Are 19th century legal forms more appropriate for social enterprise than we think?
I recently blogged about legal forms that social enterprises are adopting, drawing on published figures from the respective regulatory bodies, in an attempt to see if the hype surrounding certain forms is matched by reality.
Recognising that as great as my blog is, not everyone subscribes to it, I also posted it into a few other forums and got some really useful comments which have made me revisit this subject; this time comparing new registrations against the current make-up of the social enterprise sector (as identified by the Social Enterprise Coalition's research paper published earlier this year) and also Dave Hollings' experience as a leading practitioner in the make-up of new social enterprise registrations that he deals with.
For the sake of ease of comparison, I've looked at how the 'big 4' (companies limited by guarantee, charities, community interest companies, and Industrial and Provident Societies) square up against each other according to each of these sources by ranking of popularity.
And actually, there's a high degree of consistency - CLGs are by far the dominant choice between all. The averages then show its charities, followed by CICs and in a respectable 4th place, IPSs.
While the CIC statistically outnumbers IPSs, the gap between these two forms is not as great as might be imagined: the SEC research shows only 5% difference between their current use, and its 4% by new registrations.
Could this be indicative that a legal form created in the nineteenth century to explicity support the co-operative movement is still resonating with the wider social enterprise sector today?
And that as people explore their choices in detail, they're finding that the CIC model, while obviously attractive in some instances, isn't the be all and end all that its presented as in some quarters?
(N.B.: interestingly, the SEC research also identifies and lists sole trader and unincorporated association as legitimate forms for social enterprise...)
(for all the numerous links embedded in the original posting, please see http://thirdsectorexpert.blogspot.com/2009/12/are-nineteen-century-legal-forms-more.html)
Posted on Monday, 21st December 2009 | This entry has 2 comments
Nick Temple | Monday, 21st December 2009 | 07:21 PM
Hi Adrian - I’m not even close to being as expert as you on this subject, but just a brief note to say that aren’t lots of charities ALSO companies limited by guarantee (to reduce trustee liability)? I know we (School for Social Entrepreneurs) are. Presumably this duplication is accounted for when this is all counted up….
SSE Fellows seem to be finding that CICs work well if your income is mostly coming from public sector-type contracts, but less so if you need grants to pump-prime and any blended investment (aka commercial as well as social return) further on. In the public sector, at times, CICs are effectively a social enterprise mark or label (he says, opening up another can of worms….).
Adrian Ashton | Sunday, 3rd January 2010 | 08:46 PM
for those of you who might be interested, the following was recently posted by George Leahy, Director of Research & Policy at the Social Enterprise Coalition, to this piece on the Social Enterprise Network Group on LinkedIn:
“Adrian, I just want to pick-up on a factual point re our research published in November. We did not identify sole traders and unincorporated associations as ‘legitimate’ (I really think this is an inappropriate phrase in any case) forms for social enterprise. We simply asked the question ‘what is your legal form?’ and what is reported is the answers we received. You also need to be cautious on interpreting the CIC information as we did a ‘booster’ sample of CICs rather than a random sample in order to get usable data. George “