Answer

Basically, there are pros and cons to setting your group up as a charity, which I will attempt to summarise below. Bear in mind, that being a community group of enthusiasts does not bar you from applying to quite a few different funders, such as an appopriate Lottery programme related to heritage or learning.

Generally the advantages are that most charities are exempt from income tax, corporation tax and capital gains tax. Apart from the income tax associated with donations under the Gift Aid scheme, income tax deducted from certain other types of income attract repayment, for example bank interest, government stocks, royalties and Estate income. Also,

•Relief from tax on surpluses and on any interest earned on sums held on deposit
•The ability to tap funding sources (e.g. charitable foundations) which can only give financial support to charitable bodies (Note: Many funders DO NOT require groups to be registered charities before they give funding).
•Rates relief in relation to premises occupied by the charity
•Special VAT concessions which are applicable only to charitable bodies.

The tax system also encourages individuals and companies to give charities certain shares and securities. See Charitable Status- frequently asked questions (HMRC):

http://www.hmrc.gov.uk/charities/faq_gen.htm#1

Disadvantages of being a Charity:

Charities must comply with charities legislation (imposing, for example, strict requirements on the keeping and filing of accounts).

Most charities are subject to the jurisdiction of the Charity Commission. The Charity Commission can institute formal enquiries in cases of misconduct/mismanagement and has wide powers including the removal and replacement of trustees.

Charities must produce an annual report and annual return. In practice this is little different from the requirements for companies, but very different to those for any other non-charitable organisation.

Charity trustees may not generally benefit personally, whether through receipt of a salary or of profits or otherwise.

Personal liability of charity trustees for misappropriation of funds.

Charities are restricted in that their objects must be exclusively charitable and they cannot, except in certain circumstances, carry out or fund activities or undertake permanent trading which falls outside those objects. To overcome this, a separate non-charitable subsidiary company is often established to carry out such activities, and covenants its profits to the parent charity.
 
Source: http://www.cr-law.co.uk/services/charities/faqstatus.asp

It may well help you to look into the structure of other preservation groups to see how they raise money.

CASE STUDY - BRUNTINGTHOPRE VULCAN AND LIGHTNING COLD WAR SCRAMBLE SHEDS

Visit the website: http://www.lightnings.org.uk/

It's not the slickest website but that is probably a good thing and reflects on the enthusiasm of the group.

Of particular interest is the:

- discussion forum

- raising money through open days and targeted merchandising

- an automatic donation email that puts up a formated email to send a cheque (although Paypal would be better)

- telling the history of the project, the history of the planes and the current news eg, http://www.lightnings.org.uk/lpgstory.htm

- a fundraising thermometer (simple but effective)

- The Bruntingthorpe Vulcan has been very successful in getting on local TV news items - http://news.bbc.co.uk/1/hi/england/leicestershire/7347858.stm - to get the £100K (see Heritage Lottery Fund) to keep it flying but the Lightnings will not fly again and need a different promotion. They have an online donation button that you may be able to replicate as a charity at: http://www.justgiving.com/vtts Similarly, there is the Help Make it Happen Website: https://www.help.co.uk/charities/68533

- the educational / museum context where the sheds are as much a part of the history as the planes (this allows you to bid for educational themed funds and bring in school visits for living history - see attached for Crich project).

- potential for creating a membership base. You can build on this to build a volunteer base of enthusiasts and special skills. Compile these pledges in a database including the time commitment that people can manage and you have a very record to offer "match" funding as a contribution in potential funding bids. Instead of making a financial contribution, you can offer your volunteers costed at £250-£350 a day (Big Lottery rate).

The downside of what they are doing is that they describe themselves as a "bunch of enthusiasts" whereas a properly constituted group (with the constitution available online), and even a charitable setup with a charity number displayed endows a certain respectability when approaching corporate funders in these hard times.

A successful example of their event based fundraising approach, that makes the reader feel "I want to be a part of this": 

"Stage 1 of the fund-raising appeal was launched under the slogan 'They Protected You, Now You Can Protect Them', and a very successful 'QRA Day' at Bruntingthorpe in July last year helped raise over £9,000 in donations within a few weeks. Both Lightnings were fast-taxied on reheat, with former Lightning jockeys Dennis Brooks and Tony Paxton at the controls, and in between the two runs members of the LPG carried out a sponsored 'Lightning Pull' for a mile along the runway-which was the cue for the heavens to open. The last quarter-mile was uphill and quite a struggle, but fortunately the coronary care unit was not required!

This year's QRA Day was on Sunday July 15th, and it is hoped that the funds raised at this successful event will be sufficient to kick-start the first phase of the project, to shot-blast, paint and erect the framework of the hangar. The rate of progress will then depend on the generosity of supporters. Donations of any size are welcomed, and if you give £50 or more then your name (or a name of your choice) will be permanently displayed on a Roll of Honour inside the hangar. Do it now!! "

If their website was blog-based and Web 2.0 enabled to support video, you would be able to incorporate videos to a project website filmed by members on Open Days. This would add a whole new level of engagement with the public when looking for funds. You also might like to write up your project on Wikipedia.

Try www.ruralnet.org.uk, to see if you are entitled to a free blog.