CICs: Companies adding value to society

Trudy Thompson, founder of Bricks and Bread, shares her experiences and thoughts on Community Interest Companies (CICs) and how this sustainable business model has become a thriving member of modern business.

We have social, economic and environmental issues to address in the 21st Century at both a local and global level; the business models of the past are not the solutions for the future.
With this in mind, I decided the business model I was used to operating did not have a stable future as it was only concerned about profits, so over a decade ago, I set about radically changing the way I worked to create businesses that were both sustainable and social enterprises.

I started by running my own eco building firm as a sole trader developing both new build and retrofit homes. After managing 33 projects in my local area, I used this experience to create another business - this time a social enterprise - which provided the solution to all the issues I faced in adapting to sustainable ways of working and also shared the positive opportunities I had gained from learning how to live, work, and build sustainably.

In 2009, I created Bricks and Bread Sustainable Living Centre as a CIC, a community interest company, as a hub for sharing knowledge, resources, and premises to make it easier for people to operate enterprises and adapt their lives to become more sustainable.

Many social enterprises are run as CICs as it is meant to make it easier to attract funding or grants; it is also supposed to be easy to attract social investors. I have yet to see any evidence that it achieves either of these benefits. It does not have the same tax benefits that a charity has and the CIC structure restricts the return on investment. The only obstacle I have faced as a social enterprise operating as a CIC has come from my local council who does not provide business rates relief (which would be a mandatory 80% discount if I ran a charity). Despite re-investing all my income and using all my activities to benefit society, as a CIC, my business is not different in the council’s definition as a normal limited (Ltd) company which is run as a for profit business (see the CIC Association for more information on legal regulations).

However, whilst many social enterprises rely on funding or grants, my business does not. Instead, it operates as any normal limited (Ltd) company does by selling products and services. It has enabled me as an entrepreneur to adapt the business quickly and run it without the bureaucratic burden of having countless meetings, trustees, and the restrictions that would exist if I was to run a charity. Being a CIC is no different to running a limited company in many ways but for me it defines my business as being for the benefit of others not just myself or shareholders.

Below are facts on the development of CICs sourced from the CIC Association website.

  • Community Interest Companies are one of the fastest growing community oriented enterprise movements in the country. Each month over 100 new CICs register to take on the legal form, and as of Jan 2012 there were over 6000 CICs on the Regulators register.
  • CICs can be not-for- profit, for-profit, co-operative, mutual, employee led, limited by guarantee, limited by share, a PLC. Uniquely, it allows individuals to frame their efforts for community change, irrespective of whether that community is local, regional, national or international.
  • CICs can vary from small ‘kitchen table’ type organisations, to multimillion pound turnover organisations employing thousands of people. They can be set up as both Company Limited by Guarantee and Company Limited by Shares, and are often described as Mutuals or Social Enterprise.
  • The primary core features of any company holding CIC status are two fold:
  1. Assets owned by the company are held in an asset lock which secures those assets to applications for the good use of community.
  2. Limitations applied to dividend and interest payments made to shareholders and financiers ensure a profit can be made, but the primary focus remains on achieving benefit for the community

To find out more about CICs in action, visit Bricks and Bread.

Read the rest of our series on sustainable business models in The Social Enterprise Way and The Benefit Corporation. And see what the future holds for sustainability in A Vision for Sustainable Consumption.