17/10/2016

What is a Charitable Incorporated Organisation?

A Charitable Incorporated Organisation (CIO) is a relatively new legal structure available for charities.

As the name suggests, a CIO is incorporated, which means that (like a limited company) it has its own legal personality, the ability to conduct business in its own name, and limited liability so that its members and trustees will not have to contribute in the event of financial loss.

Incorporation is a clear benefit where a charity is engaging in activities which carry the risk of financial loss – such as employing staff or owning buildings or land. If a charity is not incorporated, its debts can become the personal debts of its trustees.

Before 2013, the only way for a charity to become incorporated was to set up first as a Private Company Limited by Guarantee, and then apply for charitable status – becoming a Charitable Company. Charitable Companies are obliged to produce annual reports on their activities to both the Charity Commission and to Companies House.

Charitable Incorporated Organisations were created so that charities can become incorporated without having to set up as companies first, and without having to report to Companies House as well as the Charity Commission.

CIOs are not companies – but (for nearly all intents and purposes) have the same benefits as Charitable Companies. They can register with the Charity Commission and receive a charity number, they can engage in charitable fundraising, they can benefit from the same tax breaks as Charitable Companies, and they have limited liability to protect trustees and members from financial loss.

As of October 2016, there are more than eight thousand CIOs registered with the Charity Commission. The CIO is the most appropriate model for new or existing charities which are taking on financial risk.

Charities in the Borough of Swindon who need help registering as CIOs, or are looking for further advice on legal structures, should contact us – email Russ Francis at russell@vas-swindon.org

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