Understand SCIOs, tiers & all things charity governance-related

My recent blog on charity banking for Third Force News resulted in the first comments I’ve received for my blogs, and they weren’t positive! Michael Foot wrote: ‘Why oh why do you use acronyms! SCVO, SCIO what’s all that about!??’ Well he’s right, I shouldn’t be using acronyms, and despite there being 2,244 SCIOs in Scotland, there’s still a lot of people who don’t know what they are. So…what is a SCIO? Well its proper title is a Scottish Charitable Incorporated Organisation, and it’s the most popular legal structure for new charities setting up in Scotland, perhaps because a SCIO is a corporate body. This means it can hold property, employ people and enter into contracts in its own name, with limited liability. Unlike with a charitable company, this protection comes without the administrative burden of reporting to Companies House. A SCIO is governed by charities legislation, rather than lengthy company law, (the companies Act 2006 runs to 700 pages!), and SCIO trustees have a single set of duties, unlike charitable company directors.

If you’ve got any questions about SCIOs, or any aspect of governance or running your voluntary organisation, come along to our free Big Advice Day

We’ve got a whole load of guidance and model documents on SCIOs which were written by Stephen Phillips of Burness Paull, a partner in SCVO’s Pro Bono Service Our SCIO constitutions include models for both single-tier and two-tier options. There I go again with the jargon. What’s the difference between a single and a two-tier SCIO? In a single-tier SCIO, the same individuals are both members and charity trustees, and there is no wider membership that can vote at an AGM. I often get asked about this option on the Information Service, and whilst charity law and SCIO regulations allow for a single-tier SCIO, this isn’t always the best choice for community organisations. Similar to the structure of a traditional trust, a single-tier SCIO leaves complete control of the organisation in the hands of a small group of individuals, including control over future changes to the constitution and over who serves on the SCIO board. Recruiting a membership and becoming a two-tier SCIO isn’t as daunting as it seems. If you think there should be an election process at an AGM, even if attendance may be low, then a membership organisation is the right option for you. Membership organisations are probably the most common in the third sector. With this two-tier structure, the board is elected by, and accountable to, a wider body of ordinary members at an AGM, so it’s the members who have ultimate control. This accountability is favoured by many funders, as it’s considered democratic and representative of the community interest. The single-tier model is only really suitable for a small proportion of organisations. It does have the benefit of simplicity and reduced administration, but you should think carefully about how your organisation will develop in the future, and the importance of wider accountability. If you’ve got any questions about SCIOs, or any aspect of governance or running your voluntary organisation, come along to our Big Advice Day. It’s on Tuesday 14 June, and places are filling up fast. You can access one-to-one specialist advice from Stephen Phillips and his team at Burness Paull on all manner of topics. The deadline for booking is next week, so don’t delay and reserve your place today!