We like to talk in abbreviations and some of the common ones I see in my world are TMI, FYI and YJB. But the most common must be CIO. You may have heard of a CIO - but what is it? and why are churches talking about being one?

CIO stands for Charitable Incorporated Organisation and it is a new form of legal structure for a charity that came into existence about 10 years ago. Historically, churches were assumed to have charitable status as a place of worship. That changed about 15 years ago. At the moment, churches with an annual income of £100k+ have to register as a charity - and that amount will reduce in the future.

Pre-CIO, the options for registering as a charity were 

• an unincorporated association (which must of us are) or
• a limited company with charitable status.

The latter gave limited liability but entailed annual reporting to both Charity Commission and Companies House, the latter not required for a CIO.

So which should you choose?

The main difference is with liability. In an unincorporated association, any contracts, leases etc are with a, b and c as trustees of the church - they are personal liability - and that's the case whether registered or not. With a CIO, this is regarded as a separate legal entity, in the same way as a Company, so the contracts are with the church and only church assets can be pursued in the worst case - unless trustees to have acted negligently or fraudulently. This could ease the process of encouraging people to step up to be trustees.

Any church would be regarded as unincorporated, having to register when income level is reached. To be a CIO you have to register regardless of income level, a CIO only comes into existence at registration.

The other main difference is credibility. If not registered with Charity Commission, even though not required, questions about accountability could be raised whereas, with a CIO, regular reporting to Charity Commission is required.

We are also increasingly being involved in community projects and more churches are looking for grant funding for this type of work. Some funders will only fund charities that are registered, so as a CIO you would be, but if unincorporated, it is unlikely if you are under the income level - unless you decided to register anyway.

So in summary, the three main reasons that I would give to churches as reasons to register as a CIO are:-

• separate legal entity removing personal liability of trustees
• increased accountability giving your church increased integrity
• potentially increased access to grant funding

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Any churches that ask me to help them in registering with the Charity Commission, l recommend they choose a CIO.

Happy to answer any questions about CIOs in general or about the registration process.

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