I am thinking about establishing my existing charity as a Community Interest Company (CIC). Can I do this? Skip to content

7th October 2013

I am thinking about establishing my existing charity as a Community Interest Company (CIC). Can I do this?

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7th October 2013

I am thinking about establishing my existing charity as a Community Interest Company (CIC). Can I do this?


Example question and answer provided by panel member, Emma Prince, Senior Manager, BDO LLP – Nov 2012

Yes, but there are no advantages!

A charity has to have purely charitable purposes but a CIC can be established for any lawful purpose, as long as its activities are carried out for the benefit of the community.  However, even if a CIC has exclusively charitable purposes it cannot be a charity.

Some of the features of a CIC are that it:

  • does not have the same tax benefits as a charity
  • can be a company limited by shares and pay dividends, subject to a cap
  • can operate more commercially than a charity

Therefore, there are no advantages to establishing your existing charity as a CIC, or even thinking of establishing a CIC instead of a charity.  If you are worried about trading I would recommend establishing a normal trading company and then gift aid any profits back to the Charity.

 

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