Cycling UK Forum

John Catt wrote:[We could now ask the Trust to arrange a mortgage on the building and pass the funds back to the Club. But then all the would be happening is that the Trust would borrow from the Bank at a figure above its base rate and lend to it back to the Bank as the Club at a figure below its Base Rate. Overall I would suggest that the present arrangement is the most sensible.

Jonty wrote:John - your first sentence above isn't comprehensible to me. Are you simply saying that if the Trust paid back the loan to the CTC then it could only do so by taking out a mortgage on the property with a bank in order to generate the monies to pay back the loan but this would result in the Trust paying a much higher rate of interest to the bank than it currently pays to the CTC? In addition as the Trust has no money the Club would have to pay the higher rate of interest on the mortgage on behalf of the trust?
Is this what you mean?

Jonty wrote:By the way just for interest, what is the rate of interest which the Club charges the Trust on the outstanding loan?
jonty

Simon L6 wrote:
While we're being transparent, Simon, how about the bridging loan?

As to the loan, it is as broad as it is long, and just a book keeping exercise. The ownership of National Office was passed to the Trust to avoid paying a chunk of tax. In addition to simply purchasing the building using the proceeds from the previous offices, funds were needed for equipping the building. The Club could have just passed this to the Trust but chose to put it in the accounts as a loan so that if there was ever the need the Club could get the money back out of the Trust. If it had just been included with the transfer of the building the funds thereafter could only ever be used for the charitable purposes of the Trust.

We could now ask the Trust to arrange a mortgage on the building and pass the funds back to the Club. But then all the would be happening is that the Trust would borrow from the Bank at a figure above its base rate and lend to it back to the Bank as the Club at a figure below its Base Rate. Overall I would suggest that the present arrangement is the most sensible.

js wrote:I am also a member of the YHA which has also changed to charitable status some years ago. As a result it has become an agent for government policy rather than a club for members. I can see exactly the same thing happening with the CTC. If the government wants assistance with implementing policy it should employ the CTC and other cycling organisations as consultants. Like other members in the forum I want a club not a quango.
Whilst I like some of the work Sustrans has done to promote cycling I do not think anyone would describe it as a club. I do not want the CTC to go the same way.

If the government wants assistance with implementing policy it should employ the CTC and other cycling organisations as consultants. Like other members in the forum I want a club not a quango. Whilst I like some of the work Sustrans has done to promote cycling I do not think anyone would describe it as a club. I do not want the CTC to go the same way.

TwoPlusTen wrote:Hi,

Does anyone have the contact details for the CTC branch in Reading or Wokingham? I'm considering going out on a ride or two...

KiyoTatsu wrote:I just joined the CTC. Are there any clubs to ride with in Norwich?

Steady rider wrote:I would probably scrap this idea of allowing votes to go to the chair because there is room for error between what people may wish and the way the chair may vote. Not sure if we need proxy voting at all? Does the CTC have to provide a proxy vote via the Chair?

Motion for the next AGM perhaps, scrap all proxy voting, unless it is a requirement of the companies act, any seconders?

toontra wrote:Yes, I understand that, but, even so, you would think that if the "pro" camp were so sure of their facts and arguments they would be eager to come on here and quickly dispel all our doubts. This is called the "CTC Charity Debate" board, after all. It just seems curious that none of them, even in an idle moment, feels able to contribute, let alone debate. The silence is almost deafening!

Regulator wrote:Surprise, surprise... National Office hasn't sent the message out - and there's been no reason given. We'd guess that the Chair of Council stopped it going out as he doesn't want to play fair with the AGM rapidly approaching (as his column in the recent issue of Cycle showed).

This is obviously such subversive propaganda that the Dear Leader thought that it shouldn't see the light of day...

When will they learn?

Regulator wrote:I find it interesting that in his blog John Catt is suggesting that those opposing the current proposals from Councilor, a number of whom are Councillors themselves, want to 'split' or 'divide' the Club from the Trust. He then suggests that such a spilt would be disastrous:

I must just emphasise that I think a split would be disasterous. The "CTC" would be a small enfeebled "club" without the mass to get economies of scale in its organisation and I don't believe that active members would get any discernibly better service from it, than from a combined charity.

I'm afraid that this is spin on an extraordinary scale, as well as being a gross misrepresentation of the position of those opposed to the proposed merger.

There is already a division between the Club and the Trust - they are two separate organisations, although they are jointly administered. This is in part why some Councillors and National Office are seeking a merger. If the CTC were the unified organisation that John suggests then there would be no need for a merger.

What those opposed to merger are saying is that the current structure should be made to work properly. There are numerous examples of organisations that work well with the dual company/charity structure (including most of the national charities in the UK who have commercial arms). We have made a number of constructive suggestions, such as the introduction of a proper project accounting system and improved governance, but these have been nostly ignored by those who are determined to push on blindly with their 'grand project'.

Simon L6 wrote:John - there a few specific questions about sums of money that I'd love to see your view on. They're in the thread on the Club's donation to the Trust.

Simon L6 wrote:You may wish to address this here, or you may want to point me toward another thread, but in a general way
- the budgets show sums against the stuff that members actually pay their money for, and, with the exception of Campaigning and RtR (and RtR is a paltry sum) they come out of the Club accounts, rather than the Trust accounts. How do you expect people to believe that there are legions of people beavering away on stuff that is for members within the Trust accounts when there is no evidence on the ground? Look at it from the point of view of a DA sec waiting months for the lists of new members.

Simon L6 wrote:- many, many public companies have subsidiaries in order to contain risk - what is the case for removing the one means of containing risk from the CTC structure? As things stand if one big contract goes bad in a big way (and despite the assurances from National Office, the Cyclle Training 'business' has gone bad) and the Trust goes down, the Club is protected, if ever so slightly homeless.
- the loss of the Cycle Training database business to a profit making private company doesn't say a lot for the argument that charites are somehow held in preferential esteem by Government. Surely any government is simply going to ask themselves who can do it best for the least money? What makes you think the CTC has some kind of competitive advantage?
- isn't the market for contracts with government just about to get a whole lot smaller and a whole lot more competitive?

Where trading (other than trading in pursuit of its charitable objects) involves significant risk to a charity’s assets, it must be undertaken by a trading subsidiary. But even where it is not essential for the trading to be undertaken by a trading subsidiary, the use of trading subsidiaries may produce benefits, for example in reducing tax liabilities. In particular, trading subsidiaries may make donations to their parent charity as ’Gift Aid‘, so reducing or eliminating the profits of the subsidiary which are liable to tax.

What is a ’trading subsidiary‘, and when must a trading subsidiary be used?

The short answer :

A ’trading subsidiary‘ is a company, owned and controlled by one or more charities, set up in order to trade. The purpose of a trading subsidiary is usually to generate income for its parent charity. Trading subsidiaries must be used for non-primary purpose trades involving significant risk.

Fonant wrote:The fact that the CTC has given the Trust exactly the right amount each year to balance the Trust's accounts to zero is odd (see the "Financial history" page for the CTC Trust on the Charity Commission website). A "normal" charity would try to generate more income than their expenditure, to build up reserves for more difficult years. But the Trust effectively gets a blank cheque from CTC members however well it performs.

PaulB wrote:Oh dear, the plot thickens. Do we have hidden agendas here? Maybe it's time for a vote of no confidence in the CTC "leadership"?

I hope you will forgive the intrusion of this email following my
election as one of the CTC Councillors for the East Midlands. Whilst it
would be impossible for me to meet all the members in the region, I can
be contacted by email and would welcome any comments you have about the
work of the CTC. You will have to forgive me if I do not always respond
immediately, like many of you I am a volunteer.

My main purpose in writing to on this occasion is about the main matter
for discussion at our January Council Meeting which looked at the
formalities involved in reuniting the CTC “Club” and the CTC “Charitable
Trust”. This is to be achieved by the “Club” becoming a charity and then
re-absorbing the assets of the Trust, so that we once again become a
single body governed by the Council, as elected by members.

This involved Councillors scrutinising proposed changes to the
Memorandum and Articles of Association which have to be updated to
comply with the latest Company's Act as well as the requirements of the
Charity Commissioners.

I perhaps have the distinct advantage over some of the other Councillors
in that I have been able to come to the subject with a completely open
mind and I have been able to spend quite a lot of time since my election
in October assessing what has been going on, not only to satisfy myself
but to make sure I could adequately represent CTC members in the east
Midlands. I can now make it clear that my study of the subject has lead
me to conclude that, beyond reasonable doubt, this is the correct course
for the CTC going forward.

All but two of the Council agree with this and Council is urging members
to support the necessary resolutions at the AGM. This is to be held in
Loughborough, so many of you should be able to attend and cast your vote.

There is a group of members who oppose the merger, wishing to see the
“Club” remain independent. They have a website where they set out their
arguments at http://www.savethectc.org.uk <http://www.savethectc.org.uk/> . I
have no doubt that these members are honourable, but I believe their
concerns to be mistaken. The CTC has, I think, answered all the points
raised in a special area of its website devoted to this matter which can
be found at http://tr.im/LrZM and I have set out my thoughts in a blog
at http://tr.im/LOPZ .

My conclusion is that there is nothing that we do at the moment, or that
I can foresee the CTC and its members wanting to do, that it will not be
able to take forward as a unified charity.

Opponents of the change have also suggested that Council members have a
vested interest in changing to charitable status. Two of the advantages
of charitable status that I have been able to identify should give you
complete reassurance about my position:

a) the trustees of a charity (which is what the Councillors will become)
are not entitled to any remuneration apart from out of pocket expenses;

b) the standards expected in law of charity trustees is higher than that
required of company directors.

The suggestion has also been made that the accounts of the CTC hide a
subsidy from the Club to the Charity to cover losses on contracts with
government bodies, such as the “Cycle Champions” initiative. The income
and expenditure accounts relating to these contracts has been vetted by
our auditors, the bodies funding the contracts and some Council Members
(including a member co-opted for his financial expertise) and all
concluded that the contracts they examined had covered their costs and
provided an income towards the finances of the CTC as a whole.

The accounts show that the “Club” made a donation to the “Trust” of
£453K for the year ending 30/9/09. Whilst some describe this as a
subsidy, it has to be appreciated that the Trust funded most of our
campaigns, right to ride work, volunteer development and promotion
(including the internet site), the total cost of which was £994K. The
difference was covered from the resources available because of the
financial opportunities and advantages open to the Trust as a charity.

Other points about various problems the CTC has had, such as with the
membership system, have also been raised. I have yet to find an
organisation that did not have its problems. Both council and staff are
working hard to improve all aspects of the organisation and, whilst it
will never be perfect, it will be easier to move forward without the
administrative burden of maintaining and reporting on two separate
organisations.

I believe it is vital that we become one again. If the “Club” were to be
managed separately, as some seem to wish, then there could easily be a
conflict of interest between Council members and the trustees of the
Trust. Such problems would eventually, I believe, result in the
organisations “divorcing”.

In my view we are much stronger united than divided and I urge you to
vote, either at the AGM or by proxy vote, for the proposed changes.

Please feel free to let me know your questions or views

Good cycling.

John Catt

Regulator wrote:The Trust's governing documents (it's Memorandum and Articles of Association) are not published on the CTC's web-site, unlike the Club's governing documents which are there for all to see. Most Councillors have never seen the Trust's governing documents.

thirdcrank wrote:John Catt

Thanks for that. Is there some way of knowing what membership benefits they provide of the legal assistance, free third party insurance, free technical advice type? (By free I obviously mean included in the subs.) It's not obvious to me from looking at the site, although that could easily be me missing something obvious. These are the things which the CTC has publicised in the past and which are popular with members who apparently cite them as their reason for belonging. OTOH they are the things which some fear, perhaps wrongly, will be lost.

thirdcrank wrote:I'm sorry if I've missed the answer to this in what has gone before, but I've tried to be diligent in reading everything and if I've missed it I cannot be theonly one.

Can anybody in the know point to another membership organisation of a similar type which has already successfully taken advantage of the change in the charity legislation to change in the way proposed for the CTC?