-operative and Community Benefit Societies Act 2014, which requires a community benefit society to “carry on a business, industry or trade” that is “being, or intended to be, conducted for the benefit of the community” and be able to show that:

• the business must be run primarily for the benefit of people who are not members of the society and must be in the interests of the community at large
• the rules of the society must not allow distribution of profits or assets to the members: profits should be ploughed back into the business
• there is a ‘lock’ on any assets. For example, on dissolution the assets of the society must pass to some other body with similar objects, not to the members.

In short, they are a type of social enterprise and may additionally hold charitable status under registration with the Charities Commission.

Community assets

Community benefit societies are popular incorporations where the community ownership of particular local assets have meaning and importance for the whole community, for example community pubs or shops, some sports clubs, leisure facilities, etc.

Societies have members who hold shares and are accorded democratic rights on the basis of one-member-one-vote. The FCA says “it is not usually appropriate for a community benefit society to give any particular group of members greater rights or benefits, because the society must be conducting its business for the benefit of the community. So, for example, we would expect to see community benefit societies run democratically on the basis of one-member-one-vote.“

Membership rules are flexible. Each society’s rules will describe who can (and cannot) be a member, including individuals, corporate bodies, and the nominees of unincorporated bodies. There is no minimum age for membership of a society and the minimum age for election as a management committee member to 16. Community benefit societies are free to admit whoever they choose to membership with many defining eligibility for membership as those who support the objects of the society. Some community benefit societies have a membership fee as part of their corporate structure.

They are registered on the Mutuals Public Register held by the Financial Conduct Authority (FCA) rather than at Companies House. The FCA’s role as registering authority is separate from its role as conduct regulator, but, depending on the activities of a particular society, it may also be subject to FCA regulation.

Societies are entitled to carry on any business or trade. The directors and members of community benefit societies enjoy limited liability in the same way as companies registered under the Companies Acts.

Are BenComms working well?

There are some excellent examples of community benefit societies among public-purpose organisations including Fair Ways, PELC, Leicester Vaughan College and Lewis Community Football Club, as are the majority of non-profit housing associations. But the true richness of BenComms is often not picked up even by their leaderships and reform is on the way. On behalf of HM Treasury, the Law Commission is currently reviewing the role of community benefit societies and in December 2024 closed the consultation process it had been holding and aims to publish substantive recommendations for reform later in 2025.

GGI would suggest that boards of BenComms:

• refresh how they meet their community benefit obligations and are reporting these to the local community
• think through whether they are getting the best from their membership potential – a key different to other social enterprises
• undertake an independent stakeholder review and see whether their stakeholders understand their distinct mission – particularly important when bidding for public sector contracts against others
• as part of the usual three yearly independent governance review, be sure that the governing document is up to date with the organisation’s governing practices.