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Charitable incorporated organisations

The charity commission’s definition is as follows

“A charitable incorporated organisation, or CIO, is a new legal form for a charity."

A CIO:

• 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.”

You can get lots more information from their website about different structures.

Generally they expect that smaller charities or voluntary bodies will use the structure particularly if they are undertaking some contracts and want some legal protection.

Our view is that like any legal structure it is just the vehicle to get you to where you want to go.

Too often people make decisions about legal structures before they have done much more fundamental things like work out where they want to go and how they will operate. For example, if you identify that you will need investment to grow your organisation you need a structure that will allow this; maybe you will want to use a community share scheme – you don’t want to spend time and money putting in place a legal structure which does not facilitate this and has to be dismantled or ignored.

Maybe you will want to undertake lots of trading or maybe you want to incentivise staff by giving them a share of the organisation – all these will impact on what is the best legal structure or whether you need more than one. Tax efficiency often indicates a trading subsidiary is a good idea.

We always start with where do you want to get to and what are your values and mission, then we consider how you might operate and what resources you might need and where they could come from, finally we think about legal structure.

A CIO might be right for you but so might a Community Interest Company (CIC), a co-operative, an Industrial and Provident Society or a charity with company limited by guarantee. There are pros and cons with them all, so our advice is do the strategic thinking first before wasting money on the legalities.