CIC Support

Thinking of Starting a CIC?

More and more people are choosing to set up a Community Interest Company (CIC). It’s a popular route for those who want to make a real difference in their community while staying in control of their own organisation. A CIC can be a great way to turn passion into action – whether that’s running a social enterprise, delivering services locally, or testing out new ideas for social good.

But it’s important to go in with your eyes open. Unlike charities, CICs don’t have the same access to grants and donations, and funders often prioritise registered charities. That doesn’t mean CICs can’t succeed – far from it. It just means that income generation through trading, contracts, or services usually needs to be the main focus. The most successful CICs are those that build strong business models first, with grants as a small extra rather than the foundation.

At Funding Eye, I offer support to help you think through the right structure, set up your CIC properly, and plan for financial sustainability. Whether you’re at the early idea stage or looking to grow an existing CIC, I can help you balance social mission with practical business planning.

CIC Structures

There are 2 basic structures :

1. Limited by Guarantee (LBG)

  • No shareholders, just members with a small guarantee.
  • Surpluses fully reinvested for community benefit.
  • Most like a charity in feel — better for groups relying on grants/donations.

2. Limited by Shares

  • Has shareholders, but dividends are tightly capped.
  • At least 65% of profits must be reinvested.
  • Better for social enterprises wanting to attract investment.
  • Can be private company (most common) or PLC (rare).

There are also Schedule 2 vs Schedule 3 Articles

  • Schedule 2 Articles (Model)

  • Standard off-the-shelf rules approved for CICs.
  • Simpler, widely used, covers most needs.
  • Best if you don’t need anything fancy.

  • Schedule 3 Articles (Bespoke)

  • Customised articles you draft yourself.
  • Must still meet CIC regulator requirements (community benefit, asset lock, etc.).
  • Useful if you want unusual governance, voting, or share structures.
  • If going for Schedule 3 be wary that many funders will not fund Schedule 3 Articles
  • If you want the best opportunities to secured grants the Limited by Guarantee is the way to go

 

Below are the key points to consider when deciding between a CIC and CIO (Charitable incorporated Organisation )

CIC (Community Interest Company)

Pros

  • Quick & flexible to set up, lighter regulation than a charity.
  • Can trade freely and distribute limited profits (if a share CIC).
  • Attractive for social enterprises, social investors, contracts, and trading activity.
  • Not bound by strict charity law – fewer restrictions on what you can do.

Cons

  • No charitable status → can’t register with Charity Commission.
  • Can’t claim Gift Aid or most charity tax reliefs.
  • Fewer grant-makers fund CICs (many prefer charities).
  • Less “trust” with the public compared to a registered charity.

CIO (Charitable Incorporated Organisation)

Pros

  • Full charitable status → Gift Aid, tax reliefs, business rate relief.
  • Widely eligible for grants and donations.
  • Clear public trust and recognition as a charity.
  • Limited liability and separate legal entity, like a CIC.

Cons

  • More regulation – must comply with Charity Commission requirements.
  • Can’t distribute profits to members; all surpluses must be used for charitable aims.
  • Slower to set up than a CIC.
  • Less freedom in trading and investment structures.