What is a CIC?

A Community Interest Company (CIC) is a hybrid between a non-profit organization and a company. In most countries, there are strong restrictions on the income-generating activities that not-for-profit organizations are allowed to undertake. These restrictions generally prevent them from generating their own resources by doing business. They depend on external sources of funding (such as grants or donations) or need to have a endowment.

The Community Interest Company (CIC) was created as a legal form in the UK in mid 2005, in order to enable organizations with philanthropic purposes to generate their own resources by conducting business. The essential feature of a Community Interest Company is that its activities must be for the benefit of the community. CICs are subjected by law to the so-called “Asset Lock”, “a general term used to cover all the provisions designed to ensure that the assets of the CIC (including any profits or other surpluses generated by its activities) are, subject to meeting its obligations, either permanently retained within the CIC and used for the community purposes for which it was formed, or transferred to another asset locked body, such as, another CIC or charity”.

CICs can be companies limited by guarantee or limited by shares. A CIC limited by shares can distribute a limited percentage of its returns amongst its shareholders. A CIC limited by guarantee is a ‘not for profit’ company. Yansa CIC is limited by guarantee: it has no shareholders, distributes no dividends, and is therefore a not-for-profit organization. For more on CICs see www.cicregulator.gov.uk.