Community Interest Companies

BCASL

I wonder if any one has any experience of Community Interest Companies. After much reading and research, I cannot see any REAL benefit to being a CIC over an ordinary company, as they still pay tax, can still pay dividends etc., but they need a lot more paperwork to incorporate etc. Even if a charity needs a trading arm, could they not just have an ordinary Ltd Company?
I would love to hear any views on this.

deanshepherd

The REAL benefit of being a Community Interest Company is usually the access to funding and support you are likely to get from awarding bodies and government agencies.

I have one CIC client who currently has a contract with a number of local government agencies to match young employees who have been out of work for more than 6 months with employers. Under the government's scheme, the employer gets a grant to cover the first 6 months' wage cost.

A number of different organisations would have applied to operate this scheme and the local government agency have to decide who is best placed to maximise the benefit to the local community. I suspect the CIC was looked on very favourable in that review process.

BCASL

Thank you Dean - I was thinking this was probably the case, but as I said in my earlier post, no one has yet come up with a definite answer. The CIC in question is also setting up a charity, so that the CIC can be used as the trading arm as an interaction with it.
The CIC also has a link to one of our clients which is also involved with obtaining govermnent monies, but so far hasn't had the need to be a CIC - hence my query!
You've confirmed my suspicions though Dean - thank you

deanshepherd

A CIC is supposed to be a half-way house of sorts between a charity and a normal LTD. It has non-profit making status but still has the option of attracting investors and being able to pay them a return on their investment.

I agree that the advantages are limited to very specific circumstances and in most cases people who come to me wanting a CIC are persuaded to go for a company limited by guarantee instead.

If your client wants a trading arm for it's existing charity then I would think a normal company would be more useful than a CIC.

For some people CICs are like 'vanity PLCs' a lot of extra hassle for the perception of being something more than they are.

BCASL

I totally agree. Trouble is the client is quite a long way down the incorporation, shame they didn't come to us first - such is life!