(Immediate Release 28 March 2011)

The Charity Commission, the independent regulator of charities in England and Wales, is today publishing the first part of its guidance for anyone interested in setting up a Charitable Incorporated Organisation (CIO) and two model constitutions for forming a CIO, ahead of the expected implementation.

A Charitable Incorporated Organisation (CIO), brought in by the 2006 Charities Act, is an incorporated form of charity which is not a company. It only has to register with the Charity Commission and not Companies House and is only created once it is registered by the Commission. A CIO can enter into contracts in its own right and its trustees will normally have limited or no liability for the debts of the CIO.

The Commission has published its guidance and the model constitutions to enable charities, advisers and anyone else interested in setting up a CIO to decide if the CIO structure is the right one for them, and to familiarise themselves with the guidance and constitutions ahead of implementation. The guidance will be added to over the coming months. The documents are also being published to coincide with the Office of the Scottish Charity Regulator (OSCR) starting to register Scottish Charitable Incorporated Organisations (SCIOs) from 1 April.

Sam Younger, Chief Executive of the Charity Commission said;

"By making the CIO guidance and constitutions available now, there is the opportunity for people to look more closely at whether the CIO structure is the right one for their needs, and what will be involved. The guidance will help ensure people are clear about what being a CIO would mean ahead of the new structure being implemented."

The documents may be subject to change once Parliament has agreed the regulations, however it is expected that any changes would be minor. The regulations which complete the legal framework for CIOs have not yet been debated by Parliament and the Office for Civil Society will in due course publish a timetable for implementation.

Implementation will be phased, with new organisations among the first to be able to register as CIOs, and existing charitable companies being able to convert to CIOs towards the end of the implementation period.

The CIO will be most suitable for small to medium-sized organisations that employ staff or enter into contracts. The guidance sets out the rules and the benefits for CIOs, how to register, what CIOs will have to do which is different from an unincorporated charity and what is involved in running a CIO including reporting requirements.

Many aspects of running a CIO will be the same as other forms of charity, but there are important differences and additional obligations on the trustees of a CIO which are set out in the guidance.

The Commission has published two model constitutions:

• the foundation model for charities whose only voting members will be the charity trustees

• the association model for charities that will have a wider membership, including voting members other than the trustees

A CIO using the foundation model will be like an unincorporated charitable trust, run by a small group of people (the charity trustees) who will make all key decisions. A CIO using the 'association' model will have a wider voting membership who must make certain decisions (such as amending the constitution), will usually appoint some or all of the charity trustees (who will serve for fixed terms), and may be involved in the work of the CIO.

The Charity Commission and the Office for Civil Society (then the Office of the Third Sector) held a consultation at the end of 2008 to give the public the opportunity to comment on the proposed regulations. Following the consultation, a number of significant changes were made to the regulations to simplify the CIO structure. One significant change made is that there is now no provision for a CIO or the Charity Commission to keep a register of charges (such as mortgages) over CIO property, which may impact on the usefulness of the CIO structure for larger charities with significant assets.

The guidance and the model constitutions are published today at www.charitycommission.gov.uk/Start_up_a_charity/Do_I_need_to_register/CIOs/default.aspx

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Notes to Editors

1. The Charity Commission is the independent regulator of charities in England and Wales. See www.charitycommission.gov.uk for further information or call our contact centre on 0845 300 0218.