Regulation with Rosie: CICs

The Charity Commission's Rosie Chapman on the benefits of creating a CIC.

There are about 670 community interest companies in the UK. They have been around for years, but they are still not as well-known as they could be.

CICs are a modern solution for organisations that want to 'do good', but for whom charitable status is too restrictive in terms of payments and activity. They offer a company framework designed for social enterprises that want to use their profits and assets for public good. But an organisation can't be both a charity and a CIC.

Unlike charities, CICs can sell shares to raise the capital to get started, undertake activities that aren't exclusively charitable and operate more commercially - paying directors and shareholders, for example. They are also subject to a less stringent regulatory regime than registered charities.

But there are restrictions. CICs don't have the tax advantages that charities do. There's also the 'asset lock' feature, which means that assets must either be kept by the CIC to use for the benefit of the community or, if transferred out of the CIC, be subject to fairly strict conditions.

CICs are specifically identified with social enterprise, and the definition of community interest that applies to them is correspondingly much wider than the public benefit test for charities.

They could be just the right vehicle for a founding entrepreneur who wants to set up a social enterprise to help their community without having to make the choice of working for nothing or handing over the strategic direction of the board to others.

If you know of someone thinking along these lines, direct them to the CIC website, It's not only charities that can achieve public good.

• Rosie Chapman is executive director of policy and effectiveness at the commission.

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