CIC Association

Serving Community Enterprise

Since incorporation in 2009, we have suffered a lot of ignorance about what a CIC actually is, does and its future; particularly in relation to funding.

It would appear that there is a very narrow approach to this - and many local funders (government 'grass roots') funding is beyond our reach, for want of misunderstanding about CIC's generally.

Also, the bank has a strange attitude to CIC's - and the accounts offered have limitations in our experience. We currently have a Treasurer's account - which avoids charges, but is not much use when it comes to borrowing eg. Also, it seems that the CIC model is a hybrid which puts its Directors and members in a vulnerable 'no-man's land' when it comes to many business opportunities. I feel that the model slips through the net too many times, in terms of funding, public perception (which can be damaging indirectly) and simply does not work.

Clearly some are making it work, but for us it's brought more hassle than anything else - and the funding issues prevent expansion. Whilst I don't want to be overly dependant on funding, it's hard making things work without it, particularly in the middle of a recession.

The third-sector is dominated by charities and unincorporated associations which are always at the front of the queue for funding and support - and the CIC, in my opinion - doesn't fit either the business world or the charitable sector neatly. It's an untidy, misunderstood hybrid that no-one really 'gets.'

 

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Thanks again Terri.  The world needs professional scroungers for the greater good obviously.

 

David

I don't know of anything published on this but here are some of the main points:

  • make the objects charitable
  • add a 'well-being' object - "To promote and improve for the public benefit the economic and social well-being of people living and working in areas where the Company operates."
  • limit directors' remuneration - something like

Directors shall not be paid for their services to the Company as directors, but are entitled to reasonable and proper remuneration for any services they supply to the Company in addition to their service as directors, including reasonable and proper salary or wages for working as an employee of the Company in a capacity additional to their service as directors.

A director who is also an employee shall not vote on his or her own contract of employment and no question relating to terms and conditions of employment shall be decided at a meeting of the Directors where one half or more of those present are employees of the Company.

  • add a 'social audit' article
  • add an equal opportunities article
  • maximise stakeholder participation - if possible link directly into governance

Some of these need some discussion and development - it's often a question of appropriate compromise between what you want and what likely funders will want - but I can send examples of the sort of thing that works.

I agree with Terri's practical advice too.

Hopefully the CIC Ass will someday get some money and we can produce properly structured written guidance on all this.

Hi Geof,

 

Thanks for the advice - it is really useful.  I think the CIC movement should perhaps help those thinking about establishing CICs by producing some kind of written guidance.  This may be becoming more urgent as I understand that Charitable Incorporated Organisations (CIOs) may be joining the affray sometime this year - just to muddy the waters a bit more!

I've found the CIC model to be perfect for what I want to achieve and it's been a great talking point when I'm in a room full of people who haven't come across one before. Not so good when trying to get an accountant though! They all seem to run a mile!
Hi Sharon - Why do you think they run a mile?  Is it because they think social enterprises are run by people who are not business-minded and too wrapped up in their social missions?  I am interested, being an accountant (though not in practice) as I want to help these companies succeed.

Well, I am a little guilty of being the above!

I suppose many of them think there's far too much extra work, or they just don't understand them. (The amount of accountants I've met at networking events that try and convince me I'm exempt from Corporation Tax...)

Good to know there are exceptions, thanks!

Feel free to contact me...

Sharon's absolutely right! It took us ages to find an accountant - and many stated directly that they didn't understand CIC's or simply didn't want to get involved in something they perceived as 'too complicated.' It's barmy really, but this is what can happen.

Even when I explained the basic differences between CIC's and standard limited companies, they still weren't moved. As for the asset-lock (a defining feature), our accountant was so nervous about this that he made us draw-up a detailed list of our assets to include in our first-year accounts!

I didn't mind really - but can't understand why accountant's are so weird about it all....

 

Hi,

 

I guess the problem is that accountants generally do not like to step outside their comfort zone for fear of negligence claims and/or disciplinary charges from their professional body.

 

I think they think all social enterprises will require social accounts and that they will need to work out the SROI or other measures and feel that this is outside their experience.

 

Sharon - I would like to contact you at some stage to learn a little more.  The comment about corporation tax is very strange - presumably they think you are operating as a charity and not trading!

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