What type of organisation should I set up?

What does the Housing Act say?

The Housing Act outlines the definition of exempt accommodation as follows - A dwelling is exempt accommodation if the accommodation is provided by:

• a Housing Association, registered or unregistered;
• a Registered Charity; or
• a Not-for-Profit voluntary organiation.

Types of organisation you can use

When a church or Christian charity wants to partner with GP they usually already have charitable status (CIO or Charitable Company).

If that’s not the case we would recommend opening either a Charitable Incorporated Organisation (CIO) or a Company limited by guarantee (Charitable Company).

Charitable Incorporated Organisation (CIO)

We often recommend CIOs to Partners because, as a charity, it is far more straightforward for dealing with Exempt Accommodation recognition. Also, CIOs are far more attractive to grant making bodies. They are easy to set up if you use the Charity Commission template constitution, and they are regulated by the Charity Commission.

We recommend you setting up your supported housing project as a separate CIO by following these guidelines:

• Step by step guide: How to choose a structure
• How to write your Governing Document
• We recommend the Foundational Model
• Apply to Register your CIO

The process is easy and you shouldn't need to pay anyone to do it for you.

Company limited by guarantee

A company limited by guarantee is set up with special charitable articles, and is registered both at Companies House (as a company) and with the Charity Commission as a charity.

Please note, not all companies limited by guarantee need to register with the Charities Commission, even if registration is very common.  

The requirement to register with the Charity Commission depends on whether the company limited by guarantee meets the criteria for charitable status.  

According to the Charity Commission, there are four main types of charity structure.  Please read here for more information from the charity commission and weather you will need to register with the Charity commission as well as companies house.  

Limited by guarantee companies are usually not-for-profit. This means the company:

• is legally separate from the people who run it
• has separate finances from your personal ones
• has guarantors and a 'guranteed amount'
• invests profits it makes back into the company

Notes on other organisation types

Community Interest Companies (CICs)

CICs are not ideal for being eligible in HB’s eyes for supported housing. But still possible. CICs come under Companies House and are potentially not as simple for EA purposes depending on the HB dept. If GP is partnering with a CICs it has to be set up as ‘limited by guarantee’ NOT ‘limited by shares’. It needs to be a CIC “private company limited by guarantee without share capital”  

We cannot partner with CICs ‘limited by shares’. They are not eligible to be categorised as Exempt Accommodation. If the CIC is ‘limited by shares’ the directors have to write to companies house to change it to be  ‘limited by guarantee’  

Advice from our Housing Benefit specialist is that if a CIC is limited by guarantee then the following needs to happen:

1. In the case of a CIC the memos and articles are different from that of an ordinary not-for-profit company
2. As a CIC there is an expectation that it must make a surplus so it can continue to benefit the community. The Housing Benefit scheme does not allow providers to make profits, although it can be argued that it must make some profit in order to continue. That aside, right away there is a conflict if making profits

Text needed in the Memorandum of Articles of Association relating to the objects of the CIC:

1. The provision of supported housing for vulnerable adults; and
2. To carry on its activities otherwise than for profit

“For the CIC's I have been involved in, the Local Authority has always accepted the entity but the above wording would just ensure a 'belts and braces' approach. Regarding the CIC application form on page 2, if a company makes any surplus it will be used for...'  Please write:  'If the company makes any surplus it will be re-invested within the CIC to do more of their work within the community'. “
Note from our Housing Benefit specialist

Community Benefit Society

A Community Benefit Society would be a suitable entity, it will also be registered with the FCA.  

However, particular attention should be paid to the constitution and application form. One Council our consultant worked with was not convinced the entity was in fact charitable.

Unregistered Charity

Unregistered Charity - An unregistered charity isn't incorporated so those running the charity are not protected by limited liability. Usually, you must register with the Charity Commission if your charity is based in England or Wales and has over £5,000 income per year. If your charity is a charitable incorporated organisation (CIO) it must register whatever its income. For Housing Benefit purposes the charity must be registered with the Charity Commission.