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The voice of Scotland’s vibrant voluntary sector

Published by Scottish Council for Voluntary Organisations

TFN is published by the Scottish Council for Voluntary Organisations, Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh, EH3 6BB. The Scottish Council for Voluntary Organisations (SCVO) is a Scottish Charitable Incorporated Organisation. Registration number SC003558.

What next for Community Interest Companies?

 

Duncan Thorp says CICs and other social enterprises have a central role to play in driving a wellbeing economy

Community Interest Companies (CICs) continue to be a social enterprise success story.

There’s a huge diversity of enterprises that operate as CICs in every part of urban and rural Scotland. CICs tackle a wide range of social and environmental issues and operate in most parts of the economy.

Animalia CIC organise sport and fitness in local communities and designs and makes high quality sportswear known as Animalia Apparel. There’s Clean Water Wave CIC working with advanced technology to transform polluted water into clean water and there’s Circle Scotland CIC, a hub for charities, social enterprises and socially aware businesses, offering support and consultancy under one roof.

These are just a few of the many CICs that are working across Scotland and the UK to transform lives and drive local economies.

For those not familiar with this type of business, a CIC is a special type of limited company that exists to benefit the community rather than private shareholders. They have additional features that certify their social mission, lock in assets, and limit dividend payments to members. Most CICs in Scotland don’t hold share capital.

Much of the growth from 2017-19 within Scotland’s social enterprise community has been through the growth of Community Interest Companies. The number of CICs registered and trading grew from 409 to 884 in just four years up to 2019, according to the Social Enterprise Census 2019. We expect that number to have grown significantly when the new census is released in the next couple of months.

However, there are a number of barriers facing CICs across Scotland and the UK that is potentially stifling their development, including a general public awareness and understanding issue.

Some CICs have faced funding barriers regarding charity and third sector funders, who don’t always fully recognise the business model and the benefit of CICs to our local communities.

There’s also a lack of awareness issue with regards to some mainstream banks and local authorities, as well as some business advisors without a specialist expertise, who are unable to fully appreciate the CIC business model.

This is posing challenges for CICs who have to explain their business model and seek to build trust, something that other businesses don’t face in the same way, and they don’t always qualify for the same support afforded to, for example, registered charities.

Introduced by the UK Government in 2005 under the Companies (Audit, Investigations and Community Enterprise) Act 2004, CICs were designed as a social enterprise model, as businesses that want to use their profits and assets for the public good.

CICs are intended to be easy to establish, with all the flexibility and certainty of the company form, but with special features to ensure they are working for the benefit of the community.

The UK Office of the Regulator of Community Interest Companies (CIC Regulator) decides whether an organisation is eligible to become, or continue to be, a Community Interest Company. It’s responsible for investigating complaints (and taking action if necessary) and provides guidance and assistance to help people set up CICs.

With the continued rapid growth in Community Interest Companies we have a real opportunity to reassure potential funders, investors and supporters and demystify the CIC model.

CICs and other social enterprises have a central role to play in driving a new, wellbeing economy and building community wealth but can only succeed with the right business and financial support.

We certainly believe that CICs will play a continuing and increasingly important role within our social enterprise community over the coming months and years.

Duncan Thorp is policy and public affairs manager at Social Enterprise Scotland.

 

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