CIC Association

Serving Community Enterprise

CIC Association response to Guardian Article- Selling up without selling out

Full story click here: http://www.guardian.co.uk/social-enterprise-network/2011/may/10/sel...

 

I might well agree with some of the issues you're raising Dermot but this article is innacurate to such an extent I felt I should contribute to clarify a few points.

There is little enough detailed discussion on CIC and these subjective articles really do not help in reducing the innocent misrepresentation about the issues at hand. There seems to be a massive disconnect between the reality of the situation and the 'canape conversation' on CICs, I hope you'll appreciate how damaging this can be to individual CICs and the wider progression of the growing CIC community.

There are actually 5080 CICs on the Regulators register of companies as of today, and the trending rate for incorporations is accelerating month by month. Viewed in any context this is hardly paltry, in fact the number has far exceeded any of the original expectations. Ive previously called it a microboom and it shows no sign of letting up.

If you compare it to when limited companies were brought into being in 1844, there have been more CICs created in the first five years.

According to the Co-ops UK website, there are 4800 independent Co-operatives.

In some ways CICs will be at a disadvantage in specific situations, but then again in others they have advantages. I cant think of a local authority that would give a private company an asset for less than market value for example, whilst they can and do with CICs.

This link connects you with press articles about CICs up and down the country, a quick flick thru the 150 or so articles will show that far from proving unpopular, it is becoming the structure of choice for many community activities, from multimillion turnover health organisations to kitchen table community activists.

CICs in the News

We have the same tax breaks as any other company available to us such as EIS and CITR. We dont get the same tax breaks as Charity but they dont look to cash in without selling out anyway.

The extra £15 on incorporation is for the Regulator to do her job, this is still the case and isnt really inexplicable. We have conducted two surveys of the CIC community so far and both have shown that in general we are very happy with the regulation overall.

Agreed the Asset Lock does make it harder to sell a CIC, but part of that reason is they aren't very attractive to the large corporations who can strip out the social mission of non-CICs. This is surely a good thing?

If you think of the NHS for example, many are concerned with 'privatisation by the back door', as happened with transport and building societies previously. The Asset Lock can go a long way to reducing those fears and ensuring reform remains for the benefit of the general public and not private company shareholders.

The caps do restrict access to some profit demanding capital, but can you give me an example of a social enterprise that has paid a dividend of greater 20%??
If there are 60k + social enterprise in the UK, the fact that none pay a dividend of more than 20% is a statement in itself.

There have been some excellent recent reports that state return isnt the main problem anyway, more understanding and awareness, investment readiness and structured investment products.

One point that I would like to make that is nearly always misunderstood, you CAN sell your CIC shares for a profit. All small businesses have huge problems putting liquidity into their shares, all the recent activity around CIC shares actually makes for a very promising future, St Mirren FC is a good example.

Is selling to a corporate what you want to do? if so then CIC might not be for you, ultimately it is about building assets for the community.

Having said all that, I completely agree that more needs to be done to enable entrepreneurs to get a return on their sweat equity, after all those individuals (i think of myself as one) deserve to be rewarded for the risk, passion and dedication they bring to bear.The Regulator responded in a previous consultation by raising the dividend caps, and she is currently holding another review to assess progress and potentially make changes.

The wider Treasury review around financial services will have a greater impact on where, what and how we develop investment infrastructure. We've put a submission in.

CICs can also apply for discretionary business rate relief, granted it is at the discretion of individual local authorities to approve but again it is something you cannot access as a private company.

Consider also that virtually no cash has been spent on building infrastructure for CICs up to now, again, that is a statement in itself.

CICs already employ tens of thousands of people, have turnover in the hundreds of millions (if not more) and are being led by individuals from the private, voluntary and charity sectors. Surely not paltry, surely not unpopular

John Mulkerrin

 

Views: 1382

Reply to This

Replies to This Discussion

I love this! CICs can and do offer good investment options, and also exit strategies. I think Dermot should attend a CIC event to find out more!

RSS

Groups

From Funding Central

Events

© 2022   Created by John Mulkerrin.   Powered by

Badges  |  Report an Issue  |  Terms of Service