Many people start their good cause informally as a community group, local fundraiser, or volunteer project. But as your activities grow, you may want to register your organisation, and it’s important to understand CIC vs CIO, the two most common legal structures for UK charities and social enterprises.
Registering can give you a clear legal identity, access to more funding opportunities, accountability and public trust, and protection for the people running the organisation.
Before we get to the CIC vs CIO question, there are several other common legal structures that charities and social enterprises also use. Each has its own advantages and limitations. Learning the ins and outs of charity structures and legal requirements can feel overwhelming at first. Don’t worry if you’re only just starting to learn about these structures, most people setting up a good cause for the first time have to figure this out as they go.
Main options for good causes
Unincorporated Association
A simple group of people working together under a constitution. It cannot own property or enter contracts in its own name, so trustees or members are personally responsible for any obligations.
Charitable Trust (registered charity only)
A registered charity with the Charity Commission. It has official charitable status but does not have a separate legal identity, meaning trustees hold property, enter contracts, and take legal responsibility personally. Usually suitable for small, grant-focused organisations.
Charitable Company (registered charity and company)
A company that is also a registered charity. Registered with Companies House as a company limited by guarantee, it has its own legal identity, which means it can enter contracts, employ staff, and hold property. Trustees act as directors and have limited personal liability. The organisation reports to both Companies House and the Charity Commission. Before 2013 many charities took this form, and still do.
Charitable Incorporated Organisation (CIO)
A registered charity with its own legal identity. Introduced in 2013, it gives trustees limited liability and allows the charity to enter contracts, employ staff, and hold assets without needing to register as a company too. It is only regulated by the Charity Commission, so there is less administration than for a charitable company.
Community Interest Company (CIC)
A limited company designed for social enterprises. As a separate legal entity, it can trade and hold assets. CICs have an “asset lock” and operate for community benefit, but they are not charities and do not receive charity tax reliefs.
Why many organisations choose CIC or CIO as their next step
While there are several ways to set up a charity or social enterprise, the two most common choices today are CICs and CIOs. Both give the organisation a legal identity and protect trustees from personal liability, while offering credibility to funders and supporters.
- A CIC is often chosen by social enterprises that want to run a business with social impact at its heart. They can trade more freely and even attract social investment, but they don’t get charity tax breaks.
- A CIO is chosen by groups that want to operate as a full charity, focusing on grants, donations, and tax reliefs like Gift Aid. It can trade too, but its main focus is charitable activity and fundraising.
Because these are the two structures most suited to small and medium-sized organisations today, many people find themselves asking “Should we be a CIC or a CIO?”
CIC vs CIO: Key differences
Feature | CICCommunity Interest Company | CIOCharitable Incorporated Organisation |
Legal status | Limited company with special “community interest” rules | Incorporated charity (own legal identity) |
Main regulator | Companies House + CIC Regulator | Charity Commission only |
Primary purpose | Social enterprise with flexibility to trade | Purely charitable aims for public benefit |
Tax advantages | No special charity tax reliefs | Full charity tax reliefs, Gift Aid, and often business rates relief |
Funding access | Easier for social investment, can issue shares (if limited by shares) | Easier for grants and donations; higher public trust |
Profit use | Asset lock; limited dividends possible | Must reinvest all profits into charitable objects |
Paying directors/trustees | Directors can be paid (normal salaries allowed) | Trustees generally unpaid (exceptions tightly regulated) |
Trading | Broad freedom to trade commercially | Must trade in line with charitable purposes or set up a subsidiary |
Public perception | Seen as a social enterprise (less “official” charity status) | Recognised charity – higher trust and credibility |
Reporting | File accounts + CIC report annually | File annual return + accounts with Charity Commission |
Set-up speed | Faster (a few weeks) | Slower (often several months) |
Best suited for | Social businesses that want to mix trading & impact | Charities reliant on grants, donations, and tax relief |
Starting as a CIC, then moving to a CIO
In practice, we have seen many good charities begin life as a CIC. It can be a quicker, more flexible way to get started, especially if you want to begin trading and generating income right away. Later, once the organisation is more established and has proved its concept, some groups decide it is worth putting in the extra groundwork needed to convert to a CIO so they can benefit from charity status, access more grants and donations, and benefit from more tax reliefs. If this is something you are thinking of, it’s just important to know the differences between CIC and CIO, how they will affect you, and make sure you plan for the extra admin and cost involved.
How we can help
At the Matthew Good Foundation, we support all the kinds of good causes listed above, from an informal volunteer group to a well-established CIC or CIO, so don’t worry if you’re still in the middle of a CIC vs CIO decision.
Our Grants for Good programme is designed to make funding simple, flexible, and accessible. We don’t expect you to have your ideal legal structure in place, we care about the impact of your work and how it benefits people and communities.
Through the programme you can apply for grants to help your project grow, regardless of whether you trade as a CIC or operate as a CIO. The funding is also unrestricted, meaning that you can use it in the way that best suits your organisation, including combining with other funds.
Grants for Good is open now for small volunteer groups, social enterprises, charitable companies, CICs or CIOs to apply for. Visit our Grants for Good page to learn more.
We also offer other support for selected organisations, including longer term grants and professional short charity films to showcase their work.
Whatever stage you’re at, the important thing is your mission, and we’re here to help you make it happen.
This guide is for general informational purposes only and is not legal or financial advice. If you are considering setting up a charity or social enterprise, you may wish to seek professional advice from a solicitor, accountant, or other qualified advisor.