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.'
Yes, in the most fundamental sense, it's working very well. BUT,BUT,BUT!!!!! ..........there is a huge amount of work to do solve some of the issues you raise, which in my opinion show up the failing of other groups to understand and evolve CIC into their worlds.
I had a bit of a rant about it in the Third Sector magazine interview this time last year , the year before in this welcome to Welcome to Planet CIC piece, and earlier still with this letter to Cabinet Office Minister Liam Byrne .
I've personally come across every point you raise, and quite a few more besides. Things are changing, one reason is the withdrawal of Central and Local Government funding which means individuals and organisations have to come up with new ways to solve problems, the second is that now we're nearly as big a number as Co-ops people are starting to recognise there might be an opportunity for them to get involved and work with CICs, rather than have the attitude that we're too small yet, are a threat to their funding pots or that they dont like us from an ideaological perspective. Its a new way to skin the cat.
I could go on forever about this, but the simplest statement I can make as a general view is that the problems are reducing by the day.
CIC is a baby Giant with an absent father and a negligent mum. Its been a harsh upbringing but we'll be stronger for it in the long run.
Hi John, lol, I particularly love the last statement ;-)
We are just setting up as a CIC and it has been a hard decision to make: initially we were keen on charitable status, but we decided on the CIC form as it's much lighter in terms of regulations and the owners can remain in control. I think, like you said, the subscriptions to this model of social enterprise is growing rapidly and this shoud lead to something positive, both in terms of future outcomes & developments and in terms of acceptance/understanding in the public mind.
Yes John - I agree with much of what you have said but without sounding defeatist: is it worth all the bother?
If something is so difficult it brings you into conflict so much of the time (which appears to be the case) then surely it's symptomatic of a flawed way of operating?
I am not a pessimist or a defeatist but I remember some ancient wisdom which goes something like this:
If you keep falling over the same hurdles, maybe they're not actually hurdles, but SIGNPOSTS indicating that you are going the WRONG WAY....
It's food for thought anyway - and I'm fast reaching the conclusion that whatever you do with this model, it will remain indequate because it's a HYBRID. Now, in nature such hybrids are strong - but we're talking about something quite different here. In business terms it just causes confusion - and in the third-sector it seems to engender suspicion - bordering on paronoia!
I admire what you have achieved in this fight for recognition - but feel that your energies might be better placed in creating something new that actually works! Perhaps there is a better model which might address these issues?? Remember, the CIC was a government construct - and the government is not known for its creativity! Maybe the time has come for a complete appraisal and re-structering - from someone with the requisite creative thinking to achieve this?!
I'd be interested in your ideas....
ha-ha! ive often asked myself the same question.....i keep finding myself saying YES, without much more than a shadow of a doubt. Whereas that might have been based on hope and potential in the first few years, its based on emerging facts now.
CIC is working, as a context.............limited liability companies came into being in 1844, if you compare how many of them were in existence after 5 years, and compare that to CICs after 5 years, you might be suprised to know we are doing better.
Our asset base is growing at a ridiculous rate, CICs are employing tens of thousands (probably nudging into the hundreds of thousands) already. As a collective we (and this isnt hugely scientific) already have a combined annual turnover in the hundreds of millions (a few biggies have come on board recently)
Its working Terri, the hurdles are being removed, well, the ones than can be removed. I completely take your point that there is in parts a 'suspicion' about CICs, but thats just simple ignorance, once people find out what it is all about that usually changes. Lord Victor Adebowale spoke very eloquently recently at an event about vested interest, and the fact that you have to just accept it and carry on. Its not nice, or fair, but then most things arent.
If there are any particular issues you have let me know, and i'll get involved as best I can, we're knocking the obstacles down one at a time.
Its good to hear that the hurdles are being removed. I am a late convert to social enterprise - which is strange as I have largely worked in the third / mutual sector but never really had that mindset.
My recent research however, has found me re-visiting old accountacy magazines - sad i know, i should have thrown them out according to my wife. But, I came across an article written way back in 2005 about social enterprises which said:-
Social enterprise is a way of life in some parts of the world, in others its a necessity, but in many parts of the West it is widely misunderstood. This is one of our biggest challenges.
It goes on to say that there are a number of legal forms to adopt and that people nned to use the model which best helps them to achieve their social objective.
In other words, the social objective should drive the selection of the model. The article says there isn't any one approach that is any better than any other. Different solutions solve different problems.
CICs therefore will be the right solution but only if they are solving the problem that needs a CIC. So, fundamentally, it is about problem definition. If you get that wrong you may choose the wrong solution/vehicle.
Social enterprise has to better than the so-called US Enterprise model which is all about short term performance and greed. Again, in the same magazine (2005) an article entitled " Why there's no future in shareholder capitalism". It argues that concentration should be on shareholder value not profit per se. However, it also suggests that there is no long term future in the Stakeholder model where companies try to satisfy a multitude of objectives. It suggests that companies with a single objective (true economic value) will out perform their competitors.
So maybe the CIC is not the optimal structure to solve problems. However, with the influence of people like John we have a chance to move towards that optimal structure.
You clearly have a good grasp of the underlying principles which drive people to consider the options about the structure of running a social enterprise.
Even within the CIC structure, there are vast differences in operation. Not all CIC's are the same - as no Directors are the same. Vive la Difference!
The problems you describe are real - but by no means limited to CICs. What you describe is common across social enterprise whatever organisational form it takes.
Most charities engaging in enterprise strain against charity law, especially the problems around a voluntary management committee; IPS forms struggle with FSA regulation, and often with misunderstanding by funders too; unincorporated associations are a disaster once trading gets going because they lack limited liability; other kinds of companies are not asset-locked so are less fundable than CICs (if you have adapted your CIC constitution to make it really grant-fundable).
I advise people to use all of the above forms in the right circumstances, but often the CIC is the best option as a structure for social enterprise - its usually a compromise, and one that could be better (which is why I support John and the direction of the CIC Ass so strongly) but please beware of that 'grass is greener' trap!
Geof - you have clearly identified the many forms of structure open to social enterprise - and you're right in that whatever form you opt for, there will always be some kind of problem!
In essence, there is a dichotomy within social enterprise anyway; the endless balancing-act between generating earned income and serving the community.
Whilst the CIC is not a perfect fit my organisation, it seems to offer the 'best fit' - at least for now.
What I am beginning to realise from much of the feedback on this site is that there are so many ways of operating, even within the CIC 'model' - and that's no bad thing.
There are as many ways of creatively operating as there are different personalities within individual management structures. I think that it all comes down to personal interpretation and application, depending on your ultimate vision.
Whilst I am uncomfortable with some of the problems we face, I still wouldn't want to swap with another structure as it currently stands....
Can you point me in the direction where I can learn about how to make a CIC constitution really grant-fundable?
It is not necessarily what I am looking to do, but would still be interested to know any "tricks of the trade".
I know this question was for Geof (who probably knows more about this) but I do have some experience in being a 'professional scrounger' - for the greater good!
Firstly, ensure that your constitution allows you to borrow as well as receive grant assistance to further the aims of the organisation. Next, ensure that your 'designated recipient' for the asset-lock is preferably a clearly recognised asset-locked body to reassure any potential funders.
When you come to processing grant applications emphasise the asset-lock - (which is only applicable to capital grants obviously) - but it does help to specifically point this out to funders who need reminding of the asset-lock sometimes!
There is no sure-fire way to guarantee making your organisation more grant-fundable in itself, apart from carefully drafting your Objects - and this is a case of communicating clear focus without being too narrow or restrictive. If you draft your Objects too narrowly, then you may scupper certain types of funding or make yourself work in having to change them later.
Think about what attracts funders first: certain types of 'projects' - they love this word! Reassurance is another, which can be gained from having a robust Management Committee, but this takes time to build.
It also depends to some extent, on your geographical location. Research the whole area of grant-funding; it's a minefield, but you soon learn. One final point: funders are increasingly encouraging all social enterprises to be more self-sustaining, so even if you are desperate for a leg-up financially, try not to show it - and emphasise your strong points on generating income to 'become sustainable and independant in the long term....' This will reassure funders in many ways of your suitability - and that your organisation is making every effort to become less reliant on severely restricted funds....