Update: Charitable Incorporated Organisations

 

Charitable Incorporated Organisations have arrived!


The new legal form for charities, the Charitable Incorporated Organisation ("CIO"), was first included in the Charities Act 2006 and was initially intended to become available from 2008.


However, since then their launch has been continually delayed and postponed until December 2012 when the long-awaited regulations were made by the Minister for Civil Society.  The Charity Commission, as of 10 December, is now accepting applications to become a CIO from certain charities.


Currently, the Charity Commission is only considering online applications for registration as a CIO from new charities with incomes over £5000.00 per annum.


Despite the fact that the Charity Commission is now accepting applications, it has confirmed that no CIOs will be able to join the register of charities until 3 January 2013, as the relevant regulations do not come into force until 28 days after being made.


The CIO Timetable


A timetable, setting out a phased introduction to applications has been published by the Commission as follows:

> Online applications for brand new charities with incomes of over £5000.00 are currently open. The subsequent stages are set out below: 
> From late March 2013 - window opens for existing unincorporated charities (to set up a CIO and transfer assets into it) with incomes of over £250000.00
> From May 2013 - window opens for existing unincorporated charities with incomes between £100000.00 and £250000.00
> From July 2013 - window opens for existing unincorporated charities with incomes between £25000.00 and £100000.00
> From October 2013 - window opens for existing unincorporated charities with incomes between £5000.00 and £25000.00
> From January 2014 - window opens for existing unincorporated charities with income less than £5000.00 and for brand new charities with anticipated annual incomes of less than £5000.00.


The Commission has stressed that the timetable is indicative and may be updated according to demand but no amendments have yet been made.


What are the benefits of becoming a CIO?


CIOs are likely to be most beneficial for small to medium sized charities and a CIO structure has the following advantages:
> CIOs are only registered with the Charity Commission, reducing the administrative burden in comparison to other incorporated charity legal structures, in the main the company limited by guarantee.
> CIOs are limited liability entities (unlike unincorporated charities) which offers an additional safeguard for members and trustees from personal liability; 
> CIOs have a separate legal identity and can therefore sign contracts, hold assets and employ staff in their own name; and
> It is intended that establishing and running a CIO should be quicker and easier than incorporating a charitable company.


However, the CIO is a new legal entity so may, at least initially, suffer from being unknown by funders, stakeholders and the general public as well as by charities, their trustees and staff themselves.


If you would like to discuss whether the CIO is an appropriate structure for your organisation or not, please contact Nick Dent at legal@rcvda.org.uk