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18 January 2024 | Blog
A CIC should be seeking to generate the bulk of its income from trading, but a common finding was that grant income was the main source for many CICs we had worked with.
The relentless rise of the CIC
Back in November last year, we held the first of Consultant for Good’s fringe events. Our debut session was themed around Community Interest Companies (CICs), the number of which is on a relentless rise. In fact, the number of CICs in the UK has roughly doubled over the last six years, and in 2020, they even overtook registered charity registrations for the first time – a trend which doesn’t show any sign of slowing.
But what does this mean for the charities and the wider voluntary sector? At our first ever fringe event, nearly 30 consultants from our membership, coming from a broad range of specialisms, shared their views in what proved to be a lively discussion.
CICs – the easy option?
Put simply – it’s easier to become a CIC than register as a charity. A shared experience of our members has been that founders find the combined advantages of getting paid, retaining control and the speed of registration mean that the CIC model is a simpler solution – it’s certainly easier than jumping through the Charity Commission’s sometimes over-stacked hoops. That said, this trend might be changing– fellow consultants involved in new organisation registrations revealed some early signs that the CIC regulator is getting tighter on its criteria, so let’s watch this space.
Equity and Diversity
We also discussed whether CICs offer opportunities for a more equitable and diverse sector? Whilst setting up a charity might require larger amounts of social capital (favouring middle class white folk over others), CICs offer an alternative way to approach setting up a new socially minded organisation, with the potential of conversion to charitable form once established.
The never-ending challenge of finding funds
A CIC should be seeking to generate the bulk of its income from trading, but a common finding in our session was that grant income was the main source for many CICs we had worked with. We are all too painfully aware that grant funding is getting much harder to find – for all organisations, but especially for those without a charity registration. Whilst there is a better understanding of CICs and how they work than there ever has been, the reality is that they are still the poor cousin of charity status when it comes to being awarded grants.
Getting it right – where we can help
We agreed, it’s not rocket science after all, that organisations appear to be choosing their legal structure based on funding and income rather than being rooted in their cause, whatever need they are meeting and their planned delivery model. Not surprisingly, this tendency to be a bit myopic causes strife and challenge along the way. The good news is that this is where a network of consultants like us can really help. Our knowledge and expertise, plus the way we generously share our thoughts, experiences and skills between each other, all really helps us support the people in the third sector who are trying to decide whether charity or CIC.
If you would like to host your own ‘Fringe Event’, please get in touch. We are piloting these but hope they will offer Consultants for Good Members an opportunity to talk about something they are keen to discuss, muse or just get ideas on.
Leah Selinger and Gwen Joubert