is the honeymoon for CICs over?

I’ll begin by outing myself (again) on the subject of Community Interest Companies (CICs) – I’ve personally never been a big fan of them for all sorts of reasons that include:

• their not offering any features that are truly unique,
• are generally not advantageous in securing income,
• usually allow very weak governance to emerge,
• offer little security for their Members and Directors in light of their regulators’ powers to overrule them...

(all of which are detailed in previous blog posts), BUT I have supported some clients to gain this ‘hallowed status’ and am always pleased (really!) when an enterprise proves me wrong on why it’s the best form for them to adopt.

However, I’m wondering of the wider world may be catching up with me now in light of trending data published by the CIC Regulator themselves that suggests CICs may be increasingly seen as a ‘bad apple’ by those who set them up, and those they engage with...

You see, I’m a geek in oh, so many things, but particularly in the governance of organisations of all types, and as a result, find the annual reports from regulatory bodies fascinating reading. And despite my personal misgivings about the CIC form, I’ve always said that the CIC Regulator published perhaps the best designed and most accessible annual report of all the regulators. And this year I decided to dig into some of the stats they publish in a little more detail –

I looked at the period 2011/12 to 2013/14 (3 years) to see what trends there might be amongst CICs that are emerging and it’s not an encouraging picture:

• as context, over the last 3 years, the total numbers of CICs have increased by 44%;
• but last year, over 10% of all CICs on the register were wound up – a figure that’s also growing year on year (and has floated around the 9% mark in previous years);
• and the biggest reason (70%) for CICs being wound up is that they’ve been struck off the public register by Companies House for failing to meet their associated statutory legal duties! - which amongst other things means that the Directors of them may subsequently face difficulties with being able to act as Directors or Trustees of other organisations as well as against their own personal credit ratings;
• and the number of formal complaints being made about CICs to the CIC regulator has also been doubling year on year as a proportion of all CICs on the register

So – is all well in the land of CICs? More are currently registered every year than are being wound up, but the trends in each suggest that most CICs currently don’t make it past 5 years. And with a growing trend of CICs failing to fulfil their basic statutory legal responsibilities, it’s perhaps illustrative that many are adopting this legal form on the basis of poorly informed advice and guidance. It also perhaps suggests that CICs are approaching a plateau in terms of their prevalence, and are not in fact the ‘magic bullet’ to solving the sectors’ woes and concerns that many have presented them as being? (but as with all things, I’m open to being proved wrong of this...) 

UPDATE - 6th Nov
after sharing a link to this post with the CIC Association, there's been a clear response offered against my closing invitation to 'be proved wrong about this': http://cicassoc.ning.com/profiles/status/show?id=2691611%3AStatus%3A72861

whatever happened to the Conservative Coops?

So, its party season again, and with a general election looming, every sector seems to be vying for attention with all the separate parties to become the solution that they’re each hoping to find that’ll help them to deliver on all their aspirations but won’t bankrupt the economy in the process...

One such sector which every party (at least in recently history) has embraced and talked up are co-ops: marrying social justice with economic independence and free market economies, they seem too good to be true and have often been cited in many a politician’s speech as to their ‘fab-ness’. Recently, co-op sector bodies such as Co-operativesUK have also started to more explicitly publish the ways in which co-ops can help each party deliver on their conference promises too.

But how far can we really hold faith in these political parties’ interest? Historically, government and political parties were so anti-coops that the movement formed its own political party to ensure that the sector wasn’t discriminated against in parliament! In more recent history, the Conservative party launched its own co-ops initiative. “The Conservative Co-operative Movement” (CCM) to capitalise on politicians’ interest in co-ops and to help keep this sector at the heart of parliament and to their policy and thinking. And they even set it up as a co-op society! (Intrigued, I even became a Member of this society, despite my father being a Labour councillor and a Co-op party Chair...)

But fast forward 4 years. In that time as a Member, I’ve had 3 general emails; 1 item of post (with postage underpaid on it); no notifications of Members’ meetings (or minutes from them); and I also spotted that they’ve been identifying themselves by another co-op society’s registration number in their stationary. Their website seems to have disappeared and I’ve not been able to get any response to messages I’ve sent to contact details I have.

What can I conclude from this?

In the absence of any response that may suggest otherwise, it seems like the CCM were an opportunistic political attempt to cash-in on the integrity and hard work of the co-op sector over the last few centuries. It’s obviously not understood what it means to be a co-operative by not acting as one. And it doesn’t seem to notice when it stops being able to deliver what it was set up to do.

Some might say the above analysis and conclusions are reflective of this wider political parties approach in general, but I couldn’t possibly comment...