Lesson 2 of 10
What a CIC is — and isn't
Learning objectives
- Understand the Community Interest Company structure
- See what the asset lock and community interest statement actually commit you to
- Know what a CIC can and cannot do commercially
- Stop treating CIC as a 'charity-lite' shortcut
What a CIC is
A Community Interest Company is a UK limited company with an extra layer of regulation by the CIC Regulator. It exists to benefit a defined community, locks its assets so they can't be cashed out, and submits a yearly community interest report alongside Companies House accounts.
It's a normal trading company in most respects — it can sell, employ, contract, invoice — with a legally enforced community purpose on top.
Two non-negotiables
Community interest statement: a written statement of who the community is and how the company benefits them. Asset lock: profits and assets cannot be distributed to private owners beyond a capped dividend; on dissolution everything must transfer to another asset-locked body.
Both are checked at incorporation and every year via the CIC34 report.
What a CIC isn't
Not a charity — no Gift Aid, no charity tax reliefs, no trustees. Not a free pass to grant funding — funders increasingly ask for the same evidence they'd ask a normal business or charity for. Not a shortcut to NHS / council contracts — you still need safeguarding, insurance and delivery track record.
Founder insight — Derrick Twum
The CICs that scale inside MEM are the ones that treated incorporation as the start of a 5-year commitment, not a quick re-brand to look more fundable.
Key takeaway
CIC = limited company + community interest statement + asset lock + annual community report. Not a charity, not a shortcut.
Reflection questions
- 1Who is the specific community your CIC would serve?
- 2How would you describe the asset lock to a sceptical accountant?
- 3What would you stop doing once an asset lock is in place?
- 4What does the 5-year commitment look like, not the 1-year?
Action task
Draft a one-sentence community interest statement and a one-paragraph description of how the asset lock would change your decisions.
Worksheet
Work through these prompts. Answers save to this device.
Answers are saved to this device only. Cloud sync coming soon.
Related MEM tools
- Business Planner