Search

How can we help?

Icon

Setting up a Charitable Incorporation Organisation

Interest in Charitable Incorporation Organisations (CIO’s) has grown in recent months, we explain how these could be considered an appropriate structure for a reorganisation or setting up a new activity.  

CIO’s have been around for some time, following their introduction into law through Part 11 of the Charities Act 2011. The CIO structure is also regulated by the operative provisions of the Charitable Incorporated Organisations (General) Regulations 2012, the Charities Act 2011 (Charitable Incorporated Organisations) (Constitutions) Regulations 2012 and the Charitable Incorporated Organisations (Insolvency and Dissolution) Regulations 2012. 

What is a Charitable Incorporation Organisation? 

The CIO is a form of body corporate, that like a regular corporate structure can own property, hold title to real property, enter into contracts – it is its own legal entity.  Until now, the conventional structure for a charity was either through an unincorporated trust or, a company limited by guarantee which was then registered at the Charities Commission to qualify for charitable status.   

The core advantages of a CIO over the conventional corporate structure are that duplicity of administration is removed.  There is no need to file accounts and annual information at Companies House as well as with the Charities Commission and there is no need to hold separate board and trustee meetings.  

Financial benefits of a Charitable Incorporation Organisation

CIO’s have the following financial benefits:  

  • Gift Aid Relief on donations;  
  • Stamp Duty Land Tax exemptions on buying or leasing property; 
  •  Rate Relief; and  
  • No charges to tax on income as long as this relates to the CIO’s charitable objects (or exemption rules apply). 

Incorporation of a Charitable Incorporation Organisation

A CIO is created through two routes: 

  • An application to convert an existing charity into a CIO structure; or  
  • A new application  

Converting an existing Charity to Charitable Incorporation Organisation

The regulations permit an existing charity to convert, through adapting its existing constitution and making an application to the Charities Commission.   

Once the CIO is set up, trustees are able to transfer the existing charity, including its assets and undertaking into the CIO.  Care needs to be taken to ensure legal and beneficial ownership and benefits are transferred over and due process complied with – for example,   advice should be taken in respect of the application of TUPE in respect of any employees being transferred to a new entity.

 

The CIO is a form of body corporate, that like a regular corporate structure can own property, hold title to real property, enter into contracts – it is its own legal entity.

Creating a new CIO  

A CIO is incorporated through application to the Charities Commission.  Initial trustee appointments will need to be agreed and an application will need to be submitted with a constitutional document, regulating the meeting and order of the CIO.  This will need to follow one of two models – a foundation CIO where the CIO will be run exclusively by trustees or an association CIO where membership will have a function in the running and management of the CIO. 

Typically applications are heard within 40 – 50 business days.  A CIO does not exist until its application has been accepted by the Charities Commission. 

For more information on CIO’s, or legal structures generally please do not hesitate to contact us.  

About this article

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

About this article

Read, listen and watch our latest insights

art
  • 10 July 2024
  • Employment

Redundancy : Back to Basics FAQs

Redundancy can be a scary and overwhelming time both for employees being made redundant, and for those that have to make the decision. It is important for both parties to know their rights and obligations in this time.

art
  • 09 July 2024
  • Public Procurement

Buyer Beware: Practical Guidance for Breach of Warranty in an SPA

Are you buying a business? Whether you are buying shares in a company or purchasing its assets… the general Latin common law principle “caveat emptor” applies.

art
  • 08 July 2024
  • Corporate and M&A

Navigating corporate transparency: ECCTA reforms series

This is the second article in a series exploring the changes brought by the Economic Crime and Corporate Transparency Act 2023 (ECCTA).

art
  • 08 July 2024
  • Immigration

Right to Work Check Guidance – Key Changes for Employers

This updated guidance introduces several significant changes aimed at streamlining the right to work verification process for employers.

Pub
  • 02 July 2024
  • Privacy and Data Protection

Data protection unlocked for HR: Introduction to data protection

Lucy Densham Brown and Sana Nahas from the data protection team will discuss data protection issues encountered by HR professionals in the first episode of the ‘Data Protection Unlocked for HR’ podcast series.

Pub
  • 27 June 2024
  • Employment

TUPE Podcast Series: What Transfers

In this sixth podcast in our TUPE Podcast Series, Amanda Glover will delve into the automatic transfer principle and what transfers to the incoming employer under TUPE.