A CIC is expected to make a profit/surplus whereas a charity is considered as a not for profit which should not profit from the work it carries out. CICs are expected to reinvest their surpluses to do more of their work but can also pay a proportion of this out to the owners or investors.
Can a CIC have charitable status?
CICs must be limited companies of one form or another. A CIC cannot be a charity, an IPS or an unincorporated organization. Limited liability companies that do not have charitable status find it difficult to ensure that their assets are dedicated to public benefit.
Should I set up a charity or a CIC?
The biggest difference. The largest difference between a CIC and charity is the source of funding. A CIC will get most of its income from trade, selling something then reorienting the money into the social enterprise. A charity, on the other hand, will be almost entirely reliant on donations and grants.
Is a CIC not for profit?
A community interest company (CIC) limited by guarantee is a ‘not for profit’ company, this means that it does not operate for private profit. Any profit generated is used to grow and develop its business which is benefiting an identified community, or goes directly to benefit that community.
Can a CIC take donations?
A CIC cannot apply to Inland Revenue for Gift Aid status. If a CIC donates surpluses to a charity it will be able to deduct the amount of any such donations as a “charge” when working out its profits for corporation tax purposes.
Can a CIC pay its directors?
A major advantage of CICs is that their directors can be paid a salary, which means that the founders of the CIC can retain strategic control of the enterprise by sitting on the board as paid directors.
Can a CIC have one director?
Number of directors
A CIC limited by shares can have just one director and shareholder. A CIC limited by guarantee should have at least two directors (trustees).
Can a CIC own property?
The CIC or charity can own property, and rent space to the other. … The charity would be eligible for a lot more trusts and foundations that only give grants to registered charities, as well as being eligible for gift aid on donations.
Does a CIC pay tax?
A community interest company (Or CIC) is liable to Corporation tax as a company. This applies to all it’s Trading profits, Investment Income and any gains. It’s an asset locked body that must ensure any profits/assets are used for the benefit of the community.
Can a CIC be a foundation?
A community interest company (CIC) that wishes to convert to a charitable company will have to have only charitable purposes. A CIC that became a charity in England, Wales or Scotland would no longer be subject to the community interest test and the Regulator.
How much does it cost to set up a CIC?
Enabling you to register your company name with Companies House, register with HMRC for Corporation Tax and gain approval from the CIC Regulator to form a CIC , all at the same time. The filing fee for an online incorporation for a CIC is £27 and is payable by card or PayPal.
Can you sell a CIC company?
Can you sell a community interest company? … A CIC’s assets have to be retained for community benefit. They can be transferred to another asset-locked organisation in some cases, such as another CIC or a charity.
What is the difference between a CIO and CIC?
What is a CIO? Unlike a CIC, a CIO (or Charitable Incorporated Organisation) is a new legal structure introduced for non-profit organisations and charities. With a CIC, you need to apply to Companies House when registering. However, with a CIO, you only need to register with the Charity Commission.
How can a CIC raise funds?
By contrast, as a separate organisation, a CIC can attract external finance, be it philanthropic, governmental or venture capital, allowing unlimited growth. It can also raise funds through commercial trading.
What are the benefits of a CIC?
Compared to a standard company, a CIC specifically provides several advantages:
- 1 A clear commitment to social goals. …
- 2 Access to certain forms of finance. …
- 3 Limited liability and protection. …
- 4 Familiarity. …
- 5 Flexibility of limited company structure. …
- 6 Continuity of purpose. …
- 7 Quicker to set up.
Can CIC claim gift aid?
Please be aware CICs cannot qualify to receive Gift Aid donations (because a CIC is not a charity). So CICs cannot take part in the ‘Local Giving’ initiative (that is an initiative for charity fundraising). CIC law specifically forbids a CIC from being a charity.