As of January 1 this year, incorporated charities and community interest companies can now become Charitable Incorporated Organisations (CIO).
CIO’s have been an available option for new charities since 2013 but it will now be possible for existing charities to also convert to a CIO.
While the news may be music to the ears of charities and community interest companies, it’s a move that’s not going to be felt by everybody right away.
Right now, smaller charitable organisations and community interest companies with annual income below £12,500 can apply to become a CIO. Over the next few months, other charities will be eligible to apply, depending on what their gross annual income is. The table below shows how the process will be phased in, according to the Charity Commission:
|January 1, 2018||Less than £12,500|
|March 1, 2018||Between £12,500 and £25,000|
|May 1, 2018||£25,000 and £100,000|
|June 1, 2018||£100,000 and £250,000|
|July 1, 2018||£250,000 and £500,000|
|August 1, 2018||More than £500,000|
Charities that wish to become a CIO have to apply to the Charity Commission but it’s hoped that the process is now far more straightforward for charities to follow after the Government recently published a new set of draft regulations.
But while it’s hoped the process is much easier for organisations, what are the pros and cons of applying to become a CIO? Here are just some of the main benefits and drawbacks of venturing down this route:
KEY BENEFITS OF BECOMING A CIO:
Cost and time savings
First and foremost, there’s no dual regulation. From a practical perspective, this means CIOs only have to register with the Charity Commission, not with both the Charity Commission and Companies House. As a result, this means that they can save on their Companies House filing fees and the extra administration of having to file everything twice.
Greater visibility and transparency
As part of the new regulations, it’s also been agreed that any new CIOs are added to the Registrar’s Business Names Index, which is maintained by Companies House. Not only does this give CIOs greater transparency and visibility around their new status, it’ll also help prevent other CIOs from setting up with similar names.
MAIN DISADVANTAGES OF BECOMING A CIO:
CIO status is a relatively new thing, (having been only introduced in 2013), which means not all financial institutions recognise it, even now. The best thing to do is to check in advance with your financial institutions before you do anything.
To find out more about becoming a CIO or for help with the process, contact Joanne Baldwin on 01905 777 600 or JoanneBaldwin@ormerodrutter.co.uk.
Joanne has over 25 years’ experience working with companies, owner managed business and subsidiaries of overseas parent companies. She provides accounting and audit services to specialist sectors including charities and academies.