Make your money make a difference Community Interest Companies The Future for Ethical Business? Gavin Smith Dublin 9 th November 2006

Make your money make a difference What is a CIC ? New Type of Legal Entity in the UK Created in September 2005 Assets are ‘Locked-in’ Delivers ‘Community Benefit’ Has Shareholders and Limited Liability Has a regulator – John Hanlon

Make your money make a difference Care – Education – Local Transport - Health Talentstar CIC - performance and media work experience EQ Health CIC – psychotherapy for children using horses SM Pride - Devon ‘Fetish group bids to join sector - sadomasochist group is one of the first organisations applying to become a community interest company’ Third Sector - September 14th 2005 Who are the CICs ?

Make your money make a difference Benefits Raise capital and Pay Dividends to investors Annual Community Interest Report produced Borrow more easily than Charities Assets Distributed – to a CIC, or Charity only 33 CICs registered by 1 st November 2005

Make your money make a difference Limitations No tax advantages to the CIC or the Investor Dividends are ‘capped’ No asset appreciation for the Investor Less control for the Investor Social Business – seen as less professionally managed and more risky investment

Make your money make a difference The Future for CICs ? Investments made by UK taxpayers in CICs should attract full income tax relief Triodos Bank CICs should be granted: -the same 80% relief on business rates -exemption from corporation tax -ability to give interest, or dividends, tax free to the investor Stephen Lloyd of Bates Wells Braithwaite

Make your money make a difference UK Community Interest Tax Relief (CITR) –The model for future CIC development –Tax incentives for investments by individuals –Funds raised via banks & finance bodies Triodos Bank raised £3.8m from individual savers through CITR to lend to community groups – in 2 weeks The Evidence for Investment

Make your money make a difference The Children’s Scrapstore

Make your money make a difference The ‘Green Funds’ – Netherlands –Triodos manages €400m of funds for lending to environmental businesses –Other banks control similar funds –Volume of investment has been huge –Creating competition to lend to ‘green businesses’ The cost of funds to green businesses fell below European base rate for lending More Evidence…

Make your money make a difference Conclusion CIC’s provide a more flexible way for socially motivated organisations to operate Tax incentives for investors in CIC’s could raise much needed development funds CIC’s deserve similar tax breaks to charities CIC’s are being set up by people with a genuine interest in community benefits

Make your money make a difference Gavin Smith (0) Triodos Bank Brunel House, 11 The Promenade, Bristol BS8 3NN