Scottish sports charities: how to play the legal game
Having strength and depth at a grassroots and community level in any sport is vital to develop talent and get more people involved in activities that are beneficial to their health and wellbeing.
There are many sports clubs across Scotland, from running to cycling to bowling and tennis organisations, which are often at the heart of their communities. A key consideration for new and existing entities is deciding what legal structure to adopt, according to experts.
To avoid potential pitfalls and to make the most of funding opportunities, clubs and other sporting bodies are advised by lawyers to investigate the best structure for their organisations. For example, they should look into whether achieving charitable status is the most suitable route to go down, or if becoming a community amateur sports club (CASC) is a better approach.
For some, neither option will be appropriate but it is worthwhile to explore structures at an early stage in an organisation’s development, says Alan Eccles, a partner with Scottish law firm Brodies, who specialises in advice for charities and the third sector. Eccles and his team have substantial experience of advising charities, including grassroots tennis organisations and other sports-related enterprises, on structure.
As not every sports organisation is able – or wants – to become a charity, they may decide to explore the CASC option, which can offer charity-like tax benefits. According to Eccles, some clubs look at becoming a CASC because they feel it might come with some greater flexibilities than having charitable status.
There are some 24,500 charities in Scotland and Eccles estimates that about one-third of those that Brodies is currently involved in setting up have sport as their main activity or as a significant part of their purpose.
He explains: “I would say that of all the sports organisations we deal with about 40 per cent are charities, 40 per cent are CASCs, and the remainder do not fit into either category for a variety of reasons, but they will have considered these particular options. An organisation can also mix structures to be able to deliver all the things they want to do.”
A mixture of structures allows organisations to set up part of their activities – such as community tennis courts – as charitable, and other areas – such as cafés – as trading companies that contribute to the funding of the enterprise.
“That is one of the benefits of having that mixture of structures – to maximise the revenue raising opportunities; all the money is making its way back to the charity and sport,” adds Eccles. “And, in some cases, charitable status can be crucial to help get funding from the likes of trusts and foundations.
“It’s better to get legal advice early rather than getting it often. As part of their strategy, trustees or directors should decide on the right structure for the next five or tenyears. That usually means considering a number of factors, including how the structure helps funding, tax position, and important issues, such as child protection and health and safety.”
Judy Murray, tennis coach, mother of Scottish tennis stars Andy and Jamie, and founder of her eponymous foundation which aims to grow the sport across Scotland, describes herself as a big believer in community clubs.
Murray works to create environments where sport can thrive and sees the benefits of a charitable structure.
She explains: “It is people who make those environments flourish and I’ve spent much of the past five years building tennis workforces within local communities across Scotland with my Tennis on the Road programme.
“I set up the Judy Murray Foundation in 2017 to continue that work. Our motto is ‘Tennis For Everyone’ and our aim is to take tennis into rural and disadvantaged areas and train local teachers, parents, youth leaders, club members, students and high-school pupils how to deliver starter coaching and competition in whatever space they have available.”
Eccles adds that organisations should also consider having an asset lock put in place, as such a precaution can offer reassurance to potential funders about what happens should the enterprise come to an end.
An asset lock ensures that, if an organisation is wound up, its members cannot simply take any assets away.
Eccles concludes: “Having a clear structure setting out who is in charge and how decisions are made, can also help avoid disputes in the future.”
Get your 15% discount on tickets to the Brodies Tennis Invitational at Gleneagles 13-15 June by clicking here and entering the code SCOTSMAN15