NCVO and Social Enterprise UK
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Who controls it?  Board of Trustees
What is the governing document?  Constitution
Who is the regulator?  Charity Commission
Does it have limited liability?  Yes
What sources of finance are available?  Grants and some Loans
Is charitable status available?  Yes, obligatory

The Charitable Incorporated Organisation (CIO) is a new incorporated form which has been available since January 2013. Many aspects of the CIO are similar to those of a company limited by guarantee, but the CIO can only be used by an organisation which is charitable.

A CIO, like a company, has a two tier structure of trustees and members. Like companies, the trustees and members can be the same people – called a ‘foundation CIO’. A CIO that has members other than its trustees is referred to as an ‘association CIO’. For more information see the Introduction to Governance Structures.

Here are some of the key differences between the CIO and charitable company limited by guarantee:

  • The CIO is intended to have all the advantages of incorporation, namely limited liability and the ability to hold assets in its own name, without the burdens of dual registration and requirements to comply with two sets of law, as the CIO is regulated solely by the Charity Commission.
  • A CIO only comes into being once it is registered with the Charity Commission. In contrast, a company can register in a day at Companies House and start operating immediately.
  • CIO legislation makes no provision for the maintenance of a register of charges, which may make it more difficult for a CIO to borrow, as a lender will not be able to obtain the protection of registering a charge at Companies House.
  • The rules which apply to CIOs, while having the advantage of being tailored specifically for charities, are as yet untested, and there may be some gaps and grey areas.

Anyone establishing a new charity should certainly consider whether a CIO might be an appropriate vehicle. Smaller charities are likely to find the limited liability, coupled with less red tape, a real advantage. New charities which plan to hold significant assets, or borrow funds, may still prefer a company form. The Cabinet Office has assumed that the target market for CIOs will be charities with incomes of between £10,000 and £500,000.

It is anticipated that existing charitable companies will be able to convert into CIOs at some stage, but this is subject to further regulations which have yet to be introduced.

For further information on CIOs see the Charity Commission’s website.