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Setting up a Community Fund

Foundation Scotland helps local communities manage and maximise the potential of funding provided by developers operating in their area.

When a community receives funds from a renewable energy development it will need to safeguard the monies through some form of legal entity. These are usually commercial developments with the developer providing some level of community benefit payment to the local community. If it has the means, a community may turn to a solicitor for advice. Foundation Scotland provides specialist support for communities wishing to use their funds for charitable purposes and can assist with setting up a Community Fund (or ‘Trust’). Foundation Scotland can establish the Fund as a ring-fenced Fund and also provide on-going advice and support to invest the funds for positive community impact. Often this is through bespoke funding schemes designed to meet the needs of the local community or area.

In Scotland, charitable purposes are those recognised in Section 7(2) of the Charities Trustee and Investment (Scotland) Act 2005. They include, for example, the prevention or relief of poverty, the advancement of education, the advancement of citizenship or community development, and the provision of recreational facilities. It is possible to provide support to businesses as well as not-for-profit organisations, as long as the award will enable the business to meet at least one charitable purpose and the public benefit generated outweighs any private benefit.

By setting up a named Charitable Trust as a restricted fund within Foundation Scotland, the community does not need to deal with the regulations and on-going administration of actually managing a Trust. There is no need to worry about preparing annual accounts, reporting annually to the Office of the Scottish Charity Regulator, appointing Trustees, organising meetings, arranging and monitoring payments. Foundation Scotland takes legal responsibility for the safe management and distribution of funds, provides an annual report to the charity regulator and our auditors report on the fund within our annual accounts.

Community Funds established with payments from commercial renewable developments will sometimes cover a geographical area that will encompass more than one Community Council area. In these circumstances the Foundation may encourage the different communities to operate a single joint fund rather than dividing the monies up to be managed separately. This enables communities to work across Community Council boundaries to invest in larger, more strategic projects. Depending on the size of the fund, this can be a more effective way to both distribute funds and potentially lever in further resources.

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