Good news for new charities

An expert in charity law is alerting good causes to a new business structure introduced by the Charity Commission that can bring many benefits.

David SewellApplications are now being accepted for Charitable Incorporated Organisations (CIO) – an alternative over the way charities traditionally operate as trusts or companies limited by guarantee.

David Sewell, partner in the corporate team at Napthens solicitors and a charity law specialist, advises that new charities being established now, with a turnover of more than £5,000, should consider forming a CIO.

David explains that CIOs can bring the benefit of limited liability but, for instance, are not required to register with Companies House.

He said: “It is important for charities to seek the best business structure allowing them to operate as efficiently as possible.

“Following the announcement establishing CIOs, we expect many newly established charities to take advantage of this new structure, and existing ones to seek advice on whether it is possible to convert to a CIO.

“It was hoped that regulations might allow for existing trusts and companies limited by guarantee to simply convert directly to CIOs but this is not possible at the moment. “However, we expect that many trusts will wish to form a new CIO and then transfer their assets and operations to it. Charities which may benefit in this way should contact their advisers for help.”