Members of the gay festival Pride have voted to transform their organisation to protect it and to move a step closer to becoming a charity.

The move means Pride in Brighton and Hove will be completely non-profit with all cash raised from the festival being ploughed back into the organisation and community groups.

They voted at last night's annual meeting to become a company limited by guarantee, which means each member promises to pay £1 if the company goes bust.

Chairman David Harvey said: "It's a very good move. It's taking the organisation to a safer and more secure position.

"It has been exposed in the past but it means we cannot take any profit out now. If all goes according to plan we will hopefully be a charity by next summer."

Before, the company was limited by share, with a membership alongside, which meant any shareholder could legally have asked for a share of the profits and no one could stop them. This has happened with other Pride festivals in the UK.

It is a further safeguard to protect the annual festival and its year-round support of community groups.

Earlier this year The Argus reported how £10,000 had vanished from the organisation.

Accountants discovered the money had been stolen and a man was arrested last month and released on police bail pending further inquiries.

Mr Harvey told the meeting: "Tonight is about moving Pride into its next stage of development and protecting it.

"Last year, we knew little of the financial events that were going to unfold. What in fact was presented as £11,000 profit in 2002 was nearly a £15,000 deficit. On top of that nearly £10,000 in grants had not been paid out."

The organisation took control of internal communications and realised many creditors and organisations promised grants had not been paid.

Mr Harvey said: "By May we were faced with some tough decisions to see if Pride could recover."

This year's two-day festival was the most successful with 90,000 people attending and £4.1 million coming into the city.