Paying yourself as a director of a Community Interest Company (CIC)

As a Community Interest Company (CIC) director, you can pay yourself for your work—just make sure it’s done responsibly and aligns with your company’s mission.

Here’s a breakdown of how to approach compensation that’s fair, reasonable, and aligned with both regulatory expectations and your CIC’s goals.

Why Director Pay for CICs Is Different

Since CICs are mission-driven, regulations around director pay are stricter than those for standard companies. Pay must not only reflect the work performed but also serve the community’s best interest. Essentially, you can be compensated for your hard work, but it needs to be proportional to your role, transparent, and documented to satisfy both the CIC Regulator and any community stakeholders.

Options for Director Pay

There are a few common methods to consider for CIC director compensation:

1. Salaries:

This is the most straightforward approach. A regular salary allows you to receive consistent income that’s directly tied to the time and effort you dedicate to the company. To avoid raising concerns, make sure your salary is benchmarked against similar roles in social enterprises, and take the CIC’s financial health into account.

2. Expenses and Reimbursements:

Reimbursement for out-of-pocket expenses related to the CIC—such as travel, office supplies, or other operational costs—can also be a helpful way to receive compensation without it counting as profit. Ensure expenses are necessary and well-documented to maintain transparency.

3. Bonuses:

While bonuses aren’t typical for CICs, they can be justified if they reflect exceptional contributions to the CIC’s mission. Any bonus should be kept modest and directly tied to achievements that benefit the community.

Best Practices for Justifying Pay

To keep everything above board, make sure to document how you set your pay and justify it. Use industry standards as a guide, keep records of decisions, and be prepared to explain them to stakeholders. This helps build trust and avoids attracting unwanted attention from the Regulator or the public.

Maintaining Transparency

Transparency with stakeholders is crucial. Consider summarizing your pay policies in an annual report, which reassures the public that funds are being managed responsibly and shows that your focus remains on benefiting the community. Clear communication fosters trust, allowing you to sustain your CIC’s social mission while receiving fair compensation for your work.

So, while paying yourself as a CIC director requires some extra steps, it’s entirely possible to do so responsibly, in a way that aligns with both your mission and the CIC’s community-focused values.

And if you need any help, don’t hesitate to contact us.