A new dawn for charities?

Wednesday, 06 April 2011 00:00

"Spring is with us!", said Richard King, partner and head of Tozers' Charities and Schools team, said as he opened a highly topical seminar for charities and their advisers at Exeter University on 5 April. "A seed that was sown many years ago is at last starting to push up from the sometimes dense soil that is charity regulation". He was referring to the decision of the Charity Commission to publish, only last week, what it admits is unfinished guidance on Charitable Incorporated Organisations (CIOs). At the same time the Commission put forward two types of model constitution which it expects to be adopted for this entirely new creation, specially for charities, when the CIO finally emerges into the sunlight later this year.

All this was to anticipate an announcement from the Minister for Civil Society that had been expected in March if not long before. The Commission is still waiting on the Regulations to be passed by Parliament, but there are technical difficulties so that will not happen until perhaps late June. So it seems that the first CIOs should be up and running (as they already are in Scotland) 'from Autumn 2011'.

There is no obvious advantage in converting charities that are already established as companies, as the cost would outweigh any reduction in regulatory costs. And for technical reasons there is now considerable doubt whether funders and lenders will accept what is an unfamiliar and untried vehicle, so the CIO may not suit some large charities.

But it should certainly interest many charities that are not incorporated, especially if personal liability is a worry. Megan Cross, a solicitor in the Tozers charities team, adds: "Not every charity needs to be corporate, but those who employ staff, own or rent property or enter into other contracts really should consider their position. A CIO could have several advantages for charitable trusts, as compared with the company model: a single regulator, no dealings with Companies House, no filing fees and a tailor-made constitution. If you run a charity that is not a company and you are at all concerned about liabilities for trustees, then you might look at setting up a CIO."

There has been a lot of slippage already so there is some understandable scepticism around. But Tozers solicitors' seminar on CIOs gave charities the tools to make informed decisions once the final timetable is confirmed this Summer.