What is a CIO?
A charitable incorporated organisation, or CIO, is a new legal form for a charity.
• is an incorporated form of charity which is not a company
• only has to register with the Charity Commission and not Companies House
• is only created once it is registered by the Commission
• can enter into contracts in its own right and its trustees will normally have limited or no liability for the debts of the CIO
The CIO was created in response to requests from charities for a new structure which could provide some of the benefits of being a company, but without some of the burdens
What are the benefits of being a CIO?
The CIO structure has several benefits over unincorporated structures, such as:
• the members and trustees are usually personally safeguarded from the financial liabilities the charity incurs, which is not normally the case for unincorporated charities
• the charity has a legal personality of its own, enabling it to conduct business in its own name, rather than the name of the trustees
What types of charity will benefit most from being a CIO?
We think that the CIO will be most suitable for small to medium sized organisations which employ staff and/or enter into contracts. If your charity is likely to want to issue debentures, a company limited by guarantee will be a better option for you.
Although establishing and running a CIO should be simpler than establishing a charitable company, it will not be as straightforward as running an unincorporated association or a charitable trust.
We cannot tell you what is the right structure for your charity and it is not our role to provide such advice. If, having looked at our guidance on the structures available for charities to use you are not sure, we advise you to consult a professional adviser. The Law Society provide a way of finding a suitable charity solicitor.
Many aspects of running a CIO will be the same as other forms of charity, but there are important differences and additional obligations on the trustees of a CIO:
- all CIOs will have to register with the Commission, regardless of their income, even if they have an income of less than £5,000
- as all CIOs will have to register, a CIO cannot be an exempt charity
- a CIO does not come into existence until we have registered it
- a CIO will have to have a registered principal office situated in either England or Wales
- all CIOs will have to submit an annual return and accounts to us, regardless of the income of the CIO
- CIOs will have to keep a register of members and a register of trustees – anyone can ask to see, or be provided with a copy of, the register of trustees
- the constitution of a CIO must contain certain provisions – we have produced two model forms of constitution for use by a CIO, one for CIOs where the members are not necessarily trustees (the association model) and one for CIOs where the only members are the trustees (the foundation model)
- amendments to a CIO’s constitution will not be valid until they have been registered with us – certain amendments will need our prior consent
- insolvency law applies to CIOs
Charitable Incorporated Organisations are now able to be created using the Charity Commissioners website : charity-commissioners.gov.uk. Click on Start up a Charity and then registering a CIO.
The CIO is separate from a Charitable company under the 2006 Companies Act. All the details concerning the CIO are held by the Charity Commissioners and not Companies House.
To see if a CIO is the right type of charitable trading concern for you please see the below.
There are two model constitutions for CIOs:
- the foundation model is for charities whose only voting members will be the charity trustees
- the association model is for charities that will have a wider membership, including voting members other than the trustees
In practice a CIO using the foundation model will be like an unincorporated charitable trust, run by a small group of people (the charity trustees) who will make all key decisions. There may be no time limit on how long charity trustees may serve and they will probably appoint new charity trustees.
A CIO using the ‘association’ model will have a wider voting membership who must make certain decisions (such as amending the constitution), will usually appoint some or all of the charity trustees (who will serve for fixed terms), and may be involved in the work of the CIO.
Like companies, which must have both members and company directors, all CIOs must have members and charity trustees. Depending on the CIO’s needs, the same individuals can be both members and charity trustees, or there can be a wider membership made up of people who are not the charity trustees.
Section 206(5) of the Charities Act 2011 gives the Charity Commission power to make regulations to specify the form of a CIO’s constitution. View the regulations (PDF).
For further information please see the Charity Commissioners Website