Definition
A Community Interest Company (CIC) is a type of company introduced by the UK Government in 2005 under the Companies (Audit, Investigations and Community Enterprise) Act 2004. Designed for entrepreneurs who want to use their profits and assets for the public good, a CIC is a unique blend of business hustle and social heart. It’s the mullet of the business world: business in the front, party in the community!
Key Characteristics
- Asset Lock: A CIC includes an asset lock feature, which is a legal commitment ensuring that the assets and profits are dedicated primarily to community benefits. It’s like a chastity belt for assets; they’re promised to the community, not private pockets.
- Limited Dividend: CICs are allowed to pay dividends to their shareholders, but these are capped. This limitation ensures that while you can still make a penny, the well doesn’t dry up for the community initiatives.
Purpose
The primary purpose of a CIC is to serve the community interest and operate with a clear conscience. These companies address a wide range of social issues — from providing affordable housing to running community kitchens. Think of a CIC as a business knight, wearing armor made of spreadsheets and annual reports, battling the dragon of societal need.
Origin and Conceptual Background
The CIC structure was created to address the need for a flexible company model that allows for profits but with strings attached to serve the greater good. It’s like your business wants to sprint on capitalist legs but with socialist shoes.
Incorporation and Regulation
CICs are incorporated as either private companies limited by shares or by guarantee, and they must be approved by the Community Interest Company Regulator. This process involves proving the community benefit of their activities — basically, a talent show for companies where the only talent is doing good.
Related Terms
- Social Enterprise: A business model that applies commercial strategies to maximize improvements in financial, social, and environmental well-being.
- Nonprofit Organization: Organizations that use surplus revenues to achieve their goals rather than distributing them as profit or dividends.
- B Corporation: Businesses certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency.
Further Reading
If you find yourself enchanted by the charm of a CIC and itch to learn more or perhaps start your own, consider diving into these insightful books:
- “Building Social Business” by Muhammad Yunus - Learn about the journey of creating business models that blend profit with societal improvement.
- “The Social Entrepreneur’s Playbook” by Ian C. MacMillan and James D. Thompson - A guide that expands on strategies for high-impact social enterprises.
With CICs, blending profit-making with community benefit isn’t just possible, it’s encouraged. It’s a playground where businesses can indulge their altruistic side without hearing capitalism’s whispers to “keep it all.” Dive into the world of CICs and uncork that spirit of enterprise served with a generous pour of philanthropy. Cheers!
