The Touchwood Project

If you’re a social enterprise — business with a social purpose whose profits go entirely towards that purpose — in the UK, then you might want to think about becoming a Community Interest Company.

What is a CIC?

Community interest companies (“CICs”) are a new form of limited company set up by the UK government which may be able to help you get more funding, advice and trust from your community and potential partners. They require your organisation to be verified by a government agent, the impressively titled ‘the Regulator’, pass a ‘community test’, and have all of your assets ‘locked’, or owned by the community.

More on this in a moment, but first, why should you consider bothering to become a CIC?

Social enterprises falling between the cracks

One of the biggest challenges we’ve faced in starting up and developing Touchwood is credibility.

Since we’re a business with a social mission whose profits are invested in that mission, we’re neither a traditional business nor a charity. That means we tend to fall between the cracks for advice and funding: most people we meet with on the government and charity side are nervous about our business aims and background and don’t see why we should get grant funding, and those on the business side can’t believe we’d do all the work and hand over most of the profits to the community and don’t want to invest in something they can’t get a huge financial return on.

But social enterprise is about taking the best of a charity or non-profit (its mission and dedicated staff) and the best of business (its dynamism and financial self-sufficiency) and using them for the greater good.

However, most people familiar with social enterprise come from the charity or government side, and so tend to think of social enterprises as either the Red Cross charity shop or members of a community wanting a wind turbine or local shop.

The space for two businesspeople like Malcolm and I to come in and do a social enterprise is much less established. So we’ve had more than our share of initial awkward meetings with local authorities and voluntary organisation support groups, thanks to this lack of understanding about what social enterprise is and can be.

When I moaned about all of this to our social enterprise consultant Clive, he told me to become a CIC pronto, which would help alleviate some of the skepticism we encounter.

Is a CIC right for you?

From the CIC Regulator website:

The CIC is for organisations which:

• Trade with a social purpose (social enterprises) or carry on other activities which benefit the community
• Want to make it clear that they are established for the benefit of the community rather than their members
• Wish to enjoy the benefits of limited company status
• Do not wish to be charities

The first CIC was registered in August 2005. By August 2006, over 400 CICs had been registered.

Among the activities carried on by community interest companies are:

• Working with disadvantaged groups to increase their employability
• Recycling and other projects of benefit to the environment
• Providing enabling facilities to disadvantaged communities
• Regulation of professional and other services
• Running schools for children excluded from mainstream education
• Providing care facilities for children and the elderly
• Community arts and educational projects

The legislation on CICs was presented as part of the Government’s strategy to promote social enterprise.

What makes a CIC different from a regular Company Limited by Guarantee or Shares

What makes CICs different is that it is:

1. Independently verified by a government Regulator through a “community test”
2. All the assets owned by the organisation or business are “locked”, meaning they can only be owned by the community or organisation, not individuals.

Where to get help and advice

The two people who really know CICs inside and out and not just the theory are social enterprise consultant Clive Sheppard and the CIC Regulator.

Clive is a man on a mission to get as many people, businesses and organisations as possible starting social enterprises which take the best parts of the non-profit and business worlds. What’s great about him is that he knows how to work with creative types and people who find it boring/daunting to deal with paperwork and process and he’s passionate about social enterprise and how it will make the world a better place.

Clive sympathized with our difficulties and was the person who urged us to get people from both sides on board by becoming a Community Interest Company. He works with the Scottish Social Enterprise Academy running free (!) courses in Understanding Social Enterprise and with HISEZ (Highlands and Islands Social Enterprise Zone) as well as consulting freelance.

The best way to get his services are to approach HISEZ, if you’re in the Highlands of Scotland, and ask for an initial consultation. If you’re outside of the Highlands, contact him directly at c.sheppard962 [at] btinternet.com.

The CIC Regulator website will give you all the info (though it’s pretty long-winded and in pdf form) you need. It’s only about £30 – £50 to become a CIC so not a huge financial investment.

More on CICs to come

I’m still researching, so will share what I learn as I go. I’d love to hear from anyone who’s actually become a CIC and how it’s made a difference. I’ll be looking into the Shares model as well, since we may decide to open up Touchwood to community share ownership — very exciting!

Tags: social enterprise

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