Community Interest Companies: A Smart Option for Purpose-Driven Agencies?

Want to create an agency with social impact? A CIC might be your answer.

Many of our clients are increasingly interested in creating positive social change alongside running successful businesses. If that sounds like you, a Community Interest Company (CIC) structure could be worth exploring.

What exactly is a Community Interest Company?

A CIC is basically a limited company with a social mission at its heart. Introduced in 2005, it's designed for businesses that want to use their profits and assets primarily for public good rather than purely for shareholders.

The key feature is something called an "asset lock" which ensures your company's assets (including profits) are mainly used to benefit your chosen community cause. While you can still pay dividends to shareholders, they're capped at 35% of distributable profits.

Why agencies are choosing the CIC route

As purpose-driven causes become more popular, we're seeing agencies adopt this structure to:

• Clearly demonstrate their commitment to social impact
• Access specific grants and funding only available to social enterprises
• Create a business that balances profit with purpose
• Stand out in a crowded marketplace with a genuine social mission

The benefits for your agency

1. Genuine social credentials

In an industry sometimes accused of "purpose-washing," a CIC gives you genuine credibility. Your social mission isn't just marketing talk – it's literally built into your company's legal structure.

2. Access to specific funding

Some grants and impact investment are only available to social enterprises like CICs. This can be particularly valuable when bootstrapping an agency.

3. The safety of limited liability

Just like a standard limited company, a CIC gives you the protection of limited liability, separating your personal finances from the business.

4. Familiar and flexible structure

CICs use the same basic structure as a standard limited company, making them straightforward to set up and run. They can be limited by shares (if you want shareholders) or guarantee (if you don't).

Potential downsides to consider

While we've helped several agency clients successfully establish CICs, there are some limitations to consider:

1. Dividend restrictions

The 35% cap on dividends means most profits must be reinvested in your social mission. This is great for impact, but potentially limiting if you're looking to maximise personal earnings.

2. Fewer tax advantages than charities

Unlike charities, CICs don't receive automatic tax breaks. You'll pay corporation tax like any other limited company.

3. Asset lock limitations

The asset lock means your company's assets must primarily benefit your community purpose. This includes if you ever sell the business – most of the value must go toward your social mission.

4. Extra reporting requirements

Alongside standard company accounts, you'll need to file a CIC report each year demonstrating how you've benefited your community.

Alternative structures for purpose-driven agencies

A CIC isn't your only option. Depending on your goals, you might consider:

• Standard limited company with social goals in your articles of association
• B Corp certification (like Patagonia or Ben & Jerry's) to demonstrate your commitment to balancing profit and purpose
• Charity status if your work is purely charitable (though this comes with significant restrictions)
• Cooperative model if you want to give employees ownership

Is a CIC right for your agency?

The ideal candidate for a CIC is an agency that:

• Has a clear social or environmental mission at its core
• Wants to reinvest most profits into creating impact
• Plans to access social enterprise funding streams
• Needs the credibility of a formal social enterprise structure

Get expert guidance

At Sidekick, we've helped numerous agencies structure their businesses for both profit and purpose. Setting up a CIC is relatively simple, but making sure it's the right choice for your specific situation requires expert advice.

If you're exploring options for structuring your purpose-driven agency, we'd be happy to talk through your options. 

Book a session with us to discuss the best approach for your specific situation and goals.

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