CIO is not ‘universal panacea’, warns Charity Commission

A new legal form for charities, which is currently in development, will not be the universal panacea that many people were hoping for, according to the Charity Commission.

The charitable incorporated organisation (CIO) was originally proposed in the 2006 Charities Act with the aim of reducing charities' regulatory burden. At present, most charities can only incorporate as a company limited by guarantee, meaning they have to comply with regulations from both the Charity Commission and Companies House. CIOs will be regulated solely by the Charity Commission.

Speaking at yesterday's Institute of Chartered Accountants charity and voluntary sector group annual conference, David Locke, executive director of charity services at the Charity Commission, said that the CIO would not be right for every charity.

'The CIO isn't going to be the universal panacea that people think,' he said.

'It is not going to be a one-size-fits all vehicle for charities to incorporate as people have assumed. As well as bringing obvious benefits, it's not hassle-free.'

Locke highlighted some difficulties in the detail of the legal form, which he said the Charity Commission was currently working through. He did, however, point out that the CIO would bring two major benefits - allowing charities to incorporate while only having to deal with one set of reporting requirements, and reducing the need for charities to navigate company law as well as charity law.

'Our aim is for the CIO to be a practical option for charities,' he said.

Recognising that the third sector was getting impatient for the CIO to be introduced, he said that the Charity Commission and the Office of the Third Sector were planning to launch it by the end of spring 2010.

But, he said, this would rely on parliamentary time being set aside to pass the necessary secondary legislation.

See http://www.charitycommission.gov.uk/registration/charcio.asp