Want to run a social enterprise that helps others – and also puts food on your own table? If so, structuring your business as a CIC (Community Interest Company) may be the solution. Read on to discover how this business model lets you simultaneously be altruistic and entrepreneurial…
To put it simplistically, a CIC is like a cross between a charity and a standard business. The UK government introduced this solution in 2005 to support social enterprises that wanted to use their profits for the public good.
Entrepreneurial freedom
If you’re launching a business, accessing funding can be an arduous and lengthy process. If you’re setting up a charity, the way you run it must be strictly not for profit and you can only remunerate a minority of directors or trustees, under very strict conditions. A CIC on the other hand can pay its own directors and give (reasonable) returns to its investors – plus it has more entrepreneurial freedom than a charity.
Primarily a force for good
Being a CIC means you can apply for funding or grants to support the social change that’s your raison d’être – and also have a commercial element to your business that’s more revenue generated. As a CIC you’re not profit driven but you’re certainly not profit averse because any extra money you make can be flowed back into making change happen.
The messaging and positioning of your brand should always be centred around communicating how you’re primarily a force for good. As well as being the main reason you exist, this is also a strong USP and selling point.
Case study: InYerFace Galleries (a made-up company to give you a hypothetical example)
Imagine you want to help talented young artists make a name for themselves…
- You set up a chain of art galleries that champions the work of artists from diverse backgrounds – and helps them sidestep the hurdles of the traditional arts world.
- Let’s call your hypothetical CIC enterprise ‘InYerFace’.
- As well as InYerFace galleries, you have an InYerFace shop (selling art materials) and an InYerFace café (selling refreshments to gallery visitors).
- While your art exhibitions are financed by investors or grants, you run the shop and café commercially – using the profits they generate to subsidise your art exhibitions.
- This way, you can afford to offer free admission to your galleries – so the artists get maximum exposure to the widest possible audiences.
- Thus InYerFace as a CIC fulfils its primary purpose of supporting social change.
As this case study shows, having a predominantly social element to your enterprise increases the incentive and likelihood of customers wanting to spend their money with you. For example, if you were selling concert tickets and you declared that 50% of the money from ticket sales would go towards music scholarships for disadvantaged youngsters, your audience would not only get to attend a great show but would also have the satisfaction of supporting a worthy cause.
Is a CIC for you?
The CIC route may or may not be right for your company. Compared to other structures it has various pros and cons – for example, a CIC is liable for taxes and other business rates that charities are exempt from. Obviously, you’ll need to do your research to find out if a CIC is the best route for you.
Don’t be afraid to contact Companies House direct and ask as many ‘silly’ questions as you like. Or see the gov.uk website for guidance on setting up a social enterprise. And check out these case studies about the good work being done by a variety of Community Interest Companies across the UK.
This how-to guide was inspired by one of our Zoom Dives with Ajay Pabial, Managing Director at Art Clubbers CIC.
Our Zoom Dive events are deep-delving discussions between our founder, Carolyn Dailey and a handpicked creative business expert. You can listen to the 55-min full discussion here.
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Meanwhile, feel free to plunder our Knowledge bank for more inspiration on setting up a creative business.