CIC Association

Serving Community Enterprise

Hi there.
I'm just wondering if there is general rule of thumb for working out a salary for paying directors?
There are 3 of us looking to change our unincorporated association into a CIC and expand what we do as a baby group into areas such as peer to peer support, drop centre and to offer more groups and workshops(physical premises is our ultimate goal)
Also if 1 or 2 of the directors current businesses can directly help the CIC by ways of providing a service to clients (hypnobirthing workshops as an example) how would you contract that without it looking like conflict of interest?
Many thanks

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Full details are in the CIC Regulators Handbook but simply any work done for the CIC can be done at market rates, Directors can be paid for work they undertake for the CIC. 

It could be difficult to ensure it doesnt look like a conflict of interest. Obviously you need to ensure as Directors of the CIC you arent working for the betterment of others, but instead working for the CICs best interest. That leads to questions like why do you want to start the CIC, obviously in your case I can see the areas you want to expand into and perhaps the need for grant funding etc to achieve it. Id personally say as long as all might be regarded as reasonable and honest by the general public you'll be fine. Perhaps a short email to the Regulator for guidance would help, as will reading the guidance notes. 

Contracts must be for market rates etc, one point to understand is your companies may be regarded as associated for HMRC purposes, a quick google of associated company hmrc should bring you up to speed.

Best of luck

John

Thanks John. I've just spent the last hour or more reading all the handbooks.
Definitely something we need to discuss and I did find that at least 65% must go back in.
Another quick questions. If we were to go by CLG but obviously put up starting costs will we be able to get them back again? E.g. i pay £200 one month then get funding to help pay said rent can i get that £200 back again?

Yes, basically you are loaning the money to the CIC and can take it back when appropriate. The CIC can also 'owe' you for hours worked getting set up etc which it can repay to you when prudent.  IE....the board agree that you work for £15 an hour but there is no cashflow to pay at the start. This debt to you can accumulate until you do have cashflow to pay, or you can decide to waive the amount owed.

Hi John, its been a long time since my last contribution, however there is one point to remember when any organisation receives money for a specific purpose "funding". If those funds are specifically purposed for say rent, rarely will a funder provide for retrospective payment. Other words if you pay this months rent and get funding for rent it is generally understood to be for future spending.

Where the directors decide they can pay the £200 illustrated from the funding received it is based on the understanding that the money isn't provided for specific use. 

Indeed,excellent point

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