Lesson 3 of 6
Social enterprise and CIC basics
Learning objectives
- Understand the main UK legal structures for mission-led work
- Know the difference between a Ltd, a CIC and a charity
- Pick the structure that fits the work — not the one that sounds best
- Know when to run two entities (commercial + impact) instead of one
Ltd, CIC, CLG, charity — what each one actually is
Ltd company: standard commercial entity, profit goes to shareholders, full flexibility. CIC (Community Interest Company): commercial-style entity with an asset lock and community purpose, can pay directors and trade like a business, regulated by the CIC Regulator. Charity / CIO: fully regulated by the Charity Commission, no private benefit, eligible for the widest range of grants but heavy on governance.
Each structure trades flexibility for legitimacy with different audiences (funders, councils, NHS, corporates, the public).
Pick the structure that matches the actual work
If you plan to win grants, deliver in prisons, schools or with the NHS, CIC or charity status unlocks doors a Ltd cannot. If you mainly sell commercial products and services, a Ltd is usually cleaner. If you want both, the two-entity model exists for a reason.
The two-entity model
MEM uses a commercial Ltd brand (MEMFitness) alongside a CIC (MEM Academy CIC) so commercial profit and community impact can each be governed properly. The commercial side funds and amplifies the CIC; the CIC unlocks funded work the Ltd could not.
Two entities means two sets of accounts, two governance loads and a clear policy for how money moves between them — usually through arm's-length contracts, not informal transfers.
Founder insight — Derrick Twum
Picking the wrong structure costs years. Get the structure right before the funded work starts — restructuring after a grant is far harder than choosing well up front.
Key takeaway
Pick the legal structure that matches the work. For founders doing both commerce and community, the two-entity model is the cleanest route.
Reflection questions
- 1What is the primary type of work — commercial, community-funded, or both?
- 2Which audiences need to trust your structure (funders, councils, NHS, corporates)?
- 3Do you need one entity or two?
Action task
Decide your structure: Ltd, CIC, charity, or a two-entity model. Write the reason in one paragraph and the next legal step (incorporate, convert, or take advice).
Worksheet
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