Selecting the right structure is one of the most important decisions for any charity – not only at foundation but also when reviewing how your charity operates.
Our summary of the Charity Commission’s guidance (CC22a) breaks down of the four legal forms, what they mean in practice, and how they impact governance, liability, and operations.
Why structure matters
Your charity’s structure determines:
- Who runs it and how decisions are made
- Whether the charity can enter into contracts or employ staff
- Whether trustees are personally liable
- How assets are held and how risks are managed
A well-chosen structure supports growth, protects trustees, and ensures compliance.
Charity structures
The four main types of legal structure, as outlined by the Charity Commission, are charitable incorporated organisation, charitable company, unincorporated association, and trust.
Charitable incorporated organisation (CIO)
- An incorporated structure designed specifically for charities
- Has its own legal personality
- Can employ staff, own property, and enter contracts in its own name
- Trustees generally have limited or no personal liability
- Registered only with the Charity Commission (not Companies House)
- Ideal for charities delivering services, holding contracts, or employing staff
Charitable company (limited by guarantee)
- A corporate structure registered with both Companies House and the Charity Commission
- Incorporated and able to enter contracts in its own name
- Trustees usually have limited liability
- Must comply with company law as well as charity law
- Good for larger or more complex charities needing the protections of incorporation
Unincorporated association
- A simple, low-cost option often used by volunteer-run groups
- Not a legal entity: cannot employ staff or own property
- Contracts must be signed by individuals personally
- Trustees may be personally liable
- Suitable for small, informal charities with no employees or property
Charitable trust
- Used when holding and managing assets is the charity’s main focus
- Trustees manage assets under a trust deed
- Not incorporated, so cannot enter contracts in its own name
- Trustees may be personally liable
- A common choice for grant-making charities
Corporate vs non-corporate: practical differences
Under the corporate structures (CIO, charitable company):
- The charity becomes a legal person
- It can hold assets, sign contracts, employ staff
- Trustees are protected from personal liability
Under the unincorporated structures (association, trust):
- The charity is not a legal entity
- Trustees may be personally liable
- There’s less of an admin burden, but greater risk
Should your charity have a wider membership?
Some structures allow voting members (similar to company shareholders), which opens up your governance to wider participation.
This membership can improve accountability and make decision-making more democratic. However, it also requires maintenance of member registers and formal AGMs. Trustee-only structures offer simplicity and faster decision-making.
Your key considerations
- If your charity will employ staff or hold contracts, choose a corporate structure
- If your charity is small and volunteer-led, an unincorporated association may be sufficient
- If your charity is largely asset-holding, consider a charitable trust
- If your trustee board want wider membership and democratic control, look at association-type structures
How BKL can help
Our charities and not-for-profit specialists are experienced advisers on the setup, restructuring and running of charities of all sizes. They apply not only technical expertise in audit, governance and consultancy, but personal experience of being charity trustees and volunteers, including BKL’s own charitable foundation.
For a chat about how we can help you please tak to your regular BKL contact or Ed Passmore using the form below.