Funding and Grants for CICs: Where the Money Comes From and What Funders Need

Community interest companies (CICs) can access a range of funding, but the landscape differs meaningfully from the one open to registered charities. Understanding which routes are open, which are not, and what funders will expect to see when they assess an application is the foundation of any serious funding strategy for a CIC.

Can a CIC get funding and grants?

Yes. CICs can access grants from public bodies, lottery distributors and some private foundations, alongside social investment, community shares (for CICs limited by shares) and earned trading income. However, many charitable trusts restrict grants to registered charities, and CICs cannot claim Gift Aid on donations, which affects fundraising from individuals. The CIC's statutory asset lock reassures funders that money will stay in the community benefit purpose, but it does not automatically open every funding door a charity can reach. Funders will expect credible accounts and, in most cases, the CIC34 community interest report alongside any application.

Why funding a CIC is different from funding a charity

The core distinctions flow from the CIC's legal status. A CIC is regulated by the Office of the Regulator of Community Interest Companies, not the Charity Commission. That means it receives none of the charity tax reliefs that make charitable fundraising more efficient.

• No Gift Aid. Charities can claim 25p for every £1 donated by a UK taxpayer through Gift Aid. A CIC cannot. A £100 donation to a charity becomes £125 to the charity; the same £100 to a CIC stays £100. For individual fundraising and public appeals, this is a material disadvantage.
• No charitable rate relief. Charities benefit from up to 80% mandatory relief on business rates. CICs pay business rates in the normal way and cannot access charitable rate relief.
• Some funders exclude non-charities. Many charitable trusts and foundations restrict their grant-making to registered charities. A CIC director should read the eligibility criteria of any fund carefully before investing time in an application. Public-body and lottery funders are generally more open to CICs and other social enterprises.
• The asset lock is a genuine differentiator. The statutory asset lock and dividend cap mean that assets given to a CIC are protected for community benefit and cannot be extracted for private gain. For certain funders, particularly public commissioners and lottery distributors, this is a positive signal. It tells them that the money will stay in the purpose they are funding.

For a full comparison of the CIC and charity structures, including the fundraising implications, see our post on CIC versus charity: which structure is right for your organisation and the CIC complete guide.

Funding routes open to CICs

CIC directors have more options than they sometimes realise. The routes below are not exhaustive, and specific programmes change regularly, so this overview describes the categories rather than naming individual funds.

Grants from public bodies and lottery distributors

Central government, local authorities and lottery distributors are among the most accessible grant sources for CICs. These funders are generally not restricted to registered charities. Eligibility typically turns on the CIC's community benefit purpose, its track record, and the quality of its application. Grant amounts and conditions vary widely. Always check the specific eligibility criteria before applying.

Grants from charitable trusts and foundations

Some trusts fund CICs and other social enterprises. Many do not, as their own charitable objects may limit grants to registered charities. Where a trust does fund CICs, it will usually want to see strong community benefit evidence and credible accounts. The CIC34 community interest report is often a useful supporting document in this context.

Social investment and loans

Social investors, including social banks and some specialist lenders, provide repayable finance to organisations that can demonstrate community impact and the ability to service debt. Social investment suits CICs that generate trading income and can manage repayment. Unlike a grant, repayable finance must be factored into cash-flow planning and your accounts.

Community shares

CICs limited by shares can raise capital by offering shares to community members and supporters. The statutory dividend cap applies to returns on those shares. CICs limited by guarantee cannot issue shares. Community share offers involve regulatory requirements that should be confirmed with the relevant authorities before any offer is made.

Earned and trading income

Many CICs are primarily self-funding through contracts, service delivery and trading. This income is not a gift; it is taxable revenue subject to corporation tax in the normal way. A robust trading model reduces dependence on grants, which is itself attractive to some funders who want to support organisations on a path to financial sustainability. For more on the tax position of CIC trading income, see the section on corporation tax below.

The trading-subsidiary-to-charity route (where applicable)

Where a CIC has a separate connected registered charity in the group structure, the charity can own a trading subsidiary. That subsidiary's profits, when donated to the parent charity, attract no corporation tax on the donated amount. This is not a benefit available to a bare CIC operating alone: it requires a connected charity to exist in the structure. See our post on charity trading subsidiaries and Gift Aid for how that arrangement works and when it is appropriate. If you are considering this structure, take advice before establishing it.

What funders want to see financially

Regardless of which funding route you pursue, a funder making a significant commitment will want to assess the CIC's financial health and its ability to use money well. The following are the most common requirements.

Annual accounts

CICs are companies and must file accounts at Companies House each year. Funders will typically review the most recent filed accounts. Accounts that are late, incomplete or qualified by an accountant raise questions. Timely, clean accounts are a basic credibility requirement. For help understanding what your CIC's accounts should include, see the charity and social-enterprise accounts service.

Management accounts

Annual accounts tell funders where you were at year end. Management accounts, typically produced monthly or quarterly, show where you are now. Many funders will ask for management accounts as part of a due-diligence process, particularly for larger grants or social investment. A CIC that cannot produce timely management accounts will struggle to give funders the confidence they need.

The CIC34 community interest report

The CIC34 community interest report is filed at Companies House alongside the annual accounts. It describes the activities the CIC has carried out to pursue its community interest objects, how it has consulted the people it serves, and (for CICs limited by shares) dividend information. Funders, particularly those assessing community benefit, will read the CIC34. A vague or boilerplate CIC34 weakens a funding application. A specific, well-written one provides independent evidence of community impact that a CIC director cannot easily fake.

The CIC34 is a public document, filed at and searchable on Companies House. Funders can and do look it up.

Impact reporting

Funders increasingly want to see outputs and outcomes, not just financial data. How many people did the CIC serve? What changed for them? Impact reporting does not need to be elaborate, but it does need to be credible and consistent with the accounts. Numbers that cannot be traced to activity records undermine confidence.

Asset lock compliance

The statutory asset lock is confirmed each year in the CIC34. Funders, particularly public-body funders, take comfort from it. Any funder conducting proper due diligence will check that the asset lock is in place and that the CIC has complied with it. Irregularities in the asset lock statement, or inconsistencies between the CIC34 and the accounts, will stop a funding process in its tracks.

Tax on grant and trading income for a CIC

A CIC is not a charity and receives no charity tax reliefs. It pays corporation tax in the normal way.

For trading income, this is straightforward: taxable profits are subject to corporation tax.

For grant income, the position depends on the nature of the grant. Grants that are genuine gifts, given for a community benefit purpose with no expectation of a specific supply in return, are treated differently from grants that are effectively payment for delivering a contract or service. Where a grant is consideration for a supply, it may be trading income for both tax and VAT purposes. The line between the two is not always obvious and depends on the specific terms of the grant agreement.

Do not assume that grant income is automatically tax-free. Equally, do not assume it is always taxable. The right answer depends on the grant terms, and the CIC should take advice if there is any doubt. For the general corporation-tax position of a CIC, see the CIC complete guide.

For the role of the Office of the Regulator of Community Interest Companies and how oversight of CICs works, see our post on the CIC Regulator explained.

Getting funder-ready accounts and reporting done

Funders do not fund well-meaning organisations. They fund organisations that can demonstrate well-managed finances, clear community impact, and the governance discipline to use money well. For most CICs, getting funder-ready means having three things in order: timely annual accounts, a well-written CIC34 community interest report, and the capacity to produce management accounts when asked.

These are not separate projects. They are the outputs of a well-run finance function. A CIC that produces its accounts on time, files its CIC34 with a clear account of community activities, and can pull management accounts within a few days is, by definition, funder-ready. A CIC that files late, writes a vague CIC34, or cannot answer a funder's financial questions will find the process harder regardless of how good its work in the community is.

The social enterprise funding landscape and the blended income model are covered separately for organisations considering a range of structures. If you are specifically a CIC looking for support with accounts, the CIC34, and the reporting that funders require, see our CIC accounting service. You can also explore the accounts and reporting service or find out more about bookkeeping for social-sector organisations.

Frequently asked questions

Can a CIC apply for grants?

Yes. CICs can apply for grants from public bodies, lottery distributors and some private foundations. Many charitable trusts restrict funding to registered charities, which narrows the grant landscape compared to a registered charity. Always check the eligibility criteria of any fund before applying.

Why can't CICs claim Gift Aid on donations?

Gift Aid is available only to charities and community amateur sports clubs (CASCs) recognised by HMRC. A CIC is not a charity and receives no charity tax reliefs. Donors to a CIC cannot have their gift topped up at 25p per £1 in the way a registered charity can.

Do CICs pay tax on grant income?

CICs pay corporation tax in the normal way. Whether a specific grant is taxable depends on its terms. A grant that is a genuine gift is treated differently from one that is consideration for a supply of services. Take advice on any grant agreement where there is uncertainty.

Can a CIC issue community shares?

CICs limited by shares can raise capital through community share offers, subject to the statutory dividend cap and asset lock. CICs limited by guarantee cannot issue shares. The regulatory requirements around share offers should be confirmed with the relevant authorities before proceeding.

Is a CIC eligible for charitable trust funding?

It depends on the trust's criteria. Some charitable trusts fund CICs and other social enterprises. Many restrict grants to registered charities. Read the eligibility criteria of any trust before investing time in an application.

What do funders want to see from a CIC's accounts?

Most funders want at least the most recent annual accounts filed at Companies House, often alongside management accounts showing the current position. The CIC34 community interest report and an impact narrative showing outputs and outcomes strengthen any application. Credible, timely financials are the baseline.

Can a CIC receive donations?

Yes. A CIC can receive donations. It cannot claim Gift Aid on those donations, so the effective value to the organisation is lower than an equivalent donation to a charity would be.

Does the asset lock help with funding?

Yes. The statutory asset lock means that money given to a CIC cannot be diverted to private benefit. For public-body funders and lottery distributors in particular, this provides meaningful assurance that the funding will stay in the community benefit purpose.