Can the economy ever be fair? Is a green economy possible? Can businesses both thrive and do good? Yes, yes and yes. By having altruistic principles at their core, Community Interest Companies are redefining what it means to be a sustainable business.
If you’re wondering why you haven’t heard of them before, it’s because they’re relatively new. Only introduced by the UK Government in 2005, they’re ushering in a new economic era. The UK business world is run by sharks no longer – Community Interest Companies are making a very big splash.
What is a community interest company?
A CIC is a non-charitable limited company, a form of social enterprise. What makes it different from other companies and corporations is the intentions it is set up with. Most enterprises are geared towards driving profits for shareholders. CICs’ very existence involves a commitment to a communal cause, either serving to benefit a community or pursue a social objective. This commitment is legally binding and highly monitored, meaning that investors and supporters can be safe in the knowledge that their money is being used for the right purposes.
Take The Climate Venture Collective. Our establishment is driven by one central goal: tackling the climate crisis. In this case, the ‘community’ we benefit is pretty big – the whole planet, current and future generations.
Why not just be a charity?
The freedom of being a Community Interest Company means that we can play a much larger role in the economy. Where board members of a charity may be paid only if deemed appropriate, a CIC is a commercial enterprise. Whilst the majority of profits are pumped directly to the cause or community, members of a CIC may earn a salary, and some limited dividends distributed to shareholders. Some profit can be made through ventures set up within the CIC.
This last point is crucial. Rather than relying on donations, CICs contribute actively to the economy. They introduce goods and services, and its members’ wages can therefore be spent on other sectors’ goods and services. Being a CIC is not just a great way to be a sustainable business, but a sustaining business. Think about what this means. A whole viable, sustainable section of our economy can be completely geared towards doing good; solving the problems that need solving; benefitting not just its members but wider society.
This sounds great in theory, but does it actually work? Yes, yes it does. Seeing is believing, and there are plenty of case studies to show that there is a genuine benefit to the CIC structure. Here are just two examples.
HR Sports Academy CIC: bringing hope to a community
Winner of ‘Social Enterprise of the Year’ in 2018, this educational establishment is a prime example of what can be achieved by being a CIC. Through a wide variety of sports programmes, education and work experiences, the company’s mission is to provide opportunities for young people in the London borough of Haringey. In an area marked by conflict, drugs and gang culture, HR sports academy does more than provide education and structure. It provides hope. It proves to young people that they are of value: they have skills, discipline and personal strength. They have something to offer the world.
It’s been a resounding success. The numbers speak for themselves – since their creation in 2010, the academy has reached 40,000 young people from disadvantaged communities. They have 100% pass rate for their flagship apprenticeship programme, with 94% of trainees going on to employment or further education. They currently employ over 60 local people, 70% of whom were past trainees.
This incredible impact is only possible with the CIC structure. On a UK Government Blog, co-founder Mickela Hall-Ramsay explains:
“Becoming a CIC made perfect sense 10 years ago and the model still fits today. I wanted to form a company which benefited my community and pursued a social purpose rather than profits. With the cause being close to my heart, full involvement in running and delivering the business services was essential. Being a CIC has allowed me to be the company director and a paid full-time employee. The structure has also allowed me to access various forms of finance from the Mayor of London, Tottenham Grammar School Foundation, Sports England, BBC Children in Need and Laureus Sport for Good. These grants have enabled us to provide free or heavily subsidised services. But it is the flexibility of the limited company structure that has provided us freedom to generate money and develop a sustainable business.”
We couldn’t have explained better ourselves. It’s clear how Ms. Hall-Ramsay became a Rising Star Finalist at the Black British Business Awards 2018,
Plymouth Social Enterprise Network: a sustainable business for a sustainable economy
Much like The Climate Venture Collective, the PCEN runs a network supporting ventures and social enterprises, big and small. It is no exaggeration to say that the network is the lifeblood of Plymouth’s economy. According to co-founder Gareth Hart, the collective income from their network is over £600 million per year, and employs 9000 people. Two of the five largest employers in Plymouth are social enterprises, relying on the PSEN’s CIC structure.
This is incredibly exciting, not just because it shows us how successful CICs can be, but it also shows us what the economy could be if we placed good intentions at its core.
Mr. Hart is just as articulate as Ms. Hall-Ramsay. Speaking on the role of CIC’s in the ability to build back better from Covid-19, he writes:
“Social enterprises need to be right at the heart of new ideas and transformation that comes out of this crisis. We need a radical shift in the way we think about business and we need to move to a fairer economy. An economy where businesses create decent work and the where the dividends of growth and prosperity are more equally shared. An economy that creates wellbeing and that enhances, not degrades the environment and creates inclusive prosperity.”
As the UK’s first Social Enterprise City, it seems that Plymouth is providing us with an alternative vision of what a sustainable business and economy looks like.
Sustainable business for a sustainable planet
So there we have it – because of the funds available to CICs and its principled foundation, HR Sports Academy has transformed tens of thousands of lives. Because of the network structure of Plymouth Social Enterprise Network’s CIC, Plymouth’s economy is low largely composed of enterprises dedicated to achieving good causes.
I think we can all agree that this is a good thing. Community Interest Companies are an idealist’s dream. Sometimes, thankfully, dreams can become reality.
As a newly designated CIC, we have never been more filled with hope. By supporting enterprises with sustainable ideas at their core, we can start to truly have an impact. Bit by bit, we can create a green, sustainable economy. Step by step, we can keep tackling the biggest issues we face today. Leap by leap, we can tackle the climate crisis.