Abuse of Community Interest Company Model Threatens Small Businesses' Survival.

A Community Interest Company (CIC) is a special form of business that aims to benefit the community. However, Jill Poet, co-founder and CEO of Organisation for Responsible Businesses, fears that the CIC model is being misused by organizations seeking a competitive advantage. This can put other businesses at a disadvantage and lead to small businesses going bust. Poet believes that grants are also available to CICs that other businesses cannot access, creating an unfair advantage.

Community Interest Companies (CICs) are a special form of business designed to benefit the community they serve. However, Jill Poet, co-founder and CEO of the Organisation for Responsible Businesses, has expressed concerns that the CIC model is being misused by organizations seeking a competitive advantage. This misuse can put other businesses at a disadvantage and potentially lead to small businesses going bust.

According to Poet, the CIC model can provide several advantages, such as access to grants and favorable procurement legislation. However, these benefits can be exploited by organizations that do not genuinely commit to the principles of social enterprise. Poet argues that the CIC application process is relatively straightforward, with the key difference being the requirement to submit a CIC36 document. This document asks about the beneficiaries of the company's activities, how each activity will benefit the community, and how any surplus funds will be used. Poet believes that the system is being manipulated, with directors paying themselves large salaries to avoid using surplus funds for community benefit.

The CIC model also allows companies to secure contracts with bigger organizations that see them as an additional tick in their ESG (Environmental, Social, and Governance) checklist. This can lead to an unfair advantage for CICs over other purpose-led businesses that are not registered as such. Poet suggests that the government and big corporates look at CICs through a rose-tinted lens, often assuming all is in working order without proper checks and balances.

Poet believes that the CIC model is outdated and that the government should support and celebrate values-led small businesses, particularly those that have gone through a robust, evidence-based certification process. She argues that certifications such as B-Corp or the Responsible Business Standard are better indicators of what it means to be a good business.

In conclusion, while the CIC model has the potential to benefit communities, its misuse can create an unfair advantage for some organizations and put other businesses at a disadvantage. It is essential to ensure that the system is properly monitored and that the principles of social enterprise are genuinely upheld.

References:
[1] https://www.thisismoney.co.uk/money/smallbusiness/article-14917907/Community-companies-abused-puts-small-businesses-risk-going-bust-JILL-POET.html?ico=mol_desktop_home