The proposals, benefits, drawbacks etc.

A place to discuss the issues relating to the proposed change in the national CTC’s structure.
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Simon L6
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Re: The proposals, benefits, drawbacks etc.

Post by Simon L6 »

Barry

at the risk of sounding just a tad tetchy...

- the unedited version of the report?
- the 'briding loan'?
- redemption of the loans made to the trust by a stake in the building?

oh, and any thoughts on the secrecy of the ballot?
Jonty

Re: The proposals, benefits, drawbacks etc.

Post by Jonty »

Hi Barry
Thanks very much for that response. From experience I always place much more importance on a professional view on these matters rather than an amateur view, no matter how sincerely the latter is expressed.
Just to be clear in my own mind are you saying that the advice from the professional tax experts is that if the Club became a unified charity the member benefits would not have to be restricted to 25% of fee income in order to benefit from Gift Aid and, even if it were, it wouldn't have an adverse impact on member benefits because of the way these benefits are likely to be defined by HM Revenue and Customs?
On the contrary being a combined charity would potentially attract more income with no reduction in member benefits.
So the professional tax expert view is a Win/Win situation if the Club becomes a combined charity?
Is my understanding broadly correct? If so, please just reply "Yes". If not please explain where I've gone wrong.
jonty
John Catt
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Re: The proposals, benefits, drawbacks etc.

Post by John Catt »

Simon L6 wrote:.... Consider this...

third party insurance costs about £3.50 a member
the legal advice line can be had for free
the rides leaders insurance costs next to nothing
the mag costs just over £2 a member
campaigning costs about £3.50 a member
the administration of the membership service costs about £4.50 a member
RtR support and support for DAs is a tricky thing - skilled staff spend a lot of time shuffling paper, but I would say that the value of it is about £2 a member

So, correct me if I'm wrong, but a competitor could come in, do the membership thing efficiently, (spurning paper membership), do an electronic mag rather than a paper one, and provide a decent service for.......about twelve quid???


At last an alternative strategy from SavetheCTC :-).

I hope members will forgive the length of this post but I think it might be useful if I attempt to evaluate the alternatives before us as I see them. Supporters of SavetheCTC are of course welcome to comment/criticise/correct and come up with their own scenarios as they see fit.

As I see it there are essentially 3 alternatives open to us (rather too black and white but it would take forever to analyse all the shades of grey).

1. Stay as we are.
2. Combine as a single Charity.
3. Unbundle the Club.


Stay as we are

The problem with this is that the Council has the "Trusts" trustees on board and runs most of the CTC operations through the "Trust". I believe this means that effectively, as a Councillor, I am a "shadow trustee". This is an over simplification but I believe both the "Club" and its Council have a fiduciary duty to the "Trust" which it established and which, to all intents and purposes, it controls. Charity law makes it clear that anyone who controls a charity (be it individual member or a corporation) has a fiduciary duty to the charity.

To quote from http://www.charity-commission.gov.uk/publications/rs7.aspx?#37 However, the Charity Commission considers that the rights that exist in relation to the administration of a charitable institution are fiduciary, regardless of the identity of the person or persons on whom the rights are conferred. Therefore this applies to both individual and corporate members". (Members may find this page on membership charities of interest).

Since our current operation is fully in line with the objectives of the Trust and we are supporting the trust, I don't think there any major current issues. However separating the two could be difficult. I think any good lawyer could demonstrate that we control the Trust and therefore are responsible for it with a fiduciary duty to it.

Wikipedia says "A fiduciary duty is a legal or ethical relationship of confidence or trust regarding the management of money or property between two or more parties, most commonly a fiduciary and a principal. One party, for example a corporate trust company or the trust department of a bank, holds a fiduciary relation or acts in a fiduciary capacity to another, such as one whose funds are entrusted to it for investment. In a fiduciary relation one person, in a position of vulnerability, justifiably reposes confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires one to act at all times for the sole benefit and interests of another, with loyalty to those interests".

Thus it can be argued that with the present arrangements the Council's duty to the "Trust" are stronger than its duties to the "Club" and its members. Bringing the Trust into the Club as a single membership charity would eliminate the problem.

2. Combine as a single charity.

I think the main points in favour have been set out above. It would be as we are, plus the full benefits of charitable status.

3.Unbundle the Club.

Simon L6 may disagree with my analysis but this is what I think he is proposing.

This is a well known business strategy, but it has its pros and cons.

By way of an example lets take package holidays. These are a classic "bundled" deal. The package holiday (from Wikipedia :-) ) consists of transport and accommodation advertised and sold together by a vendor known as a tour operator. Other services may be provided like a rental car, activities or outings during the holiday. Transport can be via charter airline to a foreign country. Package holidays are a form of product bundling.

Now all these services can be purchased separately and (if you do the necessary searching) at a lower cost. Many people do just that, particularly with the internet and some firms enter the market providing some parts of the package at low cost. However, whilst they may have suffered some loss of business the package companies are still in business because the consumer appreciates the benefit of not having to sort everything out and the protection offered by the package provider in dealing with any disputes with suppliers.

The CTC offers a similar package of benefits which members see benefit from but every member will place a different value on each benefit.

In fact I think we could go further than even Simon L6 proposes.

third party insurance costs about £3.50 a member
Since many people have this with their house insurance and it can be purchased separately - why bother including it in the bundle?

the legal advice line can be had for free
There are many companies advertising free no win no pay legal advice so why bundle this in?

the rides leaders insurance costs next to nothing
Why not move to an affiliated groups structure, and then, to save more cost and admin., suggest they affiliate to British Cycling. That's another cost eliminated.

the mag costs just over £2 a member

Why not do a deal with Cycling Plus for an pdf version only? They should pay you.

campaigning costs about £3.50 a member
Seems expensive to me. My local cycle campaign is £2p.a. £1.p.a. for low income members. Possibly better to leave it to cyclenation and take out some more cost?

the administration of the membership service costs about £4.50 a member
Not being very radical here. Move to a server with http://www.phplist.com%20/ which is open source (so free) and members can do their own admin. We can drop those high cost members who are not on the internet.

RtR support and support for DAs is a tricky thing - skilled staff spend a lot of time shuffling paper, but I would say that the value of it is about £2 a member
Many member aren't interested in campaigning. Why load them down with this cost. Get them to support their local campaign group if they so wish and co-ordinate through cyclenation. We can let the DAs keep their funds and affiliate where they wish. Another cost gone.


I hope readers will have worked out that I am being facetious - to make a point. The CTC offers a package of benefits to its members. The value each member puts on each aspect, whether it be supporting Bike Clubs, 3rd party insurance, Cycleclips, Keep Posties Cycling, the Mag., the companionship of the local group, Chris Juden, the excellent rides organised by Simon L6 etc. etc varies from member to member, but overall each member must see the package of value or they would have left. Since our membership is at record levels I suggest that we must have been doing something right and the current package is reasonably attractive.

I seem to recollect that there are something like 6m people using bicycles regularly in the UK. With out membership of 60K I would think there is room in the market for the "CTC Bundle" together with any cut down service that Simon L6 would like to introduce.

That said I believe there is room for improvement and we will need to continue improve and evolve in the future.

Now lets turn the the practicalities of "unbundling". In this case unbundling the "Trust" from the "Club". I speculate.

Let's assume for the sake of discussion that Council decides it will cease funding the "Trust" in 6 months and want any loans repaid.

I suggest that immediately the Trustees of the Trust would be in a nearly impossible situation with an obvious conflict of interest. I surmise they would have to cease attending Council meetings and committees and take legal advice as to the best way to deal with the situation.

Currently the Council elects the Trustees and is the sole member of the Trust. If it was no longer supporting the charity it would be in a difficult position in law, bearing in mind that as a member it still has a fiduciary duty to the Trust. I think Council would have to pass membership to another body or group. Possibly the most equitable way forward, bearing in mind that the Trust was set up using the Club's assets would be to make all members of the Club also members of the Trust.

The Trustees would then be appointed by the members and the new Board could then set subscription rates and set about managing itself independent of the "Club". It would be an excellent way of dividing both the organisation and the membership.

In any event, I believe there is a great danger that lawyers will be involved if we were to go down that path at great expense to all parties (which are all part of the existing CTC).

It would be interesting to learn how SavetheCTC propose to take forward the separation of the two bodies and what they think the CTC (Club and Trust) should look like in say 5 years time.

Sorry to have gone on at such length. As you will have gathered, I think the only sensible solution to the present situation is to become a single membership charity as proposed by Council.
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Simon L6
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Re: The proposals, benefits, drawbacks etc.

Post by Simon L6 »

John Catt wrote:At last an alternative strategy from SavetheCTC :-).
.

John Catt wrote:3.Unbundle the Club.

Simon L6 may disagree with my analysis but this is what I think he is proposing.

.

please don't try to put words in to my mouth. I put a lot of effort in to getting this forum up and running again, and I don't want to see it dragged down by this kind of tendentious argument.

We're trying to preserve the status quo, and to make the operations of the Trust transparent. I don't want to see the members funds frittered away on vanity projects, I don't want us to go in to businesses we don't understand, and I don't want us to run projects after the funding has expired. I've said that I would be content to see those Trust activities that members value (specifically campaigning and RtR) be subsidised by the members.

My point was a simple one. If we don't offer value for money then someone else will. I suppose that if the merger goes through I might well leave and join an affiliate to CTC, BC or LCC, or even turn the FNRttC in to an affiliate, but I live in hope that the merger won't go through.

thanks for your thoughts on how a low-cost cycling club might be run, though. If ever I feel the need........
Regulator
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Re: The proposals, benefits, drawbacks etc.

Post by Regulator »

John Catt wrote:It would be interesting to learn how SavetheCTC propose to take forward the separation of the two bodies and what they think the CTC (Club and Trust) should look like in say 5 years time.



John

It is somewhat concerning that as a Director you don't appear to have read CTC's 2007-2012 Strategic Vision (which is still in force). Here's a link to save you having to search for it: Strategic Vision 2007-2012

That's the Strategic Vision that lays out the vision of CTC having two separate entities - the Club and the Trust - and this is what many of those opposing the merger want to see come to fruition.

Is it too much for members to expect their councillors to actually know what the CTC's agreed Strategic Vision is?
Last edited by Regulator on 30 Nov 2010, 6:46pm, edited 1 time in total.
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Simon L6
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Re: The proposals, benefits, drawbacks etc.

Post by Simon L6 »

One of the questions you haven't answered John is what changed between 2007 and 2009? In 2007 we agreed that

By 2012 our work will be divided between structures as follows:
CTC - the membership organisation
Bringing together the largest, most dynamic, most diverse and most passionate group of cyclists in the country in an independent organisation working for cycling and cyclists. We are knowledgeable, trusted and supportive, the organisation of choice for every cyclist.
Making cycling more accessible, safe, enjoyable or practical through membership, activities and services we improve health, mobility, transport and leisure. We promote enjoyment, interaction and sharing of knowledge between cyclists.
Cyclists’ Touring Club is the travel, holiday and leisure arm of CTC.


CTC Charitable Trust
Extending the benefits of cycling beyond our membership organisation.
Raising public and political awareness of the needs of current and future cyclists. The authoritative cycling voice campaigning for access to cycling for all.
Building on our cycle training and local group strengths we will develop a range of CTC Charitable Trust community programmes and work with these communities to promote cycling’s benefits and access to cycling for all.
Promoting cycling that is accessible and safe; cycling that is enjoyable and functional; cycling that enriches lives and communities; cycling for fair and inclusive access to health, mobility, leisure and environmentally sustainable transport.


I signed up to that, as did every other Councillor at the time, it was presented to the Membership, who loved it. Now, as far as I can see, almost on a whim, it's been discarded. If you really want to know how the merger thing got off the ground I can tell you if you pm me, but it has absolutely nothing to do with gift aid.
Jonty

Re: The proposals, benefits, drawbacks etc.

Post by Jonty »

Simon L6 wrote:CTC Charitable Trust
[I signed up to that, as did every other Councillor at the time, it was presented to the Membership, who loved it. Now, as far as I can see, almost on a whim, it's been discarded. If you really want to know how the merger thing got off the ground I can tell you if you pm me, but it has absolutely nothing to do with gift aid.


Hi Simon
I suggest it would be in members interests to have your views openly expressed on how the proposed merger emerged even though it's not consistent with the recently prepared Corporate Strategy, and why you think the change in policy is absolutely nothing to do with Gift Aid.
I'm sure you could express it in terms with won't cause offence or are potentially libellous.
If you know the background and that has a bearing on the matter, I suggest you should make this information available to members. If the change in policy is nothing to do with Gift Aid, what is it to do with and why do say this?
Surely the proposed merger is simply a rationalisation of the current structures which opens up the possibility of increasing income through Gift Aid?
jonty
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Simon L6
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Re: The proposals, benefits, drawbacks etc.

Post by Simon L6 »

I'll do my best.

Way back in 2005 (iirc) the CTC inhabited an old detatched house on the outskirts of Godalming. It had charm, which is to say it was a bit of a dump. It also had a large garden, and when a developer offered to build a new HQ building in exchange for Cotterell House, the CTC took him up on it.

So, the deal is about to be done and four Councillors were asked, on all of fifteen minutes notice, to sign the new building over to the Trust, not the Club. I've spoken about this to two of them - one couldn't clearly recollect the events, but another obviously regretted the loss of democratic control over the members' major asset and suggested that a way to bring both the asset and the Trust under democratic control would be to merge the two.

That's how it started. At the time Council was convulsed by the attempt on behalf of some to reduce it in size, (this was rejected at the Guildford AGM) and the merger thing was kind of forgotten about. Then.....after the adoption of the 2007-2012 plan it came back again, and that's when the Gift Aid argument was wheeled out. Of course nobody had any clear idea how much was involved, but the sum mentioned at the time was £250,000. (The CASS report offers a range of figures but I think they were clustered around £57,000). Anyway, for a while we were all quite keen on a quarter of a million quid until......it became apparent to me and to a couple of others that the full story about how the Club was being run (essentially for cash) was being kept within the Management Committee.......but that's another story.

So, the essence is that there was some regret about the way the property transfer happened and the merger was originally a way of making some amends.

All kinds of arguments have been deployed in favour of the merger (actually it's a bit of take-over) but the only one that has stuck around for any length of time is the Gift Aid. Well, I'm sorry, but the flow of money around the CTC is so obscure and so vast (the £1.4M building, the £388,000 loan, the possible £250,000 bridging loan, the annual spend by the Club on the Trust of about a million a year....) that making this kind of decision, a decision that can never be reversed, for £57,000 a year seems to me to be embarrassingly foolish. I've looked at 'the books'. They included an entry for (if memory serves) £197,000. Not broken down.

Show me a way to ensure that we know where the money goes, assure me that we aren't blowing wodges of cash on stuff that the members have no real interest in, convince me that projects are being managed within their budgets, and that there isn't some ghastly hangover when the funding runs out, and I'll dance on the top of Nelson's Column with a stick of rhubarb in each ear for the £57,000. But, until then, the thing is on hold.

I was assured by a senior Councillor, one who knows his onions, that things would change after the vote. Actually........they haven't. It isn't just about the money, it's about trust (with a small 't'). I've was astonished by the editing of Jeff's piece - I thought we were beyond all that. I was gobsmacked by the piece in Cycle Clips - I genuinely believed that there would be an open and multi-faceted discussion. The thing about the bridging loan and the calculations behind it really took me by surprise (Barry can still tell me there will be no bridging loan and I'll believe him completely).

We said last year the Trust had the ability to lose a lot of money. I thought that whoever got elected that Government spending on cycling was going to be squeezed. I confess I didn't anticipate the near-instant demise of Cycling England, but, there you go - our predictions didn't so much come true as get left in the wake of events! John Catt can show us how the Trust will make good on his assurance that it will cut its cloth to suit its means, and, who knows, the new Financial Controller may get a grip on the recording of expenditure.......I'm ever hopeful. Sort of.
thirdcrank
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Re: The proposals, benefits, drawbacks etc.

Post by thirdcrank »

John Catt wrote:... Probably the best way to think of this is as a family. ...


Fair enough. I'll offer this alternative version. As with most families, the home is the biggest asset. Mortgage paid off, value has shot up over the years in spite of recent wobbles, so they want to be able to pass it on to the next generation without a whacking 40% going in IHT AKA 'death duty'. Their grown up son (Gus for short) who lives with them, points out that they can give it to him and all live happily ever after (subject to surviving 7 years.) Sounds ideal till Dad discovers late in the day that this means paying rent to live in his own house. No problem Dad, it's all in the family. (NB, no mention yet of a loan.) Now, apart from paying off the mortgage on the house, Dad has always been very careful to spend within his means, save for a rainy day etc., so in addition to his boring final salary pension for all those boring years being a bore, he has some boring savings, mainly in things like cash ISA's, Index-linked National saving certificates and so on. He's not rich but he's worth a bob or two. Gus hears that a plausible chap called Tony, with a dour businesslike sidekick called Gordon, is offering money for old rope to people who meet certain conditions, but he must have some working capital. Time to turn to boring old Dad for a loan - all within the family of course. Doesn't Dad realise that his money should be working? As well as thinking Gus ought to be working, Dad's worried that Tony's chums seem to be promising money to everybody but this family hardly receives any .... Anyway, to cut a long ramble short, Tony moved on and Gordon got booted out. Dave and Nick took over, proclaiming that everybody should stand on their own two feet, with family support if necessary rather than handouts. Mum at least, was sure that Gus would see them OK. Boring old Dad wasn't so sure ... :cry:
drossall
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Re: The proposals, benefits, drawbacks etc.

Post by drossall »

Jonty wrote:I suspect many thought they were paying to join a Club ... rather than making a contribution to a charitable institution.

Isn't this a misunderstanding of what a charity is? The two are not mutually exclusive. I am definitely not a lawyer, so here's how I see it:

Charities are organisations set up to benefit society. They don't have to be specifically "caring" organisations in the sense we perhaps first think of (Oxfam, Christian Aid, etc.) They simply have to meet the criteria of charities law in providing some social good. At least since 2006, it has been clear that the promotion of amateur sport meets one such criterion; presumably this is at least partly in response to the current "couch potato" health crisis.

It's OK for the benefits to be delivered to members, as long as anyone (or at least anyone who could benefit from the charitable objectives) can join. The Scout Association is an obvious example of a long-standing charity which primarily serves its members, whilst at the same time trying to encourage as many people as possible to become members - and so not being in any way exclusive. Typically, though, charity members are involved in delivering the benefit as well as (sometimes) in receiving it - as already happens with the CTC's local groups, charity or not.

However, charities often want to offer their members benefits that are reasonable, but not within the charitable remit. That takes careful management to satisfy both the Charity Commission and the tax authorities. Presumably member discounts are something that would have to be looked at closely in most charities. To qualify for gift aid, member subscriptions must mostly go to delivering the charitable remit (whether or not that is delivered to members), but of course whether to ask for gift aid on subscriptions is a decision that the charity trustees would have to take - not all do.

Thus, it's not a case of charity or membership organisation. The question is whether a charity is the most appropriate way to operate a membership organisation, and sometimes it clearly is.

Does anyone disagree with that?
Last edited by drossall on 1 Dec 2010, 7:17am, edited 1 time in total.
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Yorkshireman
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Re: The proposals, benefits, drawbacks etc.

Post by Yorkshireman »

No I wouldn't disagree with that in principle drossall, but after following this 'saga' from before the AGM vote I have little confidence in the powers that be (some of them anyway) at NO and/or the Trust as being capable of organising a merger/takeover in such a way as to retain the spirit of the CTC , let alone provide the many benefits that are available to members at the present time (especially after reading the post by Simon L6).
Colin N.
Lincolnshire is mostly flat ... but the wind is mostly in your face!
http://www.freewebs.com/yorkshireman1/
Jonty

Re: The proposals, benefits, drawbacks etc.

Post by Jonty »

Hi Simon
Thank you very much for that detailed response.
I'm not trying to put words into your mouth but what you seem to be arguing for is more transparency, enhanced member involvement in decision-making, improved measures to keep members informed, better control over costs, more openness and clarity on financial matters, and perhaps more emphasis on concentrating on core activites and making savings with a view to not increasing members' fees or even possibly reducing them.
Given what I've read about the proposal and its history, I think these are reasonable "wants" and I certainly support them.
Can I ask do you think these desirable changes listed above to the way the Club operates can be more readily delivered through the existing structure or the structure which would exist if the proposed merger were to be approved and implemented?
I appreciate your point that any Gift Aid which could be secured by the Club becoming a combined charity will be relatively small when compared with the size of the overall budget.
jonty
thirdcrank
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Re: The proposals, benefits, drawbacks etc.

Post by thirdcrank »

drossall

Whatever else I may think, I don't think Jonty has misunderstood anything. From the content of his posts, it seems pretty clear that he has ploughed through a fair bit on here and then summarised it fairly and succinctly. He has raised some carefully thought-out and searching questions directly to people who seem qualified to answer and has received some detailed answers. I don't think he has finished.
swansonj
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Re: The proposals, benefits, drawbacks etc.

Post by swansonj »

John Catt wrote: At last an alternative strategy from SavetheCTC :-).

....

Simon L6 may disagree with my analysis but this is what I think he is proposing.


John

I posted earlier about how the tone of some of the "pro merger" contributions contributed to the impression of how the CTC is being run which is the thing of most concern to some of us in the "anti merger" camp. I'm sorry to say that I feel you have contributed a further example here. As SimonL6 has said himself, he never proposed the stated strategy. It was very clear from his post that he was describing what the vulnerability of the CTC is, and in fact as I interpret his posts as a whole, he is actually saying that it is his commitment to the CTC that makes him so concerned (the opposite of proposing an alternative to the CTC or a radical reshape). When people in the "pro" camp misrepresent their opponents (just as when they put pressure on CTC staff, just as when they use communication channels unfairly, just as when texts are edited in not entirely straightforward circumstances, etc etc) it adds to the impression that CTC is being run by people who don't respect the members and the culture of a member organisation, and therefore that taking the organisation yet further in that direction is the wrong thing.

John
swansonj
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Re: The proposals, benefits, drawbacks etc.

Post by swansonj »

John Catt wrote:As I see it there are essentially 3 alternatives open to us (rather too black and white but it would take forever to analyse all the shades of grey).

1. Stay as we are.
2. Combine as a single Charity.
3. Unbundle the Club.


4. Regain the spirit of the club. Provide better member service so that the club is attractive to a yet wider membership. More of an emphasis on local engagement. Stop performing commercial services just because they boost the club's size or status. Continue to lobby on cycling issues, with a sharper focus because any possible compromises produced by commercial pressures would be reduced. Transparent financial procedures. More openness of information. No treating of members or staff with contempt. Then the organisational structure can sort itself out because it won't matter so much. But sort out all of those issues before changing the structure, because merging in the present setup just seems to cement all the problems yet further in place.
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