Efforts to be as innovative as possible in all facets of nonprofit operations have resulted in, among other things, the creation of social enterprise, attempting to combine the best of nonprofit mission and for-profit operation for the common good.
At a recent Conference for Nonprofits sponsored by Blackbaud Inc., Tom McLaughlin, a nationally-known management consultant, discussed the concept of the Community Interest Company (CIC), which is operational in the United Kingdom.
According to McLaughlin, the following can be said of CICs:
- They operate for the good of the community.
- They allow for private investment.
- “Asset lock” prevents distribution beyond statutory limits. It ensures that assets are retained within the community for community benefit. Assets may not be transferred at less than full market value unless to another asset lock entity. Dividends (other than to another asset lock entity) are subject to a cap.
- They cannot be formed to support political activities.
- They are intended to be for profit.
- They support social enterprise.
- An entity cannot be both a charity and a CIC, but a charity may establish a CIC as a subsidiary.