Recently I have been working on the providing feedback to the CIC (Community Interest Company) Regulator regarding a consultation on the Dividend Cap - http://www.cicregulator.gov.uk/consultationintro.shtml
The condundrum of enabling private (institutional or individual) investment in to community owned assets has, as you can imagine, arisen as a fairly important element that seems to present itself as a probelm prior to the issuing of fair dividend. Against what is an investment secured? And if the assets can't be sold, where is the exit plan? Furthermore, most investors looking for a return - especially if the investment is percieved to be high risk - wil choose to waiver any available dividends in favour of re-investing them in to the growing company again with a view to the exit. A CIC can be created as either a CLG (company limited by guarantee) or a CLS (company limited by shares) - it is in, particularly, the application of Community Interest Company limited by shares that there lies a potential to create fundable community owned enterprises.
For the record, it is my opinion that the current understanding of "exiting" is also one of the factors underpinning our destructive way of being.
moving on... given that the assets held within a CIC are locked to the good use for community and cannot be sold, other than to a another CIC or similar charitable body it would appear that CIC's do not lend themselves well to the current understanding of achieveing an exit. They do, however, represent an opportunity to build sustainable, community owned enterprises that generate profit. Since shares can be issued in return for investment and dividend can be paid against them then, for those more "patient" investors - perhaps the same kind who were looking for % annual returns from bank and building society savings accounts - there is a role for some kind of "agent" to mediate these investors money in to community projects owned by CIC's...
We then thought that it would be useful if there was a CIC bond that people could buy in to that in turn organised structured investment in to these community enterprises on behalf of the investors. The bond could then deliver sustainable returns on enterprises that were not seeking to get as big as possible take over the world and then go bust... maybe something more like running the local postoffice? There is nothing to stop institutional investors, local authorities, the government etc investing in these bonds - they could be open to anyone - but the purpose of them is to invest in budding viable community enterprise opportunities.
Other ideas for CIC's that could be invested in by such a bond could be...
- public swimming baths
- public transport
- home help
- cafe's and community resources
- local pubs
- buying land to grow veg on
- creating local infrastructure to generate electricity
The bridge to cross in terms of CIC's is enabling the value of the shares to go up and down... we'll be making this point clear in our response to the consultation.