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Forming a Community Interest Company (CIC) for Festivals.

Andy Robertson

Many festivals in the UK are set up as charities with a focus on raising money for social good rather than as a commercial concern. A number of smaller festival organisations are now moving their set up to the CIC format. This has numerous potential benefits but what are the requirements for festival organisers considering pursuing this route.

Many festivals operating in the UK have had charitable status for some time but the one size fits all approach did not really work well for certain organisations. In 2005 the UK government introduced a new range of charitable company formation options. Out of this new range of options was the Community Interest Company (CIC), a type of limited liability company designed for social enterprises that want to use their profits and assets for the public good. As a business, a CIC reinvests its surpluses to achieve its social objectives, rather than being driven by the goal of maximising profit for its shareholders or owners. 

Rules and Requirements. 
Comprehensive details about the CIC requirements and set up procedure can be found on the www.gov.uk website. In principle the requirements are: 

  • A ‘community interest statement’, explaining what the business plans to do.
  • An ‘asset lock’- a legal promise stating that the company’s assets will only be used for its social objectives, and setting limits to the money it can pay to shareholders.
  • A constitution - available from the CIC regulator’s model constitutions.
  • The company name including the name ending of either ‘CIC’ or ‘Community Interest Company’
  • A Registered Office Address located in the UK.
  • A Minimum of 1 Individual Director and 1 Shareholder must be appointed.
  • The Officers can be any nationality and reside anywhere in the world.
  • Name and Address of the Director and Shareholder.
  • Must have a Share Capital. 

Applicants must then submit their application and gain approval from the community interest company regulator and it costs just £27 to make an application.

As long as the CIC benefits the community it can continue to operate and attracts numerous benefits over the old ‘charity’ status including:

  • Access to finance - whether through donors, grants or community development finance.
  • Limited Liability status that provides an element of security for those who own and manage the business as well as giving protection for any assets related to the social enterprise.
  • A familiar company structure that has directors and shareholders that is simpler to operate compared to a charity.
  • CICs are faster to set up, taking a week or two compared to a charity that can take many months.
  • Reduced governance requirements allowing the organisation to focus on operations rather than government red tape. 

Other Considerations. 
The CIC formation is attractive to festivals of all sizes and is preferential to the charity status in terms of structure but there are some key points organisers should be aware of. There are limited tax breaks available as opposed to charities and the ongoing formal company structure compliance may require additional resources to manage. There are also restrictions on what the CIC can do with any assets. Festival organisers running events that primarily raise funds for good causes may find the CIC route more attractive than a ‘charity status’ or the formal limited liability company format. 

For CIC festival organisers planning their events using a software management platform like Festival Pro gives them all the functionality they need manage every aspect of their event logistics. The guys who are responsible for this software have been in the front line of event management for many years and the features are built from that experience and are performance artists themselves. The Festival Pro platform is easy to use and has comprehensive features with specific modules for managing artists, contractors, venues/stages, vendors, volunteers, sponsors, guestlists, ticketing, cashless payments and contactless ordering.

Photo by
Alexander Suhorucov via Pexels

Andy Robertson
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