Are you not sure whether to set up a charity or a Community Interest Company (CIC)? Then read on.
We are very experienced in dealing with setting up charities and CICs and in giving advice thereafter regarding procedures and compliance issues. If you are planning to start a charity, we can advise whether a CIC may be more suitable for your circumstances and objectives, or which legal form of charity is relevant to what you propose to do. We understand the legal regulations governing charities and CICs.
As a very brief summary:-
• The charitable model is suitable for organisations that will be asking for money, in the form of donations, grants, bequests etc. The CIC is intended for organisations that will have primarily social purposes but will earn a significant proportion of their income from trading. CICs are more likely to be financed through loans than grants.
• “Charity” is an extremely well-recognised brand for the general public, whereas “CIC” is hardly known outside the social enterprise sector.
• CICs are liable for taxes and business rates which charities don’t have to pay. CICs limited by guarantee (ie not for profit) can sometimes get a degree of rates relief.
• CICs are able to reward their own directors financially and generally have more freedom to be entrepreneurial. Charities can only pay (subject to stringent conditions) a minority of directors/trustees
Please note not all organisations will qualify for either CIC or charity status – the rules regarding what sort of body can register as each can be quite complex.
A summary of differences is in the table below. We can set up a charity or community interest company for you. Please do not hesitate to contact us for a no obligation discussion.