When looking at the sustainability of your organisation consideration must be given to the structure of your group and what would best enable it to function smoothly. A forthcoming development is the creation of the Charitable Incorporated Organisation.

What is it?

It is a new corporate structure for charities which provides some of the benefits of being a company but without some of the burdens.

When will it be available?

The latest indicated timescale for implementation is March/April 2012.

Initially it was suggested that groups with an income of less than £5000 could benefit from registration with the Charity Commission by becoming a CIO. However the Charity Commission has recently stated that it will not be able to consider applications from groups with incomes of less than £5000. At this stage and without further information this appears to be a matter of available resources at the Charity Commission.

Is it a good idea?

With the Big Society agenda and its emphasis on localism paving the way for organisations to increasingly consider entering into contracts for delivery of services it is sensible that those organisations seek the protection of limited liability.

How did we cope before?

The usual method of achieving such protection has been to incorporate as a company limited by guarantee and then register as a charity. But this has resulted in dual regulation with accounts and reports needing to be sent to both Companies House and the Charity Commission.

So what are the benefits of the CIO?

• The CIO means a reduced regulatory burden. There will be two alternative model constitutions; the “foundation” model will cater for CIOs that want only members to be charity trustees, while the “association” model will be available for those that require a wider membership.
  
  
• A charity trustee will be required to exercise only such care and skill as is reasonable in the circumstances, having regard to their particular skill set and experience.
  
  
• A CIO can enter into contracts in its own right and its trustees will normally have limited or no liability for the debts of the CIO.
  
  
• Small charities with incomes of less than £5000 a year may find becoming a CIO advantageous because by becoming a CIO they will have to register with the Commission. Previously, any such application would only be considered in exceptional circumstances since there is no legal requirement for registration.

What will CIOs have to do?

All CIOs will have to submit an annual return and accounts, keep registers of members and trustees.

A CIO will have to have a registered principal office situated in England or Wales.

Insolvency Law will apply to CIOs.

A CIO must have a constitution in the form specified by regulations made by the Commission or as near to that form as the circumstances allow (Foundation or Association models).

For further information go to
www.charitycommission.gov.uk/start_up_a_charity/Do_I_need_to_register/CIOS/