Challenge to Change is the first existing charity to use CIO legal form

New charitable incorporated organisation form allows charities to enter contracts as corporate entities so that trustees face limited or no liability

Challenge to Change works in Vietnam
Challenge to Change works in Vietnam

Challenge to Change, a Kent-based NGO that supports people in Vietnam in dealing with the effects of climate change, has become the first existing charity to adopt the charitable incorporated organisation legal form.

The new legal form allows charities that take it up to enter into contracts as corporate entities with limited or no liability for trustees. They do not need to register with Companies House and are not subject to company law. They are registered with and regulated by the Charity Commission.

The first CIOs were registered in early January, but they were new organisations. Challenge to Change has become the first existing charity to convert to the new form, a spokeswoman for the Charity Commission confirmed.

On 1 March, the commission began accepting applications to become CIOs from charities with annual incomes of more than £250,000 a yearh. Applications will be accepted from charities with lower annual incomes on a staggered basis from 1 May, when those with incomes of between £100,000 and £250,000 will be allowed to apply. From early 2014 any charity will be able to apply.

Graham Adutt, director of Challenge to Change, which has an annual income of about £250,000 and was established in 2008, said his organisation decided to adopt the form in order to limit the liability of trustees.

"Our local staff in Vietnam are regularly out on motorcycles in rural and coastal areas, working with poor and vulnerable communities," he said. "Our staff are insured, but we could never be fully confident that an insurance company would pay up when it should. Other risks include management of donor funds." 

He said the organisation was also concerned that, in the event of a conflict with a funder, its trustees might face personal liabilities. "They are not millionaires, and we don’t think they should be required to take on such risk as a result of volunteering to work as charity trustees," said Adutt.

Challenge to Change, which employs two staff in the UK and six in Vietnam, had been interested in becoming a CIO for some time, said Adutt, but put together an application only 10 days ago. He said he was surprised the application had gone through so quickly.

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