Twenty Years of Community Interest Companies: A Personal Reflection

As I sit down to write this reflection on the twentieth anniversary of Community Interest Companies, I find myself in an unusual position. For years now, I’ve deliberately stepped back from the public advocacy that once defined my work with the CIC Association. The endless rounds of conferences, the media interviews, the policy papers – I’d grown weary of what felt like shouting into the wind. Instead, I’ve focused my energy on what I’ve found most rewarding: working one-to-one with individual CICs, helping them navigate the complexities of running a social business in a world that still doesn’t quite understand what they’re trying to achieve.

But this milestone – twenty years since the CIC legislation came into force on July 1st, 2005 – demands something more. It demands that we pause, take stock, and honestly assess where we’ve been and where we’re going. More importantly, it demands that we finally address the elephant in the room that has haunted the CIC movement since its inception: the chronic lack of appropriate financial infrastructure to support these remarkable organizations.

So here I am, breaking my own rule about public commentary, because I believe we stand at a critical juncture. The social investment market has grown to over £10 billion, institutional investors are showing unprecedented interest in social impact, and we have a new government that seems genuinely engaged with the social enterprise agenda. If we don’t seize this moment to build the financial ecosystem that CICs have always needed, we may not get another chance like it.

The Unexpected Journey

When I incorporated one of the first hundred CICs back in 2005, fresh from a fifteen-year career in financial services spanning London and Hong Kong, I thought I understood what we were getting into. The legislation seemed elegant in its simplicity: a company structure that could trade commercially while being locked into social purpose, with the flexibility that charities lacked but the credibility that ordinary companies couldn’t claim when it came to social impact.

What I didn’t anticipate was just how revolutionary this concept would prove to be, nor how stubbornly the existing systems would resist accommodating it.

The early days of the CIC Association were driven by a mixture of evangelical enthusiasm and practical necessity. We could see that CICs were going to need support – not just the kind of business advice that any startup requires, but something more fundamental. They needed help navigating a world that had clear boxes for charities and clear boxes for businesses, but no real understanding of what to do with organizations that deliberately sat between the two.

I remember those first meetings, often in borrowed rooms or coffee shops, with a handful of CIC founders who were all grappling with the same questions. How do you explain to a bank manager what a CIC is? How do you convince a grant-maker that you’re worthy of funding when you’re not a charity? How do you attract investment when you can’t offer the returns that traditional investors expect?

These weren’t abstract policy questions – they were keeping real people awake at night as they tried to build organizations that could change their communities.

The CIC Association grew organically from those conversations. We started with a simple premise: if we could connect CICs with each other, they could share knowledge, support each other, and collectively build the credibility that individual organizations struggled to achieve alone. What began as an informal network has grown into an organization with over 6,400 members – a number that still astonishes me when I think about those early gatherings.

Achievements Beyond Our Wildest Dreams

Looking back over these twenty years, I’m struck by how much CICs have achieved, often in spite of rather than because of the support systems around them.

The statistics tell part of the story: from those first hundred CICs in 2005, we’ve grown to a point where CICs now represent 25% of all community businesses in England. That’s not just growth – that’s a fundamental shift in how people think about organizing for social purpose.

But the numbers, impressive as they are, don’t capture the real story. The real story is in the thousands of communities that have been transformed by CIC-led initiatives. It’s in the 90% of NHS community health spinouts – representing £900 million in budget – that chose the CIC structure when they needed to transition from public to community control. It’s in the community transport services, the renewable energy projects, the social care providers, the arts organizations, and the countless other enterprises that have found in the CIC structure exactly what they needed to turn social vision into sustainable reality.

When I wrote in The Guardian back in 2013 about the “300% increase in collective turnover” that CICs had achieved, I was celebrating what felt like a breakthrough moment. But even then, I don’t think I fully grasped the scale of what was happening. CICs weren’t just growing in number – they were proving a point about the viability of purpose-driven business that had profound implications for how we think about enterprise itself.

The diversity of CIC activity has been perhaps the most remarkable aspect of this growth. From art to zoology, as I once put it, CICs have demonstrated that the social enterprise model can work in virtually any sector. Nearly 10% of the CICs we surveyed in our early research had international communities of interest, showing that the model could scale beyond local community boundaries. And perhaps most importantly, our research consistently showed that CIC activity was most prevalent in the poorest wards and boroughs – exactly where innovative approaches to social and economic development were most needed.

The healthcare sector deserves particular mention. When the NHS began its program of spinning out community health services, the overwhelming choice of CIC structure wasn’t accidental. These organizations needed the commercial flexibility to contract with multiple commissioners, the governance structures to ensure community accountability, and the asset lock to guarantee that any surpluses would be reinvested in services rather than extracted as profit. The CIC structure provided all of this in a single, coherent package.

Similarly, the community asset transfer movement found in CICs an ideal vehicle for taking on the ownership and management of everything from village halls to swimming pools, from libraries to community centers. When local authorities faced budget cuts and needed to transfer assets to community control, the CIC structure offered the perfect combination of business capability and community accountability.

The Persistent Challenges

Yet for all these achievements, I would be dishonest if I didn’t acknowledge the persistent challenges that have dogged the CIC movement throughout these twenty years. Chief among these has been the chronic lack of appropriate support infrastructure – a problem that has, if anything, become more acute over time.

When I gave that interview to Third Sector back in 2010, I was already expressing frustration about the uncertainty surrounding CIC support. “I’m often asked for advice by potential social entrepreneurs about the CIC structure,” I said then, “and I’m unsure whether to recommend it to them.” That uncertainty stemmed from a fundamental asymmetry in how different forms of social enterprise were supported. Development trusts, cooperatives, and regional social enterprise groups all received government funding for their support organizations. CICs, despite forming a constituency of similar size, received nothing.

This disparity has had real consequences. While other forms of social enterprise benefited from dedicated support programs, training initiatives, and advocacy efforts funded by government, CICs have had to build their own support systems from scratch, relying on the voluntary efforts of organizations like the CIC Association and the goodwill of individual advisors and supporters.

The result has been a kind of institutional neglect that has made life unnecessarily difficult for CIC founders and leaders. Without dedicated support programs, many potential CICs never got off the ground. Without proper advocacy, the CIC brand remained poorly understood by funders, investors, and policymakers. Without research and development funding, innovations in CIC practice spread slowly and unevenly.

This neglect has been particularly damaging in the area of finance and investment. While the broader social enterprise sector benefited from initiatives like Big Society Capital (now Better Society Capital) and various government-backed loan funds, these programs were rarely designed with CICs specifically in mind. The result is that even today, social investment represents only 2% of the average community business income – a figure that represents a massive missed opportunity for both CICs and the social investment market.

The regulatory framework, while generally fit for purpose, has also presented ongoing challenges. The CIC Regulator’s powers, while necessary to protect the integrity of the CIC brand, can feel daunting to small organizations trying to navigate compliance requirements. The prohibition on political activity, while understandable in principle, has sometimes limited CICs’ ability to advocate for the systemic changes their communities need.

Perhaps most frustratingly, many CICs continue to struggle with basic issues of understanding and recognition. Despite twenty years of growth and success, CICs still regularly encounter funders who don’t understand their structure, investors who can’t categorize them properly, and policymakers who lump them in with either charities or businesses without recognizing their distinctive characteristics.

The Funding Valley of Death

Of all the challenges facing CICs, none has been more persistent or more damaging than what I’ve come to think of as the “funding valley of death” – that treacherous terrain between startup enthusiasm and sustainable operation that has claimed far too many promising CIC initiatives.

The statistics are sobering: most CICs are wound up within two years of formation, not because their social mission was flawed or their business model was unviable, but because they couldn’t access the patient, flexible capital they needed to bridge the gap between initial funding and revenue sustainability.

This isn’t a failure of the CIC model – it’s a failure of the financial ecosystem to adapt to the needs of purpose-driven businesses. Traditional grant funding, while crucial for getting CICs started, often comes with restrictions that make it difficult to build sustainable operations. Project-based funding, in particular, creates a constant cycle of application-writing and reporting that diverts energy from actual service delivery.

Meanwhile, commercial lending remains largely inaccessible to organizations that can’t offer traditional security or guarantee conventional returns. The social investment market, despite its impressive growth, has been slow to develop products specifically designed for CICs. Most social investment funds focus on larger organizations with proven track records and substantial asset bases. The small-scale, flexible, patient capital that most CICs need – what one social investor recently described as the kind of finance that’s “difficult to do on a purely commercial basis” – remains in desperately short supply.

This funding gap has had a cascading effect on the entire CIC ecosystem. Without access to appropriate finance, many CICs remain small and precarious, unable to demonstrate the kind of scale and impact that would attract larger investors. Without a pipeline of successful, growing CICs, investors remain skeptical about the viability of the model. It’s a vicious cycle that has prevented the CIC movement from reaching its full potential.

A Return to Advocacy

It was against this backdrop of persistent challenges and systemic neglect that I made the decision, several years ago, to step back from public advocacy and focus instead on direct, one-to-one support for individual CICs. The decision wasn’t made lightly, and it certainly wasn’t made out of despair or cynicism. Rather, it reflected a growing conviction that the most valuable contribution I could make was to work directly with CIC leaders, helping them navigate the practical challenges of building and running their organizations.

This shift in focus has been personally rewarding in ways I hadn’t anticipated. Working closely with individual CICs has given me a much deeper understanding of the day-to-day realities of running a social business. I’ve seen firsthand how creative and resourceful CIC leaders can be when they have the right support and guidance. I’ve watched organizations overcome seemingly impossible obstacles through sheer determination and innovative thinking.

But perhaps most importantly, this direct engagement has reinforced my conviction that the fundamental concept behind CICs is sound. The problems that have held back the movement aren’t inherent flaws in the CIC model – they’re failures of the surrounding systems to adapt and respond appropriately. When CICs have access to the right support, the right funding, and the right partnerships, they consistently demonstrate their ability to create significant social impact while maintaining financial sustainability.

Which brings me to why I’m breaking my self-imposed silence. After twenty years of CIC development, we stand at a moment of unprecedented opportunity in the social investment space. The market has grown to over £10 billion, institutional investors are showing genuine interest in social impact, and we have a government that appears committed to supporting social enterprise.

If we don’t seize this moment to build the financial infrastructure that CICs have always needed, we may not get another chance like it.

The case for CIC-focused social investment is compelling on multiple levels. From an investor perspective, CICs offer a unique combination of social impact and financial sustainability. The asset lock provides assurance that investments will be used for social purpose, while the commercial structure ensures that organizations have strong incentives to operate efficiently and sustainably.

From a policy perspective, supporting CIC development through social investment makes perfect sense. CICs are already delivering significant social value in areas like healthcare, community development, and environmental sustainability. With better access to appropriate finance, they could scale these impacts dramatically while reducing the burden on public services and traditional grant funding.

From a community perspective, CICs represent a form of economic development that keeps wealth and decision-making power at the local level. Unlike traditional businesses, which may extract profits to distant shareholders, or charities, which may be dependent on external funders, CICs are rooted in their communities and accountable to the people they serve.

Building the Financial Ecosystem

Creating this new financial ecosystem won’t happen overnight, and it won’t happen without deliberate, coordinated effort from multiple stakeholders. But the building blocks are already in place, and the momentum is building.

Better Society Capital, the evolution of Big Society Capital, has shown increasing interest in supporting smaller social enterprises and community businesses. The government’s renewed focus on social enterprise, evidenced by the All-Party Parliamentary Group inquiry into diverse business models, creates a policy window that we must not waste. Mainstream financial institutions are also beginning to show interest in social impact investing, driven partly by ESG requirements and partly by genuine recognition of the business case for purpose-driven investment.

Perhaps most importantly, the CIC community itself has matured significantly over the past twenty years. We now have a substantial cohort of successful, established CICs that can serve as proof points for the viability of the model. We have sector networks and support organizations that can help channel investment effectively. And we have a growing body of evidence about what works and what doesn’t in CIC development.

What we need now is the will and the resources to bring these elements together into a coherent strategy for CIC financial development. This means working with social investors to develop CIC-specific products, engaging with government to ensure that policy supports CIC growth, and building the infrastructure needed to connect CICs with appropriate funding opportunities.

The Network Effect

One of the most encouraging developments of recent years has been the growth of the CIC Association’s network to over 6,400 members. This represents not just numerical growth, but a qualitative shift in the CIC community’s capacity for collective action and mutual support.

When we started the CIC Association, our primary goal was simply to connect CICs with each other so they could share knowledge and support. What we’ve discovered is that this network effect creates value that goes far beyond individual support relationships. A strong, connected community of CICs can collectively advocate for policy changes, negotiate better terms with service providers, and create market opportunities that individual organizations could never access alone.

This collective capacity will be crucial as we work to build the financial ecosystem that CICs need. Social investors are more likely to develop CIC-specific products if they can see a substantial, organized market for those products. Policymakers are more likely to support CIC-friendly policies if they can see evidence of strong community support.

Looking Forward: The Next Twenty Years

As I look ahead to the next phase of CIC development, I’m more optimistic than I’ve been in years. Not because the challenges have disappeared – they haven’t – but because I believe we finally have the conditions in place to address them systematically.

The social investment market has reached a scale and sophistication that makes CIC-specific products viable. The policy environment is more favorable than it’s been since the early days of the New Labour government. The CIC community itself has the scale, experience, and organizational capacity to drive change. And perhaps most importantly, there’s a growing recognition across society that we need new models of enterprise that can address social and environmental challenges while maintaining financial sustainability.

The Unfinished Revolution

Twenty years after the CIC legislation came into force, I believe we’re still in the early stages of what could be a fundamental transformation in how we think about business and social purpose. The CIC model has proven its viability and demonstrated its potential, but we’ve only scratched the surface of what’s possible.

The challenges that led to the creation of CICs – the need for organizations that could combine commercial sustainability with social purpose, the desire for community control over local assets and services, the recognition that neither traditional charities nor conventional businesses were adequate to address complex social problems – these challenges haven’t disappeared. If anything, they’ve become more urgent.

Climate change, social inequality, community breakdown, economic instability – these are problems that require innovative approaches that can operate at scale while remaining rooted in local communities. CICs, with their combination of commercial flexibility and social purpose, are uniquely positioned to address these challenges. But only if they have access to the resources they need to grow and develop.

The work we do over the next few years to build appropriate financial infrastructure for CICs will determine whether the next twenty years see the CIC movement fulfill its potential or remain a promising but ultimately marginal experiment. The stakes couldn’t be higher, not just for CICs themselves, but for the communities they serve and the broader project of creating a more sustainable and equitable economy.

This is why I’m making an exception to my general withdrawal from public advocacy. This is why I’m willing to engage once again with the policy debates and investment discussions that I’d grown weary of. Because I believe we have a window of opportunity that we cannot afford to waste.

The CIC legislation gave us the legal framework for a new kind of enterprise. The past twenty years have proven that this framework can work. Now we need to build the financial and support infrastructure that will allow it to flourish.

The communities that CICs serve – and the broader society that benefits from their work – deserve nothing less.

John Mulkerrin is co-founder of the CIC Association and one of the founders of the first 100 Community Interest Companies. After a 15-year career in financial services, he has spent the past two decades supporting the development of the CIC movement in the UK. He is currently working on developing social investment opportunities specifically designed for Community Interest Companies.