CIC form called into question 3

Finance | Tania Mason | 7 May 2008

Nigel Kershaw, chairman of the Big Issue and CEO of Big Issue Invest, has called for reform of the Community Interest Company (CIC) legal entity, describing it as “half-hearted”.

Speaking during a panel debate at the Office of the Third Sector’s Good Deals social investment conference, Kershaw (pictured) argued the dividend lock, which prevents CICs from paying large dividends to investors, is discouraging investment.

He said that as far as he knew just two or three CICs had attracted any inward investment, adding: “It is so restricted. There is a need to open it up so there is an element of risk”.

Jonathan Bland, chief executive of the Social Enterprise Coalition, admitted the form was “under-utilised”, and proposed a ‘community interest reserve’ to provide finance for CICs.

He added he had been in discussions with the CIC Regulator over the possibility of changing some of the caps.

Charity and business better than CIC

The conference also saw criticism of the CIC form from Rose Marley, director of MOTIV CIC, a company which works to prevent truancy in schools.

During a question and answer session, she said she had been “very disappointed with the whole CIC experience to date”.

“It hurt us. It’s the right model to prove our social worth but if we’d set up as a business we’d have raised the money we need easily.”

Meanwhile, Felixstowe Community Radio has told Charity News Alert it is planning to register for charitable status, because as a CIC it cannot gain the same benefits.

“We keep getting told by funders and others that we aren’t eligible for what they offer because we are not a charity,” said the station’s chairman Trevor Lockwood.

He said he had applied for free Microsoft software through Charity Technology Trust’s CTX programme but had been told the station didn’t qualify because it was only available to registered charities.

“So I think we’re going to stop being a Community Interest Company and go for charitable status instead.”

Who's Who: Tania Mason

Place a comment

Adrian Ashton
29 May 2008

Some research that's just been completed that was comissioned by Co-operatives UK found that social enterprises want to raise investment through equity invariably favour IPS models over CICs.

[Reply]

Norman Rides
Chief executive officer
The Social Enterprise People
8 May 2008

Ever since the CIC form came out I have thought that it was a solution in search of a problem. It did nothing that could not have been done a lot easier by tweaking the IPS BenSoc model. If the rules are changed to permit large didivends to investors then CICs will cease to be social enterprises and simply be return-on-investment vehicles instead. The whole purpose of social enterprise is that the social purpose is the driver of the business, not a piece of marketing fluff.

[Reply]

Adrian Ashton
7 May 2008

Well, I publicly lobbied the CIC regulator about 18 months ago (with some success) and attracted interest from many who started blogs both in favour of, and opposing, my actions. www.adrianashton.co.uk/articles

[Reply]

Comments

[Cancel] | Reply to:

Name *

Email *

Organisation

Job Title

Comments *

Verification *

* Please read our Community Standards

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

Robust but respectful debate
Strongly held opinions
Intelligent relevant discussion
The sharing of relevant experiences
New participants

We will not publish:

Rude, threatening, offensive, obscene or abusive language, or links to such material
Links to commercial organisations or spam postings. The comments board is not an advertising platform
The posting of contact details for yourself or others
Comments intended for malicious purpose or mindless abuse
Comments purporting to be from another person or organisation under false pretences
Gratuitous criticism, commentary or self-promotion
Any material which breaches copyright or privacy laws, or could be considered libellous
The use of the comments board for the pursuit or extension of personal disputes

Be aware:

Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
Comments left by others may not be accurate, do not rely on them as fact
You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

Enjoy the opportunity to express your opinion and respect the right of others to express theirs
Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.