Why Choose a CIO? – March 2021

Thinking of registering as a charity?

Many churches are having to think about registering as charities.  You may be one of them.  You may have been operating as a charity for many years, but have not had a governing document which sets out how the charity operates.  Or you may be a church that already has a Constitution or Trust Deed and would like to update this to something more modern.

Independent churches

Many assemblies and other independent churches have thought that they do not need to register as a separate charity.  They have either thought that the registration as a Registered Place of Worship (i.e. the building) is sufficient or that the property Trust, under which the building is held, in some way covers the assembly.  Often the property Trust will set out the doctrines and practices that any occupying assembly should adhere to and sometimes even allows for the assembly to appoint trustees and make decisions concerning the property.  However, it is rare that the property Trust will also include the work of the assembly. 

Although your assembly may have been operating for many years without a governing document, it is still a separate charity and, if your income is over £5,000 per year, it is a legal requirement to register as a charity. 

Excepted charities

The Charities Act 2006 (now under the Charities Act 2011) introduced a requirement for churches that are known as “excepted charities” to register.  These excepted charities have operated under denominations or affiliations (e.g. FIEC) and if their annual income is under £100,000 they have not been required to register with the Charity Commission.  That exception is to be lowered to annual income of £5,000, which will mean in practice that most of these churches will need to register.  The original deadline for doing so had been pushed back to 31 March 2021, which is very imminent! However, Government has now passed the Charities (Exception from Registration) (Amendment) Regulations 2021 to extend the deadline to 31 March 2031, giving more time for churches to get ready and register.

Why choose a CIO?

Even though the urgency may be lessened, it is still a good idea to have a governing document for your church, so you know how you should be operating, and to be registered as a charity, so you can claim Gift Aid, lower VAT on utilities and apply for grants.  The CIOs are proving to be a good structure to have, as they are designed specifically for charities (unlike companies) and have now been tested for almost 10 years.  They have the simplicity of the old-fashioned Trust and the limited liability for trustees that you get with a Charitable Company, but with a CIO you only have to report to the Charity Commission (rather than Companies House).  In fact, the registration and the formation of a CIO happen at the same time, when the application form is completed online with the Charity Commission and they process this. 

There are two basic models of CIOs, one being a Foundation Model where the only voting “members” are the trustees, and the second being an Association (or congregational) model where the members of the church are allowed to vote.  Church Growth Trust’s have produced a recently updated briefing paper on Charitable Incorporated Organisations (CIOs).  The recent update allows for the changes in legislation, particularly highlighting that Charitable Companies can now be converted to CIOs.  Community Interest Companies, where their objects are charitable, can also be converted to CIOs.

Model CIO

Church Growth Trust, in conjunction with Partnership UK and the Western Counties and South Wales Evangelization Trust, have also put together a Model Foundation CIO, designed for elder-led churches.  This is proving popular and a number of churches have successfully registered using it.  

The Model CIO may help you to deal with your registration.  The Model CIO pack can be found on CGT’s website: www.churchgrowth.org.uk/model-cios/ and can be downloaded free of charge.  The Guide (part of the pack) gives recommendations on solicitors who can help you register using the Model CIO.

Should you have any queries on the Model CIO, please contact Church Growth Trust on tel: 01536 201339 or email: enquiries@churchgrowth.org.uk.