CIC Association

Serving Community Enterprise

Hi,

First of all, I would like to thank for taking the time to help me out with my questions.

I would like to set up a CIC with my wife (two directors), for activities we have been doing for the last 6 years (without CIC), but want to open more funding opportunities.

We also have a commercial business (LTD) where we are both directors.

My question is...Can we use our LTD business and sponsor our CIC? Send money to pay for free events, website costs, development etc. and appear as official sponsor? or would there be any conflict of interest?

If it is a problem, can we sponsor it anyway but without appearing as a sponsor?

Many thanks in advance

Emil

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Replies to This Discussion

Emil

I see no reason why not. If your LTD co is giving money to your CIC without getting anything in return, it is essentially making a donation/gift to a good cause. Companies often make donations to charities and other good causes in their community, as part of their corporate social responsibility, but these are incidental to their overall business. If your LTD co is going to be donating substantial sums if may be wise to amend your LTD co's articles of association to expressly give the directors power to make donations to good causes.

I should add if your CIC was a charity, the LTD co would be able to claim tax relief on the donations, so it may be worth considering whether you are better setting up a CIC or a charity for your particular purposes. Alternatively, as CICs are intended to be profit-making, your LTD co could provide the CIC with an interest-free loan, so the LTD co can recover the sponsorship once the CIC makes a profit.

Hope this helps

James

Hi James,

Many thanks, a lot of useful info. I think in the past I've come across something related to CIC and LTD being in partnership and having the same directors, and something about conflict of interest or being misleading etc. (I've actually renamed my LTD recently to avoid similarity in names).

Here is one link I just found, I believe there was another one that I will try to find.

Thanks

Emil

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