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Becoming a CIO

General information on Charitable Incorporated Organisations

A Charitable Incorporated Organisation, or CIO, is a type of charity in England and Wales. A CIO is incorporated – hence its name – meaning that the law recognises it as its own separate legal entity. A CIO can enter into contracts and purchase property in its own name and the trustees of a CIO have limited liability. This type of charity is relatively easy to set up, and free too. These are many of the reasons that lots of Men’s Sheds have decided to become CIOs. If you haven’t already, we recommend you read our Legal Structures guide as a first step in determining whether a CIO is the right type of organisation for your particular Shed. An easy reference guide of their structure is below:
Features of a CIO
Incorporation
  • Able to enter into contracts in its own name
  • Able to own property
  • Can sue and be sued in its own name, rather than that of its trustees
Limited liability
  • Trustees are personally protected from claims against them, provided they act appropriately.
Regulatory body
  • Charities Commission
Governing document
  • Constitution
Governance
  • Provided by charity Trustees
Accounting
  • A simple set of accounts must be submitted to the Charity Commission on an annual basis.

Membership and Governance

The structure of CIOs is split into two levels: Trustees and members. In most cases, it is the CIOs members that elect Trustees, who then become responsible for the charity’s governance. Details of how the Trustees govern the charity are set out in their constitution – the governing document. This document also sets out what constitutes a member e.g. a natural person. Any change to the constitution always requires approval from the CIOs members – usually at its Annual General Meeting, or another meeting called for this purpose i.e. an Extraordinary General Meeting. The constitution should outline the process for becoming a member and if there is any criteria for becoming a member e.g. approval by the charity’s Trustees. Though Sheds should be as inclusive as is possible, within their charitable purpose. Membership of a CIO is different to other membership organisations and companies, in that all members must “seek to advance the purposes of the CIO” (Charities Act, 2011). In other charitable organisations, this duty applies solely to its Trustees. Every member of the CIO is entitled to a vote at member meetings. However, the CIO can also develop an informal, non-voting membership if it so wishes. This would technically not actually be a membership of the CIO, but such subscriptions are usually referred to as memberships nonetheless.

How to register as a CIO

To form a CIO, you must register with the Charity Commission. Once this has successfully been done, the organisation becomes a formal, registered charity, as well as a corporate body (hence the incorporated bit). The people that file the documents to register the new CIO become the charity’s Trustees and are named as the first Trustees of the charity in the constitution. They are now responsible for the governance of the charity. To become a CIO, the proposed activities must be exclusively charitable. If the Charity Commission don’t agree that the activities you are proposing are charitable and solely for public benefit, your charity will not exist until it can prove this. It won’t simply exist as an unregistered charity, it will have no identity at all. CIO or back to the drawing board! Luckily, your application stays as a draft until it’s accepted, so it’s fairly easy to keep going back to it until it’s accepted.

Deciding to become a CIO

Most Sheds will have established themselves as an unincorporated association, sometimes without even knowing it. A constitution, bank account, officers and members is all that’s required; the officers (Chair, Treasurer, and Secretary) have personal liability for what the association does, meaning their personal assets are at risk. This means if anyone chose to make a claim against the association they would be personally liable. Becoming a CIO is one way of protecting your organisation against these risks. Becoming a charity can also help to secure funding and increase positive public perception of your activities, sometimes attracting additional support in turn. A CIO isn’t the only option though, so do your research, but most Sheds to date have gone down this route when deciding to become a charity. Before embarking on the task of becoming a CIO, your Shed should have reached a state of maturity and its management committee and members should feel equipped to undertake the task. Although registering a CIO is fairly simple when compared to other legal structures, it’s still quite a task; the biggest being the constitution, and it will take a few committed Shedders to develop this. You also need to be secure Trustees to act for the new charity, and commit to the rigour of its operation and administration. A newly formed Shed may not be able to meet these demands right away and you should weigh this up with risks of remaining unincorporated as the Shed develops. Prior to starting the process of becoming a CIO, commitment must be sought from the Shed’s management committee and likely the members too, depending on your constitution, to close your unincorporated association to a CIO. This is generally done though an AGM or EGM. You’ll need to agree what happens to any assets held by the current organisation e.g. donating them to the CIO. If the association has any debts, liabilities or funding agreements, they should be settled or transferred with the approval of those involved. Click here to download this guide as a PDF, or continue reading for guidance from the Charity Commission.

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