CIC Association

Serving Community Enterprise

Any tips or advice for your fellow CICs on mistakes to avoid when seeking investment?

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Yes John, We wasted a lot of time and effort in 2004 when steered toward a guarantee company and ICOF for loan funding,

What we didn't discover until submitting the plan was that they were restricting the funds for community broadband projects to I&P registered cooperatives. The guarantee company without share ownership put both charity and private funding support out of reach.

Our founder was then refused a visa to re-enter the UK as a visitor and we had a social enterprise with no director.

When the CIC came into being it was too late. I started again as a share capital company. Some principle, profit for community purpose.

Jeff
there are a few groups I've had contact with over the last few years who took CIC status soley because the bodies they were courting for investment said that they would only recognise them as a 'legitimate' social enterprise if they were a CIC.

sadly in all instances, the CIC status turned out to be problematic to these organisations after the anticipated finances never quite materialised in the way they were led to believe and they subseuqnetly discovered that the officers they were negotiating with didn't really understand social enterprise or how to invest/finance them...and that the CIC status was actually immaterial...

the moral of the tale is if you're taking CIC status, make sure its the best vehicle to enable you to act in the ways you want to, not on the basis that its what someone else tells you you should be.
very true Adrian

we've been building a body of evidence on this, and there is a clear pattern developing. I dont agree that CIC status is immaterial though, whilst social finance is certainly in a mess the need for defined regulatory and reporting strucures is clearly growing, as evidenced in the work of SAN (Social Accounting Network)

We now have some case studies actually showing that being a CIC has actually been a negative! From foundation trustees to sector business advisers, the variability and inconsistency of even basic understanding is frightening.

The funniest is a trust who wont approve grants to CICs, citing one of the main reasons for not doing so as knowing a CIC director who drives a BMW, to more worrying cases where businesslink advisers have advised funding is available as a social enterprise but not as a CIC.

Its undoubtably going to be a bit of a slog getting integrated successfully, but whilst id probably have to agree that its a slight negative carrying CIC status today, the support structures do seem to be slowly coming around, although lack of proper support for good information and awareness is undoubtably slowing things up a bit.

We're putting together some copy for dissemination which we hope will bring the level of debate up a bit, if any of the groups you mention could contact me to let me know a little more detail it would be great. Could you get them to fill out this survey? http://tinyurl.com/CIC1109 We've got some relevant questions in there
cheers
John
funny - reminds me of a church a few years ago that was structured as a charity: the Commission got a bit concerned when they learnt that the (salaried) pastor of the church was also the chair of the trustees, and the charity had just purchased a brand new, top of the range, Mercedes Benz for him... and yet they were still able to succesfully apply for grants!

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