Industry figures have warned that new legislation for organisations wishing to register as charities will cause delays in gaining funding and “widespread confusion” for arts bodies that choose to adopt it.
JMW Solicitors partner Keith Arrowsmith said the new ‘charitable incorporation organisation’ structure – currently available only to new applicants rather than existing charities – will take too long to process by the Charity Commission, which will be dealing with the applications.
Under the legislation, organisations wanting to become a CIO, which offers the benefit of limited liability, will have only to apply to the Charity Commission, whereas previously they would also have had to apply to Companies House.
While this will save duplication and some administrative costs on the part of the organisation, it will also create increased waiting periods during registration, said Arrowsmith.
“At the moment, if you wanted to set up a new theatre organisation, you could set up a company within a day or two and then you have all the right pieces of paper to start talking to the banks and funders,” he said. “While that is happening, the paperwork is also going through the Charity Commission.
“However, if you now opt for the CIO structure, the only people you talk to is the Charity Commission and you won’t get confirmation that the organisation has been formed, potentially, for 40 working days.”
He also predicted that a lack of legal framework around the new structure would prevent CIOs from securing lending agreements with banks.
Charlotte Jones, chief executive of the Independent Theatre Council, said: “Being a limited company and registering with Companies House doesn’t cost that much money and the administration is minimal. It is the charitable element that adds quite a lot of administrative tasks.”
However, Neil Robertson, head of operations for the Charity Commission, disputed these claims. “The claim that CIO registration is a ‘long wait’ in comparison to Companies House registration does not tell the whole story, since it is not part of the role of Companies House to assess charitable status,” he said. “If a company, having been incorporated by Companies House, wished to apply for status in England and Wales it would then have to apply to the Charity Commission on a similar timescale to CIO applications.”
He added that although the commission would not hold a register of charges – such as a mortgage over property – a CIO would be able to register with the HM Land Registry instead. He admitted it was “possible” that this “may deter some potential lenders