Tag Archives: Charity Commission

CIC to a CIO – how to convert?

Did you know that if you are a Community Interest Company (CIC) you can apply to convert directly to a charitable incorporated organisation (CIO)?

Cio governance conversion - signpost image
Which direction?

At the end of August the Charity Commission have just published detailed guidance on what you need to achieve this change in your governance.

The guidance offers five key steps to go through in order to change your organisation status.

 

They are…

Step 1: Prepare a conversion resolution  – see more here.

Step 2: Adopt Charity Commission model constitutionsee more here.

Step 3: Prepare a resolution adopting the CIO constitution  – see more here.

Step 4: Apply for charitable status  – see more here.

Also offered is guidance on what to do after you have appliedsee more here.

You can find full details of the advice pages here – https://www.gov.uk/guidance/convert-a-community-interest-company-to-a-cio

Note: There is a nicely detailed article by Lucy Johnson-Cameron available on the ‘final word’ on the benefits of a CIO, just in case you are in mid-debate, see more here

We are always happy to help in formative discussions about governance.

Contact us here.

 

Social Investment by Charities

 Making a social investment as a charity?

 

The Charities (Protection and Social Investment) Act 2016 (’the 2016 Act’) introduces a new statutory power for charities to make social investments. This came into force on 31 July 2016.

The Charity Commission have released yesterday interim guidance to charities to cover this new development in financial matters. The interim information is due for review in 2017, but the Commission are keen to underscore, for trustees, the power trustees now have to make ‘social investments’.

Below are some useful definitions and links to more information on this theme for those involved in charty governance and finance.

What is a ‘social investment’?

‘In the legislation, a ‘social investment’ means a ‘relevant act’ of a charity which is carried out ‘with a view to both directly furthering the charity’s purposes and achieving a financial return for the charity’.

A ‘relevant act’ means one of two things:

  • an application or use of funds or other property by the charity; or
  • taking on a commitment in relation to a liability of another person which puts the charity’s funds or other property at risk of being applied or used, such as a guarantee’

Source: Gov.uk Publications – Chariities and investment matters  See https://www.gov.uk/government/publications/charities-and-investment-matters-a-guide-for-trustees-cc14/charities-and-investment-matters-interim-guidance   Accessed 01.08.2016

What is not a social investment?

‘A financial investment is an investment made solely for the purpose of achieving a financial return for the charity.

A programme related investment (PRI) will not be a social investment unless the financial return to the charity forms part of the motivation for the charity making the decision to carry out the relevant act.’

The guidance issued goes on to review trustees’ general duties, the statutory restriction imbued by the 2016 Act, as well as the use of a charity’s permanent endowment processes.

In conclusion there is a succinct section of caution on the giving of ‘guarantees’. The guidance does recognise, however…

‘If a charity is asked to give a guarantee, the trustees will need to consider carefully whether they have the power to give it. The power to make social investments includes a power to give guarantees if they meet the definition.’

You can find the new Social Investment guidance on-line in full here.

Another section of the Commission web site offers the visitor downloadable documents and advice  – Charites and Investment Matters: a guide for trustees (CC14)

The documents are available in html or as pdf’s for review and download.