Find me on LinkedInVillage Halls and Charity Law by Moira Protani - March 2021
Village halls and community centres are the backbone of rural communities, providing a place where people can gather to pursue their various interests and hobbies for a low cost. It was commonplace after the second world war to raise money from a village’s inhabitants to subscribe and pay for the initial cost of building a village hall. They are usually required to be registered with the Charity Commission, unless their annual income is below £5,000, and they are governed by a committee of management.
With increasing age, the costs of maintaining a village hall can be high and the needs of the rural community have changed fuelled by social and economic factors leading, in some but not all cases, to a reduced demand for traditional village hall use and a corresponding reduction in income. This requires a committee of management to be innovative in order to continue to meet the needs which have been filled traditionally by providing a hall, eg, the scouts. flower-arrangers and evening language classes to meet the thirst for learning of the inhabitants of a modern village not to forget wedding receptions, a village shop or post office and a doctors’ surgery. Raising new funds can be challenging, especially during the pandemic when the use of village halls will not have been uppermost in peoples’ minds, except perhaps as a base for the temporary supply of bread, milk and other provisions when it has not been possible to travel to the supermarkets in the towns.
One way to raise funds is to sell property – there is sometimes a parcel of land that is surplus to requirements and trustees might wish to dispose of a part of the hall or its grounds to realise cash so that they can repair, renew or rebuild the village hall. Another way to free up funds is to merge with another similar hall or public facility in the village such as a recreation ground. Combining assets and activities can be a good way to free up resources and provide enhanced facilities including a sports ground, a shop, post office or doctor’s surgery. This may necessitate a revision to the governing document and legal structure of the village hall and liaison with other bodies that have an interest in local affairs or a merger such as a parish council, the church and/or the NHS.
Other planning and governance can be relevant. On a merger of two facilities in a village, for example, it may not make sense for all of the existing trustees of both charities to be trustees of the merged charity – diplomacy and tact will allow for a smaller merged body of trustees.
Like other charities, village halls have a governing document and the committee of management has a legal duty to observe its terms and the rules of charity law.
The governing document of a village hall may be a stand-alone trust deed or set of written rules which is sometimes enshrined in a schedule to the original conveyance of the village hall land to the first trustees. The rules will provide for a committee of management (sometimes called trustees) and a membership made up of the inhabitants of the adult members of the village. At each annual general meeting, the members will elect the committee of management to take charge for the coming year. Sometimes elections take place every three years or the retirements may be staggered to allow for some continuity on the trustee board. The committee will determine the level of fees to be charged for use of the hall and, where necessary, expend money on repairs and renewal of the hall.
The governing document will usually permit the sale of all or part of the land and buildings with the consent of the inhabitants voting at an annual general meeting. A sale may be contemplated where the village hall is no longer required. There may also be a land swap or a sale to a residential property developer and the reinvestment of the sale proceeds into a new purpose-built village hall with modern facilities. A condition of granting planning permission for a residential development might be that the developer is required to build a combined village hall, public conveniences and other community building such as a medical centre at little or no cost to the village hall.
There are some unusual aspects to the constitution of a village hall which should be factored in when considering redevelopment or a change to the legal structure.
- The charitable objects of a village hall are usually to provide facilities for recreation or other leisure-time occupation in the interests of social welfare or words to that effect. This means that the facilities must be provided for the purpose of improving the conditions of life of the inhabitants (and those living in the immediate vicinity of the village) who either have special needs arising out of their youth/age, disability, poverty or social or economic circumstances or the facilities must be available to all of the inhabitants regardless of their religion, sex or political beliefs.
- The land and buildings are usually permanent endowment. This means that there are limited powers of sale of the freehold or grant of a lease requiring the consent of the inhabitants. The sale proceeds cannot be expended except to replace the old building with a new one. If this is not practical – for example because there is little demand for the facility – the trustees may need to apply for a scheme of the Charity Commission to allow the funds to be given to another body for a similar purpose to a village hall. The Commission will sometimes agree to a change to the objects and the investment of the sale proceeds so that the trustees can become grant-makers out of the annual income to meet the charitable needs of the inhabitants.
- The trustees should not permit the village hall land to be occupied permanently without charge or for a peppercorn rent by a body which is conducting a noncharitable activity; to do so may be contrary to the objects of the village hall and may also erode the capital value of the land. This is a consideration which affects the basis upon which a doctor’s surgery might occupy part of the land or a village shop and post office, none of which are charitable bodies and some of which permit the payment of profits to shareholders and directors. An outright disposal might be a more suitable way to accommodate these needs.
- There are limited powers to change the objects of a village hall both as to use and as to geographical area of benefit; older governing documents require the prior consent of the Minister of Education which is usually given these days instead by the Charity Commission which can also make a scheme to amend the objects using its powers under the Charities Act 2011.
- It is possible to change the criteria of eligibility for election to the committee of management and other administrative factors such as the permitted number of trustees. Sometimes, for example, regular user groups can elect one of thecommittee members. This is a democratic concept but can fall short if the user group ceases to use the hall or doesn’t exist any more! Changes to administrative provisions of the governing document can be effected quite easily but beware of the local politics!
- Village halls are usually unincorporated and this can make potential volunteers reluctant to become trustees because of the risk of liability to third party developers and contractors and for losses incurred because of injury to the public whilst they are on the village hall premises. Some of these risks can be covered by appropriate insurance. However, these days it is commonplace to mitigate the risks by incorporation in order to limit the liability of the committee members. The best way to achieve this is to alter the governing document so that a corporate trustee can be appointed in place of the individuals. It is not always possible simply to wind up the village hall and give its property and permanent endowment to a charitable company. The Charity Commission will usually agree to vest a village hall in a corporate trustee in order to achieve the protection required. Adapting the traditional village hall to meet modern needs can be challenging and, if a committee of management is considering how it might best do this, a good starting point is the Charity Commission publication RS9a – Village Halls and Community Centres. I need hardly add that the committee of management should seek professional advice, especially if they are contemplating a sale of permanent endowment property.
This article is part of an occasional series of charity law related topics by Moira Protani who is a solicitor (non-practising with effect from 1 April 2021) specialising in charity law and good governance.
Moira Protani
Moira Protani Limited
charityadvice@moiraprotani.com
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