CIC Association

Serving Community Enterprise

New rules could 'open the investment floodgates' for CICs

Stephen Lloyd believes there is "a real opportunity now for CICs to be a key part of driving forward the social enterprise market in this country". 

Lloyd also points out that the budgetary constraints that followed the recession in the UK, have encouraged the government to look to new players to provide public services. The CIC has been a model of choice for organisations "spinning out" of public sector bodies into the social enterprise landscape. "A well financed CIC sector is a crucial player in that space," Lloyd says

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RE: Want to raise Community Shares in 2014? We can help

Hello John,

This sounds indeed exiting news and I'd be interested to find out more in the new year. Was just considering converting SE to Shares but perhaps I'll hold on a bit. Contact me on re more information and when would be a good time to have a chat in January

Wish you, your family and everyone at CIC a very festive season and a 'blooming' fabulous New Year!

Johann, I saw somewhere that your focus is on vulnerable children. It was the major focus of our own work in Eastern Europe and a few years ago my since deceased colleague gave an interview about his efforts to leverage investment for transition from institutional to foster care  

He warned of the mission risk from too great an emphasis on financial returns, pointing out how social investment could still be raised by a business which issues no shares.

I referred this to Mark J Lane, the US lawyer who promotes the LC3 model and he in turn showed me a conversation between himself and Muhammad Yunus where Yunus reveals an interesting story about getting Danone investors on side.

Hi Jeff,

In your example P-CED would give £150k less to the investors and £150k more into the social purpose if it was a CIC.

Also with a CIC you can choose whether to have dividend or non paying dividend shares (schedule 2 and 3) so you can decide individually which you prefer. Currently approx 1 in 4 share CICs have dividend paying shares, most are schedule 2.

Ha-ha.....i'd suggest you do hold on Johann! Not long now though to be honest. Only CIC, Ben Comm and Charity qualify for the relief so do hold on for final details. 

Also, you'd have to be able to find something that a non CIC share can do that a CIC Share cant. These changes will sweep away the technical issues around the CIC shares for investors and make it easier to attract external support.

Perhaps more fundamental and much more likely to be transformational is the unleashing of the modern sweat equity social business leader, who can now co-benefit from the growth they achieve in a simple, fair and tax efficient manner. 

I was hoping for something that gave us a level playing field but coupled with the tax relief, the fact that we can very simply identify CICs and create standardised products and services creates a 'collective opportunity' for CICs that also makes it a much better for every individual or organisation using it.

I'll update everyone in Jan but we can talk in the meantime if you like, the total timeline (end Oct14) is actually a lot quicker than we had anticipated but whilst there isnt a rush I thought it best to get the discussions going with those who are interested.

Merry Christmas to you also, my Christmas came early when the Regulator announced on 10th Jan, sad but true :-)

For a CIC that has clearly identified a need, properly assessed the risks of delivering on its aims and has feasible targets which are monitored through a business plan I don't think will have any trouble getting support in the form of inward investment. For all the others, I don't think any changes to the rules are really going to have much impact - other than to quell doubts over the CIC format more generally - though much of that is because even within the CIC format there are a range of mixed imperatives and so on. In this sense, getting a market going for shares in CIC's is going to be tricky because it's a bit like the housing market, in the sense that even two CIC's 'on the same street' (so to speak) will not be exactly the same in terms of the mix of social mission and potential for ROI. One of the best uses for a CIC to me seems to be as spin-off for charities and universities and in the health sector. I don't see a vibrant market for CIC shares outside those applications - and the statistics already seem to show that CIC's that are set up for venture capital type arrangements are in the minority? Maybe this will change, but I suspect in most sectors like finance, technology, property and science the preferred model will be those that offer unlimited profit maximization in terms of capital growth and income for some time to come? 



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