Published: 12 September 2008
A New Legal Form for Charities
The Charitable Incorporated Organisation (CIO) is an entirely new legal form for charities. The Office of the Third Sector and the Charity Commission publish draft details of what the new form might look like and the rules it will have to follow. The next step in developing the CIO is to consult with the charity sector and those who will do business with these new organisations.
Currently, most charities can only incorporate as a company limited by guarantee, meaning they are regulated by both the Charity Commission and Companies House. The CIO is designed specifically for charities and will be regulated solely by the Charity Commission, significantly reducing this regulatory burden.
The new CIO will inevitably bring greater administrative responsibilities than staying unincorporated, and these must be balanced against the need for sufficient control and transparency to ensure they are run effectively.
The consultation seeks responses from those who will use the CIO model and those who will work with them, including grant funders, contractors, and suppliers, ensuring the new legal form is effective and useful in practice. It's available from http://www.cabinetoffice.gov.uk/third_sector/Consultations/current_ consultations.aspx
Phil Hope, Minister for the Third Sector, said:
"The introduction of the CIO will give charities the legal form that they deserve as powerful economic players in charitable fields as diverse as the arts, science, social justice and environmental protection.
"The benefits the CIO delivers will give many charities greater flexibility while reducing the burden of regulation. To realise its full potential the CIO form must command the confidence of the wider business community, meaning there are more requirements for a CIO than for an unincorporated charity so this won't be the best model for every charity.
"It is really important that we take account of all views so I urge the charity sector and those who will be doing business with CIOs to respond to the consultation."
Dame Suzi Leather, Chair of the Charity Commission, said:
"This consultation is the next step in the development of a unique vehicle for charities which want to incorporate. We want the CIO to be an effective new option for charities and it's vital we receive the views and comments of those who may adopt, or work with it, and we encourage sector professionals and funders alike to let us have their views."
The CIO form was originally proposed in the 2006 Charities Act. This consultation completes the detailed legal framework for CIOs that will govern how they are set up and operate, and offers respondents the chance to give us their views on the proposals.
The consultation closes on 10 December 2008.
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