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How should we choose the right company structure to help us grow? (Anonymous post 🤫)

CIC

Ocean King Staff Senior Community Executive at CharityConnect Posted 9 months ago

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This question is from a member of our community that wishes to remain anonymous:
Hi all! I am in the process of creating a community interest company but there are things I would like to do in the future which I am worried will be limited due to it being a CIC. So I wanted to seek some advice on what kind of a company I should be opening.
Everything will be charity driven. As for the next 6 months I will be fundraising in a CIC compliant way but as the community grows I wish to add new revenues of money to the company so that it is sustainable to run. With a percentage always being donated to the cause I will be fundraising for. But the percentage within the other streams of income will not be CIC compliant. (e.g Fundraiser and shop sales 70% charity, 30% funding creatives and the other sister avenue would be 70% artists 30% for charity).
I am wondering if opening two companies that are connected will be best although I am aware this will cost more money (which as a fundraiser we are trying to avoid). Or perhaps an CIC is not the best idea and instead one private limited company for both would be best or maybe there is something else.
Does anyone have experience with anything similar or any advice?
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David Head

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Charity Consultant at Change is the Only Constant (consultancy) 8 months ago

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I have experience working with and for charities with wholly-owned trading subsidiaries, which is quite possibly the way to go. In simple terms a charity (most likely a CLG or CIO) owns a company that trades as per normal and then donates all its profits to that parent charity (thus incurring no corporation tax). Accounts are separate (though reported as a group), and the boards are separate (though can be the same people or with an overlap). If everything is managed carefully and transparently it allows an organisation like yours to work effectively without falling foul of charity trading regulations.
Hope this helps, let know know if you want to discuss further.
David
David Head
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www.citoc.co.uk

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Mike Preston

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Between Roles at Between Roles 9 months ago

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One of the things that larger chastities do is created a limited company for all their trading income to go though, as this is taxed differently to normal donations. Then essentially the limited company then donated it to the charity 

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Jimmy James

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Principal at Minerva Fundraising Consultancy 9 months ago

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Hi,
In my view the principal advantage of setting up a charity/CIO rather than a CIC revolves around fundraising. Many trusts and other organisations will make grants to charities/CIOs but not to CICs. Fundraising is challenging enough in the current economic climate without the additional obstacle of being a CIC rather than a charity/CIO !
Hoiweber, if you decide in favour of a CIC, I can put you in touch with a colleague who has set up a CIC from scratch and run it successfully for several years. You will find my e-mail address on my website www.minervafundraising.com
 
 

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Jon Benjamin

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Charity consultant and lawyer advising on governance, compliance and related issues at MJB Consulting 9 months ago

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What is the proposed purpose of the CIC? If it is to help encourage 'artists' and 'creatives', especially if they are people who might otherwise come from backgrounds where such opportunities aren't open to them, then how is that different from the 'charity' aspect that you also refer to? Without knowing more precisely what you will be doing, it's difficult to advise on whether a single CIC might cover it all, but it sounds like it might.

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Mike Preston

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I would be more then happy to have a short call with this member to discuss their thoughts, and map out a potential structure. I might not be able to do the 'legal' compliance, but I'm more then happy to workshop their idea and see where they get too. email me and I'm happy to chat - you can find my details on my website. www.mikepreston-consultancy.co.uk

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