Registered charities in England and Wales have a choice of four possible structures: trusts; associations; charitable companies and charitable incorporated organisations (CIOs). From 01 January 2018, it will be easier for some existing charitable companies to become CIOs, by following a new CIO conversion process.
If your charity has a company structure, but would benefit from a simpler and potentially cheaper CIO structure, it could benefit from this new CIO conversion process. No longer will a charitable company have to shut down and transfer its assets and activities to a brand new CIO. Under the new process, a converting charitable company will keep its existing charity number after conversion, and any legacies or other donations to the charitable company will automatically be payable to the CIO.
Should we convert?
Each charity will need to review its position on a case by case basis. The advantages of simpler administration need to be balanced with any disadvantages. For example, some transfers may cause problems with occupational pension schemes (despite the new rules taking some pension arrangements into account).
We can help trustees consider what to do, especially in relation to employee and TUPE concerns, data protection consents and the effect on other longer term arrangements. Some charities prefer the more transparent company structures, and others may have given their funders promises not to make fundamental changes to their governing documents.
When can we convert?
The CIO conversion process will be available to charitable companies from 01 January 2018, but only if its annual income is less than £12,500. Others may apply:
- 01 March 2018: Charitable companies with incomes under £25,000
- 01 May 2018: Charitable companies with incomes under £100,000
- 01 June 2018: Charitable companies with incomes under £250,000
- 01 July 2018: Charitable companies with incomes under £500,000
- 01 August 2018: All charitable companies
- 01 September 2018: All CICs and charitable companies.
CIO conversion process
We have helped many charities to adopt a CIO structure to date, and we think that, with some preparation and planning, the new CIO conversion process should be relatively straightforward. If you have any questions about which conversion process would be suitable for your organisation, please contact us, we’d be delighted to help.
How we can help
We’d be delighted to discuss whether your organisation would benefit from a CIO conversion, and what steps you should take to prepare for the new process. Please contact us for a free, confidential consultation.
Originally published 1 December 2017