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Next Steps for the Charitable Incorporated Organisation (CIO)

17 September 2009 

Publication of the joint Cabinet Office/Charity Commission response to the consultation on the Charitable Incorporated Organisation (CIO), a new legal form for charities, was announced today.  The CIO is the first incorporated legal form designed specifically with the needs of charities in mind.

The CIO will be available only to charities and will add to the existing range of forms that charities can use.

Responding to the consultation on how the CIO will work, the Government and the Charity Commision have agreed to make a number of important changes to the initial proposals including:

• ensuring a robust duty of care by removing a proposal that CIO trustees could in some circumstances take less responsibility for their charity’s activities
• tightening up rules on access to personal information in the registers of trustees and members that CIOs will have to maintain, and
• replacing a number of minor criminal offences for administrative failings with a power for the Charity Commission to direct rectification.

Angela Smith, Minister for the Third Sector, said:

“Charities make up an important and thriving economic sector, employing half a milllion full-time staff and countless volunteers.  Through the Charities Act 2006, the Government is completely overhauling the legal framework for the sector by cutting outdated bureaucracy and giving charities the tools to help make a difference.  The CIO is a key part of these changes, and I’m grateful to those who contributed to the consultation.”

Increasingly, charities are seeking incorporation as a means of limiting the risk of personal liability for trustees.  Currently around 25,000 registered charities are incorporated as companies, but this brings the burden of double regulation by both the Charity Commission and Companies House.  The new CIO will be regulated by the Charity Commission alone.

The aim is for the CIO to become an option for charities starting from spring 2010. Both new and existing charities will be able to consider becoming a CIO, although other forms of incorporation will also remain available. 

The summary of consultation responses and  Cabinet Office and Charity Commission response to the consultation is available here:

• Summary of Consultation Responses and Next Steps [PDF, 404KB, 31 pages]

Further details will be published later this year.