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

England and Wales: This page sets out the position in full. Scotland: partly covered — the SCIO’s own liability, registration and trustee rules are established, but the Scottish trust-law variant specifically has not been established at this level of detail. Northern Ireland: partly covered — that Northern Ireland has no CIO equivalent is established, but the same trust-law variant gap applies as in Scotland.

No route out of a CIO, and no shield from incorporating trustees

Founders asking what a CIO is usually want to know whether to choose one. This page assumes you have already decided whether to start a charity and decided which jurisdictions to register in. The forms themselves are set out in legal structures compared; this page is about the choice.

Two effects of the structure choice are permanent. They apply in England and Wales, where the Charity Commission registers CIOs, and to the SCIO in Scotland. Neither is usually put first.

There is no way to convert a CIO into anything else. The statute provides routes in. A company can convert to a CIO, and an unincorporated charity can transfer into one.

Part 11 Chapter 4 of the Charities Act 2011 is headed “Conversion, amalgamation and transfer”. Its cross-heading for the inward route, “Conversion of certain bodies to CIO”, covers each section that lets another body become a CIO. Each one runs inward. Nothing runs outward.

That does not mean you are trapped forever. Dissolution is expressly provided for. You can transfer the undertaking to a new company and wind the CIO up.

You lose the automatic vesting of assets that makes conversion into a CIO simple. 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. That makes holding land and signing contracts easier. The four-trustee cap that usually limits how many individual trustees may hold land does not apply to charity trustees.

So an unincorporated charity can add trustees for this purpose without hitting 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”. Its wording 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 often incorporate the trustee body, thinking it solves the liability problem. The statute says plainly that it does not. Incorporation gives you a convenience for holding property, not a shield. Title does not have to be transferred on each change of trustee.

The real question: will you take on obligations?

Incorporating as a CIO or as a company limited by guarantee gives a charity its own legal personality and limited liability. Everything else follows from that. That is what it needs if it will employ anyone, hold a lease, own property or sign contracts of any size.

An unincorporated charity is a trust or association with no legal personality of its own. So 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.

Why choosing a CIO commits you to registration

The registration threshold in England and Wales is £5,000 of gross income. People quote it 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 rule doing this is not in the section that holds the threshold. It sits in separate regulations. On the section itself, it appears only as a modification note, which is easy to scroll straight past.

Take a small body that would have had no registration duty at all as an unincorporated association. By choosing a CIO, it gains one permanently. It also gains annual reporting for the rest of its life. Do you have to register your charity? covers the duty for each form. The structure also shapes which accounts to prepare.

That is not a case against the CIO. It is a case for making the trade knowingly.

Why a charitable company means two registrations

A charitable company feels like one body, so it feels like one registration. It is two: Companies House and the charity regulator. The first is covered in incorporate at Companies House. Each has 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.

Cost differs too. A CIO usually costs £0 to set up. A company pays £100 to incorporate online. It then pays £50 each year for the confirmation statement, for as long as it exists. What it costs and how long it takes compares the full cost of each route.

The company still earns its place where you need something a CIO struggles to give you. That might be a structure funders and lenders recognise at once. Or it might be a charge over assets, registered in the ordinary way.

Minimum trustee numbers: what is law and what is convention

UK charity law has exactly one true statutory minimum trustee number, and it is Scottish. A SCIO’s constitution must provide for at least three charity trustees. The floor is 3. 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. For a CIO, the rule is in the Charities Act 2011, s.206(2)(b). It requires the 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.

The Act itself sets a floor of one. This guide did not check closely enough what the CIO regulations and the Commission’s model constitution then require of that provision. So it cannot give a practical figure for sure. In practice, though, the model constitution and the regulations govern 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. That is 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. That rule is conditional, not a general floor.

None of this is advice to run a charity with one trustee. It is a warning not to believe a number because it appears in a template. For a SCIO, it is also a reminder that the number is not a template default at all. How many trustees does a charity need? sets out the practical case.

The SCIO in Scotland, and no CIO in Northern Ireland

In Scotland the SCIO replaces the CIO. It is a distinct creature of Scottish law, not 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. By contrast, 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 brought into force.

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 forms on offer are the trust, the unincorporated association and the company.

What about a CIC?

A community interest company cannot be a charity. The law is direct on the point.

A CIC established for charitable purposes “is to be treated as not being so established.” So it is not an English or Northern Irish charity. It must not be entered in the Scottish Charity Register. A body cannot hold both statuses.

That makes this less a structure question than a fork in the road. CIC or charity? sets out the difference in full.

A CIC director may be paid in ways a charity trustee generally may not. A CIC also carries its own asset lock instead 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. 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, and 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. It 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. Only then does the Regulator of Community Interest Companies decide whether it may stop being a CIC.

The decision record: what to minute

Minute the choice and the reasons:

• what you expect to employ, own and sign
• what registration duty each option carries
• 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. It is the one your successors will be glad of.

With the structure chosen and minuted, the next step is to choose your name.

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. On the section itself, it appears only as a modification note, which is easy to scroll past. A small body that would have had no registration duty as an unincorporated association gains one, permanently, by choosing a CIO.

Common mistake: treating a charitable company as one registration

It feels like one body, so it feels like one registration. A charitable company registers at Companies House and with the charity regulator. That means 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 start, when the plan is truly small. An unincorporated body has no separate legal personality. So trustees contract and hold property personally and bear the liability themselves. Changing structure later is possible but is a project in itself.

Worked example

Wrenfield Village Hall is run wholly by volunteers on a modest income. It 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 at once and for good, whatever its income turns out to be. This page exists to name that trade-off openly, before you find it out after the fact.