Charitable Incorporated Organization

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A Charitable Incorporated Organization ( CIO ) is a unique UK legal form of charitable organization. The status of a CIO is awarded by the Charity Commission on application.

The most important advantage for a CIO is the associated legal personality , i.e. the ability

  • Enter into contracts on behalf of the organization
  • Manage property (rather than on behalf of the trustee) and
  • for members of the organization who are only liable to a limited extent for their actions on behalf of the organization.

Originally such rights were limited to limited companies and many charities formed private companies limited by guarantee . This made it necessary for the organizations to register with the Charity Commission and Companies House at the same time , both of which have different requirements for the organization. In contrast, a CIO only has to give account to the Charity Commission for England and Wales or the Office of the Scottish Charity Regulator . This is intended to reduce the bureaucracy for foundations. Smaller CIOs can even use a revenue surplus calculation.

It can be disadvantageous for the charities that, unlike other forms of non-profit enterprise, they do not have a public register of liens , which could make the organization of finances more difficult. The majority of charities in Great Britain, including the previously common forms of company, can be converted into a CIO. The opposite case, i.e. the name change of a CIO into a “normal” company form, is not provided.

Requirements for a "charity"

The requirements for a charity are defined in the first paragraph of the law as "organizations that have a charitable purpose ". These purposes are considered given in the third paragraph if its description can be attributed to one of the following cases:

(a) Prevent or alleviate poverty
(b) The promotion of education
(c) The promotion of religion
(d) Promoting health and saving lives
(e) Promoting citizenship and community development
(f) The promotion of the arts, culture, heritage or science
(g) The promotion of amateur sports
(h) The promotion of human rights, conflict resolution or reconciliation, or the promotion of religious or racial harmony or equality and diversity.
(i) The promotion of environmental protection or the improvement of the environment
(j) Improvement of those in need due to their youth, old age, poor health, disability, financial stress or other disadvantages.
(k) Promoting animal welfare
(l) The promotion of the efficiency of the armed forces of the Crown or the police, the fire brigades, rescue services and ambulances.
(m) Any other purpose
(i) which is not listed in paragraphs (a) through (l) but is considered charitable under Section 5 or is so defined under an earlier law.
(ii) which is reasonably considered to be analogous to or in the spirit of the purposes listed under (a) to (l) or under subsection (i) or
(iii) which can reasonably be viewed as analogous to, or in the spirit of, purposes that may be considered under charitable law in England and Wales to be within the points set out in Section (II).

history

An organization could first receive the status of a CIO in Scotland, starting in April 2011 as the Scottish Charitable Incorporated Organization ( SCIO ). In England and Wales, the facility opened on March 4, 2013.

The CIO itself was proposed by Judy Weleminsky of the National Council for Voluntary Organizations (NCVO) in 1992 and found a supporter in Lindsay Driscoll. In 2000, an advisory body was set up for the Charity Commission, which proposed a new legal form for charities. In 2001, the Review Steering Group followed the Department of Trade and Industry and supported the proposal for a Charitable Incorporated Organization with a separate administration, since the company law is intended for commercial companies with requirements for corporate governance and financial predominantly intentions of the shareholders. The legal basis was created in 2004. The full law was passed in 2006.

The Charity Commission opened consultations on the basis of the law, uncovered many problems and suggested improvements. The Scottish OSCR began in April 2011 with the approval of Scottish Charitable Incorporated Organizations (SCIO), around a fifth of the organizations registered during this time were founded as SCIO. In order to reduce the workload of the authority, existing charities were only allowed to convert their legal form to SCIOs from 2012. The introduction in England and Wales also took place in phases from 2013 beginning with new organizations and later with the conversion of existing charities.

On March 4, 2013, the Charity Commission for England and Wales enabled the first charity to change its legal form to a CIO. The organization later had problems transferring property and long-term loans during the transition and had to cease activities due to a lack of donations. Another charity tried the switch, but returned to the previous business model because of the circumstances of the switch. In May 2019 there were approx. 17,000 CIOs reported.

Individual evidence

  1. ^ Tash Shifrin: Q&A: what's in the draft charities bill. In: The Guardian's website . Guardian News & Media Limited, June 2, 2004, accessed April 29, 2020 .
  2. ^ A b Charities Act 2011. In: The National Archives website . December 14, 2011, accessed April 27, 2020 .
  3. ^ Charities and Trustee Investment (Scotland) Act 2005. In: legislation.gov.uk. The National Archives, June 9, 2005, accessed April 29, 2020 .
  4. ^ A b Patrick McCurry: New guidelines to benefit the voluntary sector. Changes to charitable company structure. In: The Guardian's website . Guardian News & Media Limited, September 19, 2001, accessed April 27, 2020 .
  5. ^ Luke FitzHerbert: All to play for. The charities bill offers welcome reform but will achieve little unless the Charity Commission raises its game, says Luke FitzHerbert. In: The Guardian's website . Guardian News & Media Limited, December 21, 2004, accessed April 27, 2020 .
  6. ^ Charities Act 2006. In: The National Archives website . November 8, 2006, accessed April 27, 2020 .
  7. ↑ a b c d Tania Mason: Charitable Incorporated Organization delayed until next year . In: Civil Society , October 12, 2011. Retrieved January 13, 2019. 
  8. ^ Office of the Scottish Charity Regulator . Retrieved October 14, 2011.
  9. ^ Niki May Young: Hurd takes CIO legislation to Parliament . In: Civil Society , October 31, 2012. 
  10. ↑ Ricketts, Andy: Challenge to Change is the first existing charity to use CIO legal form . In: Third Sector , March 5, 2013. Retrieved November 17, 2014. 
  11. ^ Closure of Challenge to Change . Challenge to Change. December 5, 2014. Retrieved March 2, 2015.
  12. ^ Tania Mason: New CIO applies to revert to charity status . In: Civil Society , May 31, 2013. Retrieved January 1, 2019. 
  13. ^ Advanced search for "charitable incorporated organization" . Charity Commission for England and Wales.