Should my charity be a CIO, a company, a trust or an unincorporated association?

England and Wales: researched. Scotland: partial — the SCIO’s own liability, registration and trustee rules are established, but the Scottish trust-law variant specifically was not researched at this level of detail. Northern Ireland: partial — the finding that Northern Ireland has no CIO is established, but the same trust-law variant gap applies as in Scotland.

Two things nobody puts at the top

There is no way to convert a CIO into anything else. There are statutory routes in — a company can convert to a CIO, an unincorporated charity can transfer into one. Part 11 Chapter 4 of the Charities Act 2011 is headed “Conversion, amalgamation and transfer”, and its cross-heading for the inward route, “Conversion of certain bodies to CIO”, covers every provision that lets another body become a CIO. Every one of them runs inward. Nothing runs outward.

That does not mean you are trapped forever. Dissolution is expressly provided for, and you can transfer the undertaking to a new company and wind the CIO up. What you lose is the automatic vesting of assets that makes conversion into a CIO straightforward — going the other way is a transaction, with the cost and disruption that implies. The same is true of the SCIO.

Incorporating your trustee body does not give you limited liability. Trustees of an unincorporated charity can apply to have the trustee body incorporated, which makes holding land and signing contracts easier — and, because the four-trustee cap that ordinarily limits how many individual trustees may hold land does not apply to charity trustees, an unincorporated charity is free to add trustees for exactly this purpose without running into that limit. What incorporating the trustee body does not do is fix liability. Section 254 of the Charities Act 2011 is headed “Liability of charity trustees not affected by incorporation”, and its operative text is direct:

“After a certificate of incorporation has been granted under this Part, all charity trustees of the charity are, despite their incorporation— (a) chargeable for such property as comes into their hands, and (b) answerable and accountable for their own acts, receipts, neglects, and defaults, and for the due administration of the charity and its property, in the same manner and to the same extent as if no such incorporation had been effected.”

Charities reach for trustee-body incorporation thinking it solves the liability problem. The statute could hardly be clearer that it does not — what it gives you is a convenience for holding property, so title does not have to be transferred on every change of trustee, not a shield.

The real question: will you take on obligations?

Everything else follows from this. If the charity will employ anyone, hold a lease, own property or sign contracts of any size, it needs its own legal personality — which means incorporating, for limited liability, as a CIO or as a company limited by guarantee.

Without legal personality, the trustees do those things personally. They sign the lease in their own names, they are the employer, and they carry the liability. That is workable for a small grant-making trust or a local association running events. It stops being workable the moment there is a payroll or a landlord.

Choosing a CIO commits you to registration

The registration threshold in England and Wales is £5,000 of gross income, and it is quoted everywhere as though it applied to everyone. It does not apply to a CIO. A CIO must register whatever its income, from the moment it exists — in fact it does not legally exist until the Commission registers it.

The provision doing this is not in the section that contains the threshold. It sits in separate regulations and appears against the section only as a modification note that is easy to scroll straight past. The practical consequence is worth stating plainly: a small organisation that would have had no registration duty at all as an unincorporated association acquires one permanently by choosing a CIO, along with annual reporting for the rest of its life.

That is not an argument against the CIO. It is an argument for making the trade knowingly.

A charitable company is two registrations, not one

A charitable company feels like one organisation, so it feels like one registration. It is two: Companies House and the charity regulator, each with its own filings, its own deadlines and its own consequences for missing them. In England and Wales that comes to 3 separate statutory filings a year. A CIO files once.

There is money in it as well. A CIO usually costs £0 to set up. A company pays £100 to incorporate online, and then £50 every year for the confirmation statement, for as long as it exists.

The company still earns its place where you need something the CIO cannot easily give you — a structure funders and lenders recognise without explanation, or a charge over assets registered in the ordinary way.

Minimum trustees: most of the numbers you will read are not law

There is exactly one true statutory minimum trustee number in UK charity law, and it is Scottish. A SCIO’s constitution must provide for at least three charity trustees — 3 is the floor, and the Charities and Trustee Investment (Scotland) Act 2005, s.50(2)(b), puts it this way:

“for the appointment of 3 or more persons (‘charity trustees’) who are to be charged with the general control of the SCIO’s administration”

Everywhere else, “three” is a model-document default, not a statutory floor. The Charities Act 2011, s.206(2)(b), requires a CIO’s constitution to make provision “about the appointment of one or more persons who are to be charity trustees” — so the Act’s own words set no minimum above one. What the CIO regulations and the Commission’s model constitution then require of that provision was not checked closely enough here to state a practical figure with confidence: the honest position is that the Act sets a floor of one, and the model constitution and the regulations are what actually govern in practice for most CIOs.

A charitable company sits on a statutory floor of its own: a private company must have at least 1 director (Companies Act 2006, s.154(1)). The Commission’s model articles leave the number for you to fill in and recommend three — a recommendation, not a requirement.

A charitable trust has no general statutory minimum at all. Two trustees are required in specific situations — where capital money arises, and on a trustee’s discharge or retirement — but that is conditional, not a general floor.

None of which is advice to run a charity with one trustee. It is a caution against believing a number because it appears in a template — and, for a SCIO, a reminder that the number is not a template default at all.

Scotland and Northern Ireland

In Scotland the SCIO replaces the CIO and is a distinct creature of Scottish law rather than a renamed version of the English one. One difference is concrete: a CIO constitution may cap member liability at a fixed maximum under s.205(3)(b) of the 2011 Act, whereas s.49(4) of the 2005 Act excludes SCIO member liability altogether, by statute rather than by constitutional choice.

Northern Ireland has no CIO. The Charities Act (Northern Ireland) 2008 contains one, but the relevant Part was never commenced — commencement orders stop short of it. Anyone listing the CIO as a Northern Irish option is reading the statute book without checking whether it was switched on. The available forms are the trust, the unincorporated association and the company.

What about a CIC?

A community interest company cannot be a charity. Legislation is direct on the point: a CIC established for charitable purposes “is to be treated as not being so established”, and accordingly is not an English or Northern Irish charity, and must not be entered in the Scottish Charity Register. The two statuses are mutually exclusive, so this is not a structure question so much as a fork in the road: a CIC director may be paid in ways a charity trustee generally may not, and a CIC carries its own asset lock in place of charitable status — it must not transfer its assets other than for full consideration, except to another asset-locked body or for the community’s benefit, and that clause cannot be removed from its constitution. Charitable grant funding is legally open to a CIC — a charity may fund a CIC’s charitable work, provided the grant is restricted and given more due diligence than a grant to another charity would get — but funder policy varies in practice: some major funders exclude CICs outright, others accept them. Converting in either direction is possible but is a project, not a form: charity-to-CIC conversion needs the Charity Commission’s prior written consent and is only open to a charitable company, not an unincorporated charity; CIC-to-charity conversion needs a Charity Commission statement that, if the change goes ahead, the company will qualify as a charity, and only then does the Regulator of Community Interest Companies decide whether it may cease being a CIC.

Record the decision with its reasons

Minute the choice and the reasoning: what you expect to employ, own and sign; what registration duty each option carries; and, for a CIO, that the board understood there is no route back to another legal form without a transfer and a winding up. That last line takes ten seconds to write now and is the one your successors will be glad of.

Common mistake: choosing a CIO for limited liability without realising it forces registration

The income threshold is quoted everywhere as if it were universal. The provision disapplying it for CIOs is not in the section that contains the threshold — it sits in separate regulations and appears on the section only as a modification note that is easy to scroll past. A small body that would have had no registration duty as an unincorporated association acquires one, permanently, by choosing a CIO.

Common mistake: treating a charitable company as one registration

It feels like one organisation, so it feels like one registration. A charitable company registers at Companies House and with the charity regulator — two registrations, two sets of ongoing filings, two deadlines, and two sets of consequences for missing them.

Common mistake: choosing unincorporated to keep things simple, then employing someone

The structure is chosen at the outset, when the plan is genuinely small. An unincorporated body has no separate legal personality, so trustees contract and hold property personally and bear the liability personally. Changing structure later is possible but is a project in itself.

Worked example

Wrenfield Village Hall is run entirely by volunteers on modest income and wants trustees protected from personal liability without taking on more than it needs to. As an unincorporated association it has no registration duty until its income crosses £5,000. If it becomes a CIO instead, it takes on a registration duty immediately and permanently, whatever its income turns out to be. Naming that trade-off explicitly, rather than discovering it after the fact, is what this page is for.