The BCF and Trust Funds
Posted: Tue Oct 05, 2021 2:39 pm
I have been passed what I believe to be a useful document on the BCF and various trust funds.
(This came me to via various officials in the Surrey County Chess Association (SCCA).)
(This came me to via various officials in the Surrey County Chess Association (SCCA).)
Is this above essentially correct or does it merit any updates?British Chess Federation (“BCF”)
The BCF was originally formed in 1903.
Its formation was caused by the regional chess unions of the time. Unions from Scotland never joined. Welsh Unions joined at some stage but then left. It is an unincorporated entity, not a company. Its governing body, BCF Council, comprises the Unions and Counties.
In 2004 the English Chess Federation (“ECF”) was formed. It had a new structure including being a limited company and a much wider range of bodies in its governing body, ECF Council. The ECF took over the BCF operations (which were at the time only pertaining to English Chess) and the monies used for normal operations in BCF’s bank account were transferred to the ECF.
Post 2004 the main concern remaining in respective of the BCF has been to manage the legacies that had been left to the organisation over its history. Most of the legacies are not specified for a restricted purpose. They reside in two funds:-
1. The Permanent Invested Fund 1 (PIF 1) - £106k – August 2019
2. The Permanent Invested Fund 2 (PIF 2) - £77k – August 2019
Chess Centre Limited (a Company ultimately controlled by BCF) shares are held by the PIF 1 fund - £57k (out of the total £106k PIF-1 value) – August 2019
(NB. The figures from August 2019 are the latest accounts for BCF on the ECF website.)
Each of the PIF funds have Trustees that have been appointed by BCF and who are appointed to their roles for life.
PIF-2 contains some funds donated by the late John Robinson where there is a restricted use in order to provide £5k/annum towards the British Chess Championships according to the published accounts. In addition the JRYT (see below) contributes a further £5k/annum to the British Chess Championships which finances junior coaching at the event (which activity may be classified as a charitable endeavour).
Chess Centre Limited has historic origins in the London Chess Centre and the British Chess Magazine.
BCF’s Board of Directors are the same persons who constitute the ECF Board.
Aside from the BCF Funds above there are two other main funds dealing with chess legacies:
a) The Chess Trust – At one time ECF considered splitting into two bodies, one charitable with tax advantages to support the amateur game and one non-charitable to support the professionals at the British Championships and international events. This idea was not pursued because of the problem of defining the relationship between the resulting two bodies, where the income for the non-charitable body would come from and which body would affiliate to FIDE. Out of that the Chess Trust was set up to provide a charitable vehicle for legacies so that VAT did not have to be charged on subscriptions or congress entry fees. The legacy of the late Richard Haddrell (ca. £500k – restricted to junior chess only)
b) The John Robinson Youth Trust (JRYT) – charity founded on 2/3 of the legacy of the late John Robinson (ca. £500k) – restricted to junior chess only. The Trustees interpret the terms of this Trust to mean that they can distribute income only and not capital from this fund.
These two funds are independent of BCF and have separate trustees. Their charitable status means that are not subject to tax. However, that also means that they cannot support chess professionals. This is why the John Robinson legacy was split between the JRYT – charitable junior support and PIF 2 to support the British Championships, including professionals therein.
In recent years the ECF have been encouraging the PIF fund trustees to transfer funds to ECF for “development” projects via the Chess Trust in order to utilise its tax advantages. This is also subject to the agreement of the Chess Trust trustees. The objective is to put BCF into “dormant” status.
In terms of emergency sources of funding the ECF may appeal to the Trustees of the PIF1 and PIF2 funds for support from the unrestricted elements of their funds. BCF Council approval is required in such circumstances. Extract from Accounts August 2019:
“The investments in the Permanent Invested Fund (PIF) are held by trustees under a deed dated 1929 which is perpetuated by supplementary deeds every 21 years whereby the income is paid to the Federation and the trustees may make distributions of capital in exceptional circumstances of urgent need provided the money is for the benefit of “the objects” of the Federation, but only on the authority of a resolution of Council.”
The previous ECF Director of Finance has recently advocated making the BCF “dormant”. However, given that BCF Council is still required to occasionally agree the appointment of Trustees and because of its apparent approval powers cited above, it is not clear that this is appropriate.