2012 brought substantial growth, a 300% increase in collective turnover and a growing army of potential sector leaders
2012 was an amazing year for community interest companies (CICs) collectively, when the reality of what might be achieved started to match the hopes of all of us involved. At seven years old we’re only at the beginning of the story in many ways, but the statistics for 2012 already show substantial growth being achieved and perhaps more importantly for the long term (IMHO), a fast-growing army of future sector leaders are taking their first steps into the fray.
A 300% increase in collective turnover and a 20% year-on-year increase in numbers to over 7,000 really do show a fast-growing impact. The initial objective of having a flexible legal structure that is simple to form and fit for purpose is clearly being met, but no one should really be giving themselves a pat on the back. There is no room for the soft bigotry of low expectation, more beer less head is the cry coming from the CIC community pub.
We are undoubtedly in a maelstrom of individual, national and global change, and much of what CICs are doing is directly in response to that. Health, social care, community regeneration and education are the four main areas of activity, but if variety is the spice of life then CIC is very spicy indeed. From art to zoology, employing thousands to starting on the kitchen table. Nearly 10% of respondents to this year’s survey had international communities of interest, and early data confirms CIC activity is most prevalent in the poorest wards and boroughs.
Many simply view it as an organisational structure, and quite right too as it is obviously doing the job. For example, 90% of the spinouts delivering a total £900m community health budget were CICs, and the very reason they became CICs was no doubt due to the specifics of the legislation.
The thousands of services and assets at risk of being sold off or transferred by local authorities – swimming pools, libraries, community centres, town halls to name but a few, in a substantial amount of these cases the asset lock with regulatory overview gives all stakeholders an opportunity to find new ways to collaborate. With budgets being slashed this development is vital to help protect some existing provision.
That products and services can be standardised around the form to aid innovation to larger organisational CICs as mentioned above is going to be a key area of focus for us in 2013, the dramatic increase of the multimillion annual turnover CICs has helped tremendously in building confidence. But I’d like to get away from the macro-statistics which will be well reported later in the year, and want to make special mention of the newbies.
Individuals who have never run a business in their life? Yes, those seemingly crazy fools who grab hold of an idea and run with it. Often simplistically caricatured as mavericks many are finding the CIC a gateway to enablement, a tool to harness what is often impressive experience and put it to good use. The CIC is not the only way to do things but in many cases it gives these individuals something formal to pull the necessary elements together.
To attempt to navigate the bottlenecks, roundabouts and cul-de-sacs required to get going can be pretty daunting if you don’t know what you are doing. I know there isn’t an immediate and obvious return on investment when doing pre-investment work but this practice absolutely critical to the success of the whole ecosystem.
The job of taking something from an idea to reality is tough and through building better connections we can help these mavericks across the funding “valley of death”, a brutal truth awaiting the naïve and well intentioned.
It takes a little time and experience to build a healthy realism alongside the passion, rather than a utopian dream this is an emerging culture that is pragmatic and progressive. Most think they can help change things for the better but like all small business the reality of maintaining finance and building sustainably requires help with improved access to advice, services and information.
Priority for 2013
We must find a multitude of new ways to match moral capitalism to these individuals and these early stage organisations, part of our contribution to that effort recently was a review of the dividend caps. Coupled with the changes in the Finance Bill and proposals that look set to be implemented via the Red Tape Challenge there is a chance to revolutionise the micro-finance system, we must ensure we grasp the opportunity.
John Mulkerrin is founding director at the CIC Association CIC. John incorporated one of the first 100 CICs after a 15 year career in financial services in the UK and Hong Kong. Twitter: @JohnMulkerrin / @cicassociation
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