Is your group structure helping or hindering your mission?

As a CFO in the charity or social purpose sector, your focus is clear: maximise the impact of every pound, every grant, every hour spent in service of your mission.

But here’s a reality that doesn’t get much airtime; your group structure can either help you achieve that mission more effectively, or quietly slow you down, drain resources, and limit your flexibility.

For many charities, the structure is a product of history. A trading subsidiary was set up years ago to run a profitable café or shop. A Community Interest Company (CIC) was launched to house a social enterprise project. Grant-funded programmes were placed in separate entities to meet funder requirements. Over time, these pieces have been bolted on, tweaked, and adapted, but rarely redesigned with today’s challenges and tomorrow’s opportunities in mind.

When structure stops serving the mission

It’s easy to think of your legal and tax structure as background architecture, something that “just is” and doesn’t need much attention unless there’s a compliance deadline.

But when that architecture is misaligned, you can end up with:

• Trapped surplusesProfits from trading activities stuck in a subsidiary where they can’t easily be used for charitable work without incurring extra tax or administrative cost.
• Inefficient VAT recoveryActivities spread across entities in ways that reduce your ability to reclaim VAT, quietly increasing costs on every project.
• Unintended tax exposureEspecially where commercial and charitable activities mix, or where funding flows between entities without careful planning.

The mission-driven sector isn’t immune to the same structural inefficiencies that plague corporate groups, but the stakes are often higher, because every pound lost is a pound not spent delivering impact.

Why timing matters

Structural weaknesses rarely cause problems during ‘business as usual.’ They become visible during moments of change and that’s when they can be most disruptive:

• Securing new fundingFunders want clarity on where their money goes and how it aligns with charitable purposes.
• Launching a new ventureDeciding where to house new income streams or projects can have lasting tax implications.
• Mergers or collaborationsJoining forces with another organisation can multiply complexity if both parties have outdated or mismatched structures.

By the time you’re in one of these moments, changing the structure can be harder, slower, and more expensive, not to mention politically sensitive.

Questions for every CFO to ask

If you want to know whether your group structure is helping or hindering your mission, start with these:

• Are trading profits being channelled to the charity in the most tax-efficient way possible?
• Does your VAT position reflect your current mix of charitable, grant-funded, and commercial activities?
• Are there dormant or low-activity entities still generating compliance costs and management distraction?
• Could your current setup handle a major new income stream or collaborative project without delay?

If the honest answer to any is “I’m not sure,” you have an opportunity to add value not just financially, but strategically.

The benefits of a proactive review

A well-timed structure review can:

1. Release more funds for impact By removing tax leakage, unlocking trapped surpluses, and improving VAT efficiency.
2. Reduce administrative burden Fewer unnecessary entities mean fewer filings, audits, and governance meetings.
3. Strengthen funder confidence Clear, efficient structures are easier to explain in bids, reports, and due diligence.
4. Build resilience for the future Your organisation can adapt faster when new opportunities or challenges arise.

An illustration

Take, for example, a mid-sized charity that runs both a retail operation and a training programme for disadvantaged young people. The retail arm sits in a trading subsidiary, with profits gift-aided to the charity.

Over time, the training programme expands, wins commercial contracts, and is placed in a separate CIC. But no one has reviewed the tax flows between the three entities in years.

When the finance team prepares for a major capital grant application, they discover that profits are not being transferred to the charity efficiently. Some surpluses are stuck in the CIC, incurring Corporation Tax before they can be used for charitable purposes.

By restructuring the intercompany arrangements and adjusting VAT group membership, funds available for the charity’s mission could be increased significantly each year, without changing a single activity on the ground.

How to get started

If the illustration and information above strikes a chord, and you’re ready to take a closer look at your own structure, here’s a simple roadmap:

1. Map the whole pictureList every entity in your group, its purpose, income streams, and relationship to the charity.
2. Overlay your mission prioritiesSee whether the current flow of funds, governance, and tax position supports your strategic objectives.
3. Spot quick winsDormant entity dissolutions, VAT adjustments, or changes to profit transfers can deliver immediate benefit.
4. Model future scenariosTest your structure against possible changes, new funding, a major contract, a partnership and see where the friction appears.
5. Involve the right advisers earlyCharity tax and structuring is a specialist field. Advice that works for a commercial group might not fit your regulatory and mission constraints.

Your structure is part of your impact strategy

It’s tempting to think of group structure as a technical, finance-only concern. But in the social purpose sector, it’s more than that, it’s part of your impact strategy.

An aligned, efficient structure helps you move faster, direct more resources to the front line, and respond to opportunities without being tripped up by hidden costs or governance delays.

A misaligned one does the opposite, quietly slowing you down, sapping funds, and making it harder to adapt.

The question isn’t just “Is our structure compliant?” It’s “Is our structure helping us achieve our mission?”

If you can answer yes with confidence, you’ve already strengthened your organisation’s future. If not, the best time to start fixing it is before the cracks show.

Aligning structure with strategy: introducing My Tax Partner

The issues raised here – trapped surpluses, inefficient VAT recovery, and unintended tax exposure – are exactly the challenges My Tax Partner is designed to solve. Acting as your embedded strategic tax partner, we help charity and social purpose CFOs ensure their structures work for their mission, not against it. From unlocking funds for impact to simplifying governance and strengthening funder confidence, we provide proactive oversight that frees your team to focus on what matters most.

With regular agenda-led reviews and specialist sector insight, My Tax Partner helps you spot cracks before they become crevices and keeps your structure aligned with both compliance requirements and mission priorities. The result? More resources for front-line work, fewer hidden costs, and greater agility to pursue new opportunities.

Ready to think strategically about tax? Let’s talk.