Consideration will need to be given to who is able to receive funding, taking into account who is best placed to deliver against the Fund purposes as well as any restrictions around private gain from the funding. The Fund Strategy (and the published materials aimed at supporting those who are seeking funds) should set out some basic eligibility criteria, stating, for example:

  • The type of body/ applicant that may apply to the Fund
  • Any award must bring clear and direct benefit to a defined group of people in the Fund area of benefit
  • Any supporting documentation required, such as a written constitution, latest set of accounts (perhaps requiring these be independently examined), and evidence of a bank account in the name of the body/ applicant.

In most cases, bona fide community organisations, i.e. those constituted on a not-for-profit basis, will be well placed to deliver activities or projects that meet the Fund’s purposes. Appropriate checks will likely be required, for example through examination of their constitution, for features such as:

  • Whether the group’s purposes / aims are for public benefit;
  • The existence of a not-for-profit “asset lock” (see the Annex on Governance Arrangements for a definition of this);
  • Who can become involved in the organisation’s governance and how, and
  • How accessible their services are.

Although insisting that recipients of funds be registered charities can provide some level of assurance as to the public benefit of their activities (in light of the level of scrutiny and regulation applied to charities by the Office of the Scottish Charity Regulator), this requirement is generally not encouraged as it disqualifies a large number of generally smaller, grassroots groups from benefitting. If the Fund has been deemed charitable it is far more inclusive to simply stipulate that the purpose of the Fund, and therefore any activity to be funded, must be charitable in nature, and for this to be scrutinised during any due diligence or project assessment process (see the annex Guide to open grant making).

Most communities will wish their funds to bring about broad benefit to the whole community or specific groups within it, rather than private gain to individuals. Nonetheless, it may be appropriate to fund individuals and private business in some circumstances, where any private gain is outweighed by the public benefit of doing so.

Many communities will have an ambition to improve or sustain their local economy. Small, locally owned businesses are often the lifeblood of rural economies, and supporting them may, therefore, be important. If a fund has been established on a charitable basis, funding can nonetheless be directed to businesses where they can demonstrate that the investment meets the Fund’s purposes, provides clear public benefit, and the activity would not take place without the funding. The investment should not, however, risk displacing or damaging other local businesses. Some communities prefer for funding for private businesses to be on a re-payable basis (see 2.5 below), particularly where the amount of funding sought is significant and the business is likely to be able to repay it.

Some purposes may be best delivered by funding individuals. Where the Fund is charitable in nature, care needs to be taken here to ensure that funding is genuinely needed (for example, the individual is in hardship) and that it will be used for activity that brings about some kind of wider public benefit. Examples include cultural, sporting, scientific, or artistic pursuits or educational activities that will further the individual’s chances of securing and/or sustaining gainful employment. One way of limiting the risks involved here is to provide small grants or bursaries up to a certain value and to require applicants to share back with the wider community on what they used the award for and the learning or achievements that resulted.

However, where a community benefit fund is not charitable in nature, some renewable energy businesses and communities may be comfortable that funding is used to provide an element of private benefit where this is available to everyone living in the Fund area of benefit. For example, through a Local Energy Discount Scheme (LEDS) that is not targeted specifically at those in fuel poverty.