Cycling UK Forum

Much of the debate around the charity makes reference to the CTC Charitable Trust ("the Trust") but little is actually known about this organisation. This thread is to discuss the Trust itself: what it is, what it does and where it came from.

Trust History

The Trust was set up in 2004, at the time that CTC sold its old offices and bought the current building. The Trust was established as a way of avoiding tax when selling Cotterell House and buying the present offices . This was done on the basis of minimal specialist advice and councillors who were involved have confirmed that they were hurried into signing the documents, without having had time to read them properly, get independent advice or consider the ramifications of their decision.

The new property - CTC’s main asset - was given to the Trust. In order to avoid the suggestion that this was a ‘dummy trust’ being used for tax evasion a number of Club’s staff were transferred to the Trust, together with some of the work previously undertaken by the Club.

All of this was done by the Council and National Office - without reference to the membership.


What does the Trust do and where does it get its money from?

The Trust is not the sort of ‘charity’ that most of us think of when we use that word. Currently, as well as providing a number of services previously provided by the Club, the Trust is mainly a contractor, undertaking projects on behalf of the Government and other bodies. These contracts have, in the past, included match funding requirements - the Trust gets money from the Government but has to match that money with money of its own. But of course, the Trust doesn't have any money of its own...

...so the money has had to come from the Club - from members' subscriptions.


Who 'owns' or controls the Trust?

The Trust has one member - the Club. It currently has four Trustees, all of whom are Club Councillors and appointed by the Council. You might think that this means that the Club controls the Trust, but you’d be mistaken.

Under charity law, the Trust and the Trustees must be independent and act in the best interests of the Trust. This means that if there is a conflict between the interests of the Club (and its members) and the Trust, the Trustees must put the Trust and the 'public interest' first.


CTC members should note:

• YOU are not a member of the Trust.
• YOU have no say in the running of the Trust.
• The Trust does not have to take YOUR interests into account

The spin at the time:

http://www.ctc.org.uk/resources/Press_A ... HQmove.doc

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.

This is not quite right. The M&AA have been available on the website at http://www.ctc.org.uk/resources/About_Us/CTC_Charitable_Trust_Mem_and_Arts_July_2007.doc and the relevant page is http://www.ctc.org.uk/DesktopDefault.aspx?TabID=4075.

I'd found them some time ago when I was investigating the problem of the Council members being effectively "Shadow Trustees" of the CTC Trust (which IMHO is a very good reason for unification).

John Catt wrote:

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.

This is not quite right. The M&AA have been available on the website at http://www.ctc.org.uk/resources/About_Us/CTC_Charitable_Trust_Mem_and_Arts_July_2007.doc and the relevant page is http://www.ctc.org.uk/DesktopDefault.aspx?TabID=4075.

I'd found them some time ago when I was investigating the problem of the Council members being effectively "Shadow Trustees" of the CTC Trust (which IMHO is a very good reason for unification).

Interesting... it wasn't there when I a looked few weeks ago. But then I note that the relevant page was amended after I looked at it.

But to be even handed I have amended my first post. I don't want people suggesting that I'm providing 'misleading' information or that I'm acting 'maliciously' as has been suggested of others...

Thanks for the thread. I suspect those of the club's 70,000 members who are aware of the Trust's existence don't take much interest in what actually goes on. This forum is a bit of an eye opener - especially the amounts of subscription money passed back and forth, that fact that the Trust is independent and not controlled by the members of the club, and the scale and commercial nature of its contracting activities.

I didn't find the 'for' and 'against' articles in the recent magazine particularly helpful in understanding the real issues behind the merger proposal, but one thing that jumps out in all of this is the fact that if the merger goes ahead it can never be undone. Does this apply to the existing Trust, I wonder? Is the club now commited to it no matter what? What happens to the finances of the Club and Trust if the contracts dry up (who takes the loss)?

patricktaylor wrote:Thanks for the thread. I suspect those of the club's 70,000 members who are aware of the Trust's existence don't take much interest in what actually goes on. This forum is a bit of an eye opener - especially the amounts of subscription money passed back and forth, that fact that the Trust is independent and not controlled by the members of the club, and the scale and commercial nature of its contracting activities.

I didn't find the 'for' and 'against' articles in the recent magazine particularly helpful in understanding the real issues behind the merger proposal, but one thing that jumps out in all of this is the fact that if the merger goes ahead it can never be undone. Does this apply to the existing Trust, I wonder? Is the club now commited to it no matter what? What happens to the finances of the Club and Trust if the contracts dry up (who takes the loss)?

At present, the Trust could be 'wound up' but it's assets, including the CTC office building, would have to be passed to a trust/charity with similar aims. It could not be passed back to the Club. Arguably, the Club could 'purchase' back the asset, perhaps through the £millions it has given in 'subventions'...

If the two are merged, as it planned, and the contracts dry up, it would be the membership who end up paying - as they are now. Whichever way you look at the accounts, large sums of money are being given to the Trust by the Club to prop it up. It doesn't 'make a profit' or financially contribute anything to the 'member activities' of the Club, despite the claims otherwise from those supporting the merger plans. Such claims are simply spin.

Thanks. The email I recently received from my Councillors says:

In the latest edition of Cycle you will see two articles ‘For’ and ‘Against’ the proposal. In the ‘against’ article the impression is wrongly given that the club have to support loss making charitable activities. The reverse is in fact the case. With our present charitable activities and the overhead costs, the CTC Trust has, in the latest accounts, saved the club £430k. In the accounts, monies transferred from the club to the trust are for member services provided by the trust.

[My bold] From that, you'd imagine the contracts make money that goes back to members.

It's surprising that the Club was able to irrevocably give a building to the Trust without reference to members.

(There's no doubt some overlap between threads on this topic, but this one deals with the Trust.)

patricktaylor wrote:Thanks. The email I recently received from my Councillors says:

In the latest edition of Cycle you will see two articles ‘For’ and ‘Against’ the proposal. In the ‘against’ article the impression is wrongly given that the club have to support loss making charitable activities. The reverse is in fact the case. With our present charitable activities and the overhead costs, the CTC Trust has, in the latest accounts, saved the club £430k. In the accounts, monies transferred from the club to the trust are for member services provided by the trust.

[My bold] From that, you'd imagine the contracts make money that goes back to members.

It's surprising that the Club was able to irrevocably give a building to the Trust without reference to members.

(There's no doubt some overlap between threads on this topic, but this one deals with the Trust.)

I refer the Honorable Member to the questions I posed elsewhere about the claims being made by certains Councillors...

In the 2008/9 accounts, there are payments totalling £863,599 from the Club to the Trust. An explanation of this sum was given at the Council meeting on 23 January 2010. The Chair of the Management Committee explained that, of the £860,000 (rounded down for ease):

• £407,000 was for ‘services’ supplied by the Trust to the Club
• £453,000 was a ‘subvention*’ from the Club to the Trust

You might want to ask your Councillor to explain (and itemise):

1. what ‘services’ were provided for the sum of £407,000 and what each of those services cost; and,

2. why the Club is giving the Trust a ‘subvention’ (a grant of financial aid) of £453,000? What is it for and why is it necessary, given the assertion in the recent e-mails that the Trust is making money on its contracts?

Another assertion made in several of the e-mails is that the Trust has ‘saved the Club £430,000’. Can your Councillor is explain what these ‘savings’ actually are and how the figure of £430,000 is reached?

Those who are assuring you that everything is OK and the Trust isn't losing money, or who are suggesting that some councillors and ex-councillors are acting maliciously, must surely be able to answer these questions as they relate to substantial sums of money and go to the heart of the concerns people are expressing over the financial situation.

If they're saying everything is OK then they should be able to give coherent and detailed answers to these questions.

*(A ‘subvention’ is defined as: ‘(1) Provision of help, aid, or support. (2) An endowment or a subsidy, as that given by a government to an institution for research; a grant of financial aid.’)

As far as I am aware, those who have posed these questions to their Councillors have yet to receive an answer...

...as do the Councillors who have been asking them for some time.

Regulator wrote:Whichever way you look at the accounts, large sums of money are being given to the Trust by the Club to prop it up.

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.

If the Trust is generating income, the CTC could donate just the money-go-round amount for staff, offices, and traditional member benefits and the Trust would still have a surplus at the end of each year. As it is the CTC donates _more_ than it receives back in benefits, and the Trust still only manages to break even.

If this is correct, the membership should vote to distance the Club from the Trust (and perhaps put a cap on the amount we're willing to donate to support the loss-making charity work), rather than merge with it.

Regulator, thanks again. As has already been suggested elsewhere on this forum, it seems important that those questions are answered before any further decisions are taken on the merger proposal.

Anthony, thanks for the link. Regarding the Charity's financial health:

The charity's financial position remains sound. We have been able to secure new grant funded income to expand the charity's work but will continue to rely on the annual donation from the Cyclists' Touring Club for those areas of work that cannot be funded by grants.

[My bold] I don't understand accounts but that seems clear enough.

This is a worse mess than I thought. Apparantly the "Club" has no control of the Trust and no longer has any hold on the assets such as 'our' HQ building. Like many members I don't really remember the trust being formed - or why. That maybe my fault for not reading the magazine closely enough but I do find the legal and campaigning stuff a bit dry and boring. The fact that the HQ building was given to the Trust without reference to the club members is unforgivable.

I have read broad brush stroke statements about "promoting cycling, getting kids on bikes, health benefits" etc. but I am still not sure what the Trust has actually done that the club could not have. I looks as though making money is pretty high up the agenda.

My membership expires just a few weeks before the AGM and I am in a quandry as to whether to renew or not. If the merger goes ahead I will not want to be a member but if I do not renew I can't vote! If we vote to keep the club and Trust as separate entities what will the future be? If we wind up the trust the club will have no home!

PaulB wrote:This is a worse mess than I thought. Apparantly the "Club" has no control of the Trust and no longer has any hold on the assets such as 'our' HQ building. Like many members I don't really remember the trust being formed - or why.

that's almost true. The Trust has one member - which is the Club. The Club has the one and only vote. It's true that the Club donated the building to the Trust, and, in effect, if the Trust was wound up tomorrow the Club would be kipping down at yours.....but see below

PaulB wrote:My membership expires just a few weeks before the AGM and I am in a quandry as to whether to renew or not. If the merger goes ahead I will not want to be a member but if I do not renew I can't vote! If we vote to keep the club and Trust as separate entities what will the future be? If we wind up the trust the club will have no home!

well, obviously I'd implore you to renew. There is a way out of this situation, which is for the Club to loan money to the Trust rather than donate it. As time goes by the Trust's net asset position will atrophy, and the Club's asset position will grow to a sum as great as the value of the building.

Move beyond the question of who pays what to who for a minute and consider risk. The Club is not a risky business - people pay their subs and they get a pretty straightforward set of services (we're talking theory, here - stick with me on this one) and support campaigning. The Trust enters in to commitments that could do well or could do badly. If something goes horribly wrong then a combined Trust/Club may go down - but keeping the two seperate isolates the risk. Why do public companies have subsidiaries?

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.

I've attempted to explain how the CTC works and how some of the numbers in the accounts come about at:
http://witherthectc.blogspot.com/2010/02/question-re-message.html

John Catt wrote:

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.

I've attempted to explain how the CTC works and how some of the numbers in the accounts come about at:
http://witherthectc.blogspot.com/2010/02/question-re-message.html

John

I know you're trying to be helpful to members but you don't actually answer the questions that were asked of you. Instead you are simply repeating the assertions.

I know you say that the analysis of the figures is being undertaken but, if Council and National Office are going to make such assertions, they should have these figures to hand when they do so, not be scrabbling around trying to make the figures fit when someone asks them to explain them.

I also find it interesting that assume on your blog that the e-mail is from a 'sceptical member' rather than a concerned member...

.