CIC Bonds: The Billion-Pound Market That's Waiting for a Structure

I’m going to say something that might sound ambitious, but I believe it’s entirely realistic. Within five years, we could have a functioning market in CIC bonds worth hundreds of millions of pounds. And within a decade, that figure could be in the billions.

The raw ingredients are already there. You just have to know where to look.

Let me start with the corporate side. There are thousands of companies in the UK with corporate social responsibility programmes, and many of them are looking for meaningful ways to deploy that money. Right now, most CSR spending goes on grants, sponsorships and employee volunteering. These are valuable, but they’re also limited. They don’t create investable assets. They don’t build long-term relationships between companies and communities.

But what if a corporate could invest in a CIC bond, get a modest financial return — say 5 to 10 percent — and define their social outcome through the measurable community benefit that the CIC produces? They’d have a monetary value for their CSR. They’d have something they could report to shareholders and stakeholders that goes beyond good intentions. And crucially, they wouldn’t be looking for the kind of return a venture capitalist demands, because their primary motivation isn’t financial maximisation — it’s social impact combined with capital preservation.

Then there’s the wider investment picture. A Euro CIF report I’ve been referencing for months quietly notes that there are trillions of pounds in socially responsible investment mandates across Europe. Trillions. These are funds that have told their investors they will take environmental, social and governance factors into account. But most of them are stuck because they can’t find enough investable opportunities that match their criteria. They’re swimming in capital and starving for deals.

CICs could be exactly what they’re looking for. A CIC limited by shares is a real company. It has a real business model. It can issue shares, pay dividends (within the cap), and offer a genuine investment proposition. But it also has the asset lock and the community interest test, which provide the social assurance that responsible investors need. For a pension fund or an insurance company with a modest social investment mandate, a well-structured CIC bond could be an ideal fit.

And then there’s the simplest and most powerful source of all: communities themselves. When a local energy project or a community asset transfer is backed by the people who will benefit from it, you get a kind of investment that’s fundamentally different from institutional capital. It’s patient. It’s loyal. It measures return in more than just financial terms. The community share model has already proved this works. CICs with share structures could do the same thing at a much larger scale.

So why hasn’t this happened yet?

The honest answer is that we haven’t had the infrastructure to make it work. Investors — whether corporate, institutional or community — need standardised, comparable information about CICs before they’ll commit money. They need to understand the risk profile. They need to see that there’s a secondary market or an exit route. They need confidence that the regulatory framework is stable and that the CIC brand means something.

Building that infrastructure is exactly what the CIC Association exists to do. At the Cambridge meeting last month, I outlined some of the thinking we’ve been doing on this. The next step is to move from thinking to doing. We need to identify a small number of investment-ready CICs, work with them to develop standardised bond structures, and prove that the model works in practice. Once we have a few successful examples, the market will follow.

I’ve been told that this is too ambitious for an organisation that’s only been operating for a year and has barely any funding. But I’d argue the opposite. The fact that we’re small and unfunded means we have to think creatively. We can’t just wait for government or institutional backing — we have to find ways to make this happen ourselves.

A functioning CIC bond market would transform the landscape for social enterprise in the UK. It would unlock capital that’s currently sitting on the sidelines. It would give CICs a credible, scalable way to finance their growth. And it would prove that social investment isn’t just a niche activity for specialist funds — it’s a mainstream opportunity that the markets have been waiting for.

John Mulkerrin is co-founder of the CIC Association and a former financial services professional with 15 years of experience in the UK and Hong Kong markets.