CIC changes not enough, says Schwartz

Finance | Gareth Jones | 26 Jan 2010

Community interest companies are “still not very attractive”, despite the government’s decision to raise the dividend cap, according to Rodney Schwartz, CEO of social business marketplace ClearlySo.

In a blog post titled “Global interest in recent CIC changes: better does not yet mean good”, Schwartz (pictured) says: “There are now three things I think about CICs: First, they are better than before.

“Second, they are still not very attractive. Third, the government is doing a great job of marketing the idea and has tapped into an international interest in coming up with something for social businesses and enterprises (SBEs).”

Schwartz added that while the dividend cap increase was set to the right level (20 per cent) and should make it easier for CICs to raise money, the 10 per cent limit on quasi-investment means “the permissible rate of return is too low” to raise funds in this way.

He concludes that the government should be praised for identifying a need for such an entity and attempting to make it work, but says: “I cannot help but feel the government (I suspect the Treasury) lost its nerve to give CICs the sort of fiscal appeal that would really help them take off.”

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