I am thinking about establishing my existing charity as a Community Interest Company (CIC). Can I do this?
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:
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does not have the same tax benefits as a charity
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can be a company limited by shares and pay dividends, subject to a cap
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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.