A CIC is a type of organisation introduced in 2005 that benefits the community without being a charity. It can be set up as a company limited by guarantee or shares.
A Community Interest Company (CIC) is an organisation established with the primary purpose of benefiting the community rather than generating private profits. CICs are categorised as 'not-for-profit' entities, meaning that any profits generated must be reinvested back into the organisation or directed toward community betterment.
CICs can take the form of either charitable or non-charitable organisations, but all CICs must adhere to a defined 'social purpose.' This signifies that the company's core mission should be oriented towards addressing social issues, promoting the arts, culture, heritage, or environmental causes, or delivering goods and services that contribute to the public's welfare.
To ensure their responsible operation, CICs are subject to regulation under the Community Interest Company Regulations 2005, which outlines the principles governing CIC management. These regulations emphasise transparency, requiring CICs to meticulously account for all financial transactions, with an exclusive focus on community benefits.
Additionally, CICs are obligated to prepare an annual report and accounts, which must be submitted to the appropriate regulatory body (Companies House in England and Wales, or OSCR in Scotland). This ensures ongoing compliance and accountability in fulfilling their community-centric mission.
Purpose: A CIC must have a community purpose.
Regulation: CICs are regulated by the Community Interest Company Regulations, which are less strict than charity regulations.
Governance: CICs have lower governance expectations compared to charities.
Reporting: Each year, a CIC submits a CIC34 form with information on paper.
Conversion: Existing companies and charities can become CICs with approvals.
Registration: CICs are registered at Companies House using standard incorporation documents.
Community Interest Report: CICs file an annual CIC34 report with details on directors’ remuneration, dividends, community benefits, and member involvement.