CIOs are a relatively new form of structure for charities, available since 2013.
Benefits of conversion
If your charity is currently unincorporated (i.e. it is a trust or an unincorporated association) there are a few key benefits to converting to a CIO:
- Limitation of financial risk for your trustees. This will be particularly relevant once your charity grows to a point that it is entering into contracts and hiring employees.
- The charity will have legal personality of its own. This means it could hold land and intellectual property in its own name, meaning that title documents do not have to be changed every time trustees retire or are appointed. It could also enter into contracts in its own name.
- Unlike the more traditional incorporated structure of a charitable company limited by guarantee (CLG), which is regulated by both the Charity Commission and Companies House, CIOs only have to make filings with the Charity Commission. Also unlike CLGs, CIOs can use simple receipts and payments accounts if their income is below £250,000 a year.
We should note however that sometimes a CLG will still be the more appropriate incorporated structure. In particular, charities working or receiving funding internationally may find that a CIO is a less well-known and well-trusted structure, simply because it is relatively new. For charities that intend to borrow, unlike the Charges Register at Companies House for CLGs, CIOs have no public register for charges, which may make lenders less inclined to make loans to CIOs.