The BCF and Trust Funds

[John Upham]

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).)

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.

Is this above essentially correct or does it merit any updates?

[JustinHorton]

By whom and for whom was the document written?

[John Upham]

By whom and for whom was the document written?

I believe it was written by Paul Shepherd following consultation with Mike Gunn.

Its purpose was to facilitate decision making in the forthcoming ECF AGM.

[David Sedgwick]

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).)

It is a very useful document. I would be interested to learn who compiled it and how it came to be in the possession of the SCCA.

[Edit: I see that this has been answered above.]

Is this above essentially correct or does it merit any updates?

I have only one query:

Each of the PIF funds have Trustees that have been appointed by BCF and who are appointed to their roles for life.

My understanding was that the Trustees were appointed not for life but for 21 year terms commencing in 1929 (see the last paragraph of the document) and hence with the last two elections having been 1n 1992 and in 2013.

However, that could have been superseded in recent years.

[Mick Norris]

My understanding was that the Trustees were appointed not for life but for 21 year terms commencing in 1929 (see the last paragraph of the document) and hence with the last two elections having been 1n 1992 and in 2013.

However, that could have been superseded in recent years.

If a Trust has a term of 21 years, but is then extended for another 21 years, as appears to be the case, that wouldn't mean under Trust law that the Trustees would change; normally, Trustees are appointed for life, but they can choose to step down, and there may be mechanisms to replace them but I haven't seen any in the many Trust Deeds I've read over the years (there are provisions in Trust law to replace Trustees who are mentally impaired etc)

I'm not a lawyer, though

[David Sedgwick]

If a Trust has a term of 21 years, but is then extended for another 21 years, as appears to be the case, that wouldn't mean under Trust law that the Trustees would change; normally, Trustees are appointed for life, but they can choose to step down, and there may be mechanisms to replace them but I haven't seen any in the many Trust Deeds I've read over the years (there are provisions in Trust law to replace Trustees who are mentally impaired etc)

I'm not a lawyer, though

I am quite sure that the specific provisions of the PIF Trust Deed did at one time provide that the Trustees were appointed for 21 year terms. David Jarrett told me in about 1996 that this was the case and that the last appointments had been made "three or four years ago".

What I cannot recall are the details of what was done in 2013.

I am getting to an age where, the longer ago something happened, the more clearly I remember it.

[Roger de Coverly]

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.

I don't think the Chess Trust has much direct connection with VAT. Any organisation small enough to be inside the VAT threshold doesn't charge VAT. That's every one except the ECF, so there's a tax cost is allowing the ECF to run things in its own name. The bigger point of the Chess Trust was that it can hold investments and not suffer tax on the proceeds of the investments. The downside is that recognition of it as a charity puts constraints on how and where it can spend money.

Presumably the ECF went into all this when the Chess Trust was first set up. I'm not aware they ever did a briefing document for new directors or members of Council. It's fairly safe that the Chess Trust can spend on juniors, particularly junior training. How far it can go beyond that to spend, say, on development officers or Norm tournaments, I wouldn't be sure.

[Roger de Coverly]

Website of the Chess Trust.
https://www.chesstrust.org.uk/

Stated objectives

The Chess Trust has been established with the support of the English Chess Federation for the furtherance of chess. The Trust has the capacity to support a wide range of activities to promote and encourage the playing of the game. Its objectives are —

♦ The advancement of amateur sport by promoting the study and practice of chess in all its forms, principally, but not exclusively, for the benefit of the residents of England; and

♦ The advancement of education by promoting the development of young people through the teaching and practice of chess

That doesn't seem to preclude the Chess Trust spending money on some of Malcolm's pet projects. Whether the ECF via the Chess Trust should spend the assets in the PIF on a dash for growth is another matter.