Wednesday, August 24, 2022

some more insight about 'that' post on CICs...

As some may recall, I recently shared a feature, published by Pioneers Post, that openly asks if CICs have had their day in light of significant numbers of them suddenly starting to be wound up - and framed it alongside all of the posts I've been writing, and research I've been sharing for the last 15 years which has also been similarly querying the relevance of this legal status for social enterprise, ever since it was first introduced after being dreamt up by a solicitor in a wine bar (true story!).

In response to the post, a few people asked the question (and rightly so) - "but how does this sudden 'cliff edge' that CICs seem to be falling over the edge of compare to other legal forms: just looking at the data for one legal form alone can't really help us understand the full picture."

So, as I've done before, I've gone off and scraped what data I can from the websites of the respective regulators (CIC Regulator, Companies House, Charity Commission, and FCA for co-operatives) to see what further light a comparing their numbers against each others might shed.* 

And there's 3 charts to show you from what I was able to find during my 'lunch break' yesterday:

So - on the face of it, CICs seem to be faring better than Companies, Charities, and Co-operatives in terms of growth. But remember, the numbers above are percentages of the total number of each legal form (there are far more Companies than CICs - so a 3% growth in Company registrations would see a lot more actual Companies being formed that a 12% growth in CICs).

To maybe get a better understanding of these figures, lets break them down further into year by year:

So in terms of 'deaths', things seem relatively stable across all legal forms - and we'd expect the 'dip' in 2021 owing to the impact of the pandemic, when all the regulators allowed for extra time in filing returns, etc.

But it's this chart that I think that's more insightful: what's happened with the growth of each legal form year by year: it would appear that charities and co-operatives remain relatively stable as a population of legal forms, with companies being more chaotic.

However, its the CIC lines that to me tell the more interesting story - they too seem to have been relatively stable (like charities and co-ops) until the pandemic hit: and then they seem to take off. But remember that in the year following this sudden surge in growth, there's also a surge in them being wound up. This makes me wonder how may communities and people registered CICs as a response to the pandemic because they were encouraged to by others, as a way to access the emergency funding grants that many grant making bodies, and local authorities made available to communities? Only to subsequently find that this legal form didn't actually help them access those funds, and so they're now winding them up - after all, the CIC Regulator is on record as highlighting how many people form CICs in the belief that it will make it easy for them to apply for grants, only to find that actually, this legal form doesn't deliver on that...

So - this more expansive look at recent CIC data as originally shared by Pioneers Post doesn't, after all, appear to raise that much of a concern when it's put into the context of what's been happening with their sister Company forms over the same period.

But based on the numerous comments on my LinkedIN posts, tweets, and direct messages I've received, is has helped us further open up and widen the conversations about some of the other issues about CICs that many people still have concerns over. 

*As always when I do things like this - please remember that I'm not salaried , and no-ones' commissioned or paid me to do this research: I've done quick sweep of what's relatively easy for anyone to find on-line, and then dumped it all into a simple spreadsheet to create some charts. If anyone out there would like to take this further and build on it, I'd be very happy to share all my workings out and source references with you - just as when I looked at the financial sustainability of social enterprises based on their legal form (TL:DR = another story of CICs not coming out that well...).



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