A CIO (Charitable Incorporated Organisation) is best for standard charities wanting limited liability without Companies House dual-registration. A CIC (Community Interest Company) is better for social enterprises trading for profit. A Charitable Trust is suited for grant-making but offers no limited liability for trustees.
Before registering a charity, you must decide on its legal structure. This decision affects who regulates you, your liability, and how you can operate.
Charitable Incorporated Organisation (CIO)
The CIO is the modern standard for UK charities. It provides limited liability, meaning trustees are generally protected if the charity faces financial issues. You only register with the Charity Commission, avoiding the administrative burden of also reporting to Companies House. Importantly, you can register a CIO even if your income is currently zero.
Community Interest Company (CIC)
A CIC is a limited company with special additional features, created for the use of people who want to conduct a business or other activity for community benefit, and not purely for private advantage. Unlike a charity, a CIC can pay directors and generate profit, provided assets and profits are locked for the community. However, CICs do not receive the same tax benefits (like Gift Aid) as registered charities.
Charitable Trust or Unincorporated Association
These are older structures. An unincorporated association is often used for small community groups, while a trust is typically used when setting aside a specific sum of money for charitable grant-making. Neither offers limited liability, meaning trustees can be personally responsible for the organization's debts.
Many founders come to us wanting to start a 'charity' when what they really want is to run a social enterprise where they can draw a salary and retain control. For them, a CIC is often the better path, even without the tax perks.
Key takeaways
- CIOs are the safest and most streamlined option for true charities.
- CICs are ideal for trading social enterprises.
- Unincorporated structures leave trustees personally liable.
Need help deciding? Elite Digital Agency can advise on the best structure and handle the paperwork. Discover our [charity registration services](/charities/charity-registration).