No more scraps - Growing up and getting tough

[John Mulkerrin]

In Sep 2002 the concept of the CIC was outlined in the Strategy Unit report "Private Action, Public Benefit”

The stated aim was to widen and deepen the enterprise culture, so that regardless of their background or circumstances, everyone has the chance to go as far as their talents will take them. Government wanted to support SMEs and social enterprises to modernise and reform the delivery of services, regenerate disadvantaged communities and spread enterprise culture.

On publication of a joint DTI/Home Office/Treasury consultation document on March 26th 2003 Patricia Hewitt said 'The CIC will present new opportunities for social enterprises to benefit the people they serve: Easy for investors to understand, with an assured lock on profits and assets to attract social investors, it will help create a strong new brand for social enterprise and a new marketplace for social investment'.

Passing into law in July 2005, numbers have grown quickly with over 4200 currently on the Regulators register, ranging from £100 individual start ups to multi million pound healthcare providers employing hundreds. It's being used by Charities, Local Authorities, Communities and Individuals up and down the country across all sectors and activities, and its potential to expand the social economy is being realised daily.

Taken at face value all seems to be rosy on planet CIC, but dig a little deeper and some tough questions emerge. At the risk of encountering the well oiled PR machines that have supposedly been aimed at me for some time, I'm sticking my head above the parapet to say that CIC has been failed by the support structure it was born into, most notably by the SEC. Social enterprise was given the first new company legislation in nigh on 150 years, how have they nurtured it?

Despite the millions that have been invested into social enterprise by the previous Government, virtually nothing has been spent on developing CIC infrastructure in five years, be that accurate and detailed information for professionals and business advisers, or research and development to establish the viability of packaged CIC investment products. I get phone calls almost daily from CICs or potential CICs of all shapes and sizes, and the quality of advice they receive is variable to say the least. CICs have flourished in spite of the indifference to doing anything tangible, not because of it.

By way of example look at The Social Enterprise Mark, which came into being after the CIC legislation. It has received nearly £1million pounds of taxpayers money in total, has less than 300 members and is a complete and utter shambles. Before it received its latest round of funding we asked the SEC and the OTS for the opportunity to present a case as to why investing in CIC infrastructure instead would create more bang for the taxpayers buck and social enterprise in general, but were rolled over, as I was previously when I asked the SEC to help us build some funding bids in 2008. I'm happy to provide full copy of all correspondence if needed, there's a lot of it.

I don't say any of this lightly, and would have preferred to discuss all the positive development we're achieving at the Association instead. However, I don't want to be played for a fool again and feel having this discussion in public will help us all draw a line in the sand, learn lessons and move forward. I hope it will also provide context to our decision to bid for a strategic partnership with the Office of Civil Society, and I would urge you to come to www.cicassociation.org.uk if you can help us develop the infrastructure to enable CIC to do more for the social economy.

Basic Incorporation statistics

Average number of applications received per month 2005-10 Period	Applications received	Monthly average
Jul 05 – Mar 06	260	28
Apr 06 – Mar 07	719	60
Apr 07 – Mar 08	873	72
Apr 08 – Mar 09	1,209	100
Apr 09 – Mar 10	1,572	131

[Geof Cox]

You're absolutely right John. For me though the most positive development of all that's being achieved at the CIC Association is that you - and I know it has been mainly down to you - have galvanised a thousand-member- strong network out of nothing - in no time! The CIC Association may well now be the largest social enterprise umbrella body in the UK - I think it has, for example, about three times as many members as the Social Enterprise Coalition. We are at a point now where we need - and deserve - much better recognition and support from both government and other umbrella bodies, and I hope the membership will support you in lobbying hard for this.
On the social enterprise mark, incidentally, I've just been looking again at the most recent and reliable research on the numbers of social enterprises (Approaches to Measuring the Scale of the Social Enterprise Sector in the UK, by Fergus Lyon et al, TSRC September 2010) - one of the approaches they propose (their option 4) and that I would see as most accurate because it embraces all legal structures, suggests that there are nearly 300,000 social enterprises in the UK - so the 'less than 300' social enterprise mark holders represent about one tenth of one percent of social enterprise. So at the current rate of spend it would take something like £500million even to get half of social enterprises to use the mark!
Perhaps each CIC should suggest they simply donate to us, oh, say £2,000 of the £3,000-£4,000 it would cost to give us the mark, and we'll promise not to ask them for it. We get £2,000, they save at least £1,500 - everybody wins!

[Jeff Mowatt]

No More Scraps indeed John :-)

One of the key elements of our own community interest model was the funding mechanism suggested to propagate it, where surplus would be re-invested into a permanent irrevocable trust that could be used to provide seed funding and in so doing spin off many new like organisation.

Early in 2004 we had a business plan prepared to do this in the UK. We'd calculated a UK yeild of £100 million for social enterprise investment. Something our government hadn't thought of until it was hit by a credit crisis and it was too late to save jobs.

http://www.box.net/shared/y3tpik8eg6


We've got by as no doubt most CIC members have too and paid tax on our revenues to fund government and government funding of grant funded social enterprise. There's an immense pyramid of grants funded social enterprise which is clearly something to cling on to.

That's a reasonable stance, if they do what they were funded for. I'd repeatedly tried to contact the regional organisation RISE-SW from 2006, and in 2009 they answered saying they were too busy t help. They were deeply involved in preparing the SE Mark. All I wanted was to make them aware that we existed and of our social business model.

It's been much the same experience from central government. After much effort our FCO eventually acknowledged that they and DFID knew about out work in Ukraine. That cut little ice when they followed our 6 years work to leverage social enterprise without wanting to involve us.

AFICS the CIC is the closest legal form to the P-CED concept and most of what passes for social enterprise is little different from charity, with a new label.

Perish the thought that one day we might have a culture that wants to share.