Assessing and Funding Community Interest Companies – Funders Learning through Sharing Practice
West Midlands Funders Network held a half-day follow-up session on 28 April on how different funders assess and fund CICs in practice. The first presentation was delivered by Richard Dowsett, Funding Policy and Training Lead at the National Lottery Community Fund (NLCF). Richard outlined the NLCF’s sharpened focus on resilient, inclusive and environmentally sustainable communities through a new long-term strategy, alongside a more pragmatic approach to funding Community Interest Companies (CICs). He described the growing role of CICs as flexible, enterprise-driven organisations with social purpose, and noted that as a major national funder, NLCF must carefully assess risks around governance, private gain, director remuneration and transparency.
With relatively low success rates for CIC funding applications and rising regulatory concerns, Richard emphasised the importance of robust due diligence, clear asset locks, and ongoing monitoring to ensure public benefit remains paramount while enabling innovation in community-led enterprise. Download Richard Dowsett’s presentation (NLCF).
Clare Haines, Grants Manager at Sutton Coldfield Charitable Trust, outlined a pragmatic, place-based approach to funding CICs, highlighting their growing role in delivering local social impact alongside traditional charities. While CICs account for a modest but increasing share of grant funding, the Trust emphasised the importance of robust yet proportionate due diligence, including scrutiny of governance, asset locks and director remuneration, to balance public benefit against private gain.
The session noted common challenges such as weak governance structures and misunderstandings of the CIC model, but concluded that with clear criteria, relational grant-making and outcome-focused assessment, funders can responsibly support CICs as innovative and flexible contributors to community development. Download Clare Haines’ presentation (Sutton Coldfield Charitable Trust).
Shamiela Ahmed, Senior Programme Manager at Heart of England Community Foundation (HoECF), set out a cautious but supportive approach to funding CICs, emphasising that applicants must demonstrate clear charitable purpose, strong social impact and appropriate governance arrangements. While CICs are seen as valuable vehicles for delivering community benefit, the Foundation’s experience highlighted key risks including lack of track record, over-reliance on grant funding, weak income generation models, and governance concerns around director control and remuneration.
Shamiela stressed the importance of asset locks, transparency and sustainability planning, with a preference for more established CICs with an evidenced track record and strong income generation. HoECF is currently reviewing its approach and is keen to learn from how other funders operate to ensure it remains supportive of CICs.
Across the table discussions, funders reached a growing consensus that while CICs are now a significant and valuable part of the local funding landscape, they continue to present complex governance and risk challenges. Common concerns centred on asset locks, persons with significant control, director relationships and remuneration, and the blurred line between governance and delivery.
There was strong alignment on what constitutes good practice: proportionate due diligence based on grant size, robust checks on governance and public benefit, use of local intelligence and relationship-building, and the importance of transparency in criteria and decision-making. Inconsistencies emerged around the depth of scrutiny applied, particularly in assessing private gain, director and staff salary levels and financial sustainability, driven by differing organisational risk appetites, capacity constraints and varying levels of familiarity with CIC structures.
A key takeaway was the need for clearer, shared guidance and more consistent expectations, alongside practical steps such as adapting application processes for CICs, strengthening due diligence through site visits and Companies House checks, and investing in sector infrastructure to support CIC development. Ultimately, funders recognised the need to balance risk with opportunity, accepting a degree of uncertainty while ensuring community benefit remains the overriding priority.
Key takeaways from the post-event feedback survey include the need to develop shared, practical guidance for CIC assessment, create opportunities for continued peer learning and follow-up sessions, and consider investment in infrastructure support for CICs themselves, particularly at start-up stage. There is also appetite for more tools, templates and case-based learning, alongside improved access to advice and intelligence across the region.
