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Becoming a charitable incorporated organisation (CIO)

The Trust for the Study of Homicide shares with us their difficulties and success in the process of becoming a charitable incorporated organisation.

Background

The Trust for the Study of Homicide aims to improve the outcomes of those whose lives have been affected by homicide. The Trust does this through providing support and advice to people affected by homicide, as well as through conducting and disseminating its research into the wider communities.

When The Trust was set up in March 2012, the only appropriate option was to set it up as a Charitable Trust, which caused concern amongst some of the trustees about their liabilities. However, once the option for becoming a Charitable Incorporated Organisation became available, the Board of Trustees decided it would be prudent to dissolve The Trust and become a CIO for two main reasons:

  • It limited the trustees’ liability, which meant the organisation could enjoy this limited liability whilst only having to report to and file accounts with the Charity Commission (and not Companies House).
  • By choosing the Foundation Model, The Trust could operate with the same structure as a CIO as it had as a Charitable Trust.

The issues we faced

We were unclear on how to go about dissolving The Trust and transferring its assets to the new CIO. It wasn’t clear to us whether we could keep the same name, as our logo is registered as a trademark. We would also have to change our letterheads, policies, website footer, and all other such assets if we changed our name and got a new Charity Registration Number.

We were also aware of how much work it takes to register as a charity, open a new bank account, and advise the HMRC of our situation. We would also incur added expenditure by becoming a CIO. Firstly, we would have to transfer our logo ownership to the new CIO. Secondly, we would have to pay for two sets of accounts for this tax year – for the organisation as a Trust and for the organisation as a CIO.

The actions we took

We went to our local Voluntary Action and completed the CIO governing document with them, which helped us understand the new constitution, and ensured we were keeping the right parts and deleting the parts we did not want to keep. We also asked for their advice on how to dissolve The Trust, and on how to transfer our assets and business to the new CIO.

Additionally, we ensured that we sent the same supporting documentation as we did originally when we registered The Trust, in order to lessen the likelihood of the Charity Commission asking lots of questions. Once registered as a CIO, we sent a letter to the HMRC advising we had now become a CIO and dissolved The Trust.

Positive outcomes

The Charity Commission registered us as a CIO within 24 hours of receiving our application. We were allowed to keep the same name and simply add CIO at the end of it. We also found out we can still use our original name as a working name.

We discovered it was very simple to dissolve The Trust. We simply had a final trustee meeting, where we passed a resolution to dissolve The Trust and transfer all business and assets to the new CIO.

The HMRC advised we could keep the same HMRC charity number, and therefore we could claim gift aid received as a Trust under the new CIO.

Lastly, changing our insurance simply took an email advising we had become a CIO, and had a new Charity Registration Number. No extra costs or information were required.

Negative outcomes

There was some confusion about claiming gift aid for the period when we were operating as a Trust, as we had not yet put in a claim and were now a CIO.

Our local Voluntary Action advised that it would perhaps have been better to keep The Trust running alongside the CIO for a few months so that a claim for gift aid could be made to the HMRC for us as a Trust. They thought there was a possibility that as The Trust had already been dissolved we may lose the gift aid we could have claimed. Fortunately this was not the case and in fact we were able to easily claim the gift aid we were due.

Another thing that could have gone better was setting up a new bank account – it took a long time simply due to the paperwork.

Lessons learnt

There are some financial implications due to the cost of the change of logo ownership and the two sets of accounts needed for this year. Overall, however, we now enjoy limited trustee liability, while having no change to the way in which our organisation is structured or operates.

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Page last edited Apr 07, 2017

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