Here are the things that have caught our eye in the charities and social enterprise world recently:
The Social Value Act is one year old
The Public Services (Social Value) Act 2012 celebrated its first birthday of coming into force earlier in the year. Read our latest article for our take on this so far.
What’s in a name?
Various law changes for industrial and provident societies (IPS) came in on 6 April 2014. They include an increase to the permitted limits of withdrawable share capital (now £100,000 for an individual member), the ability to submit electronic documents to the FCA when registering a new IPS and wider powers for the Registrar to investigate alleged misbehaviour.
We are also expecting (in August 2014) the Co-operative and Community Benefit Societies Act 2014 to come in to force. This will consolidate and replace various longstanding pieces of legislation including the mainstay to date, the Industrial and Provident Societies Act 1965. One change to get used to will be that the term ‘industrial and provident society’ will now officially go, to be replaced by the phrases commonly used to describe the two types of society, namely ‘co-operative’ and ‘community benefit society’.
Social Investment Tax Relief
Also known as ‘SITR’, this offers some scope of tax relief on income tax and capital gains tax for those investing in social enterprises covered by the scheme. For this purpose, ‘social enterprise’ means charities, community interest companies, industrial and provident societies which are community benefit societies, and some social impact bonds.
The law bringing SITR into existence forms part of the Finance Act 2014 which is expected to become law on 1 July 2014. Whilst opinion is divided as to just how many investors out there will want to take advantage of SITR, and therefore what tangible benefit there will be to the sector, it does at least offer a framework for would-be investors to get something back.
The same investment cannot qualify for relief under SITR and either SEIS (seed enterprise investment scheme) or EIS (Enterprise Investment Scheme). For more information, click here.
CIC Cap Cut
Following consultation on the subject (the second such review since community interest companies (CICs) were introduced back in 2005) the CIC Regulator has announced that they will be changing the dividend cap which applies to CICs limited by shares.
At present, there are two caps which work together to limit the amount that can be paid out by way of dividend to shareholders in CICs. There is an overall cap of 35% of distributable profits that can be paid out in dividends but there is also a cap per share which limits the dividend to 20% of the paid up value of the share. So where, as is often the case in start-up CICs, shareholders will only pay a nominal £1 per share, the maximum dividend is 20p.
The CIC Regulator has said that while the overall cap will remain, the ‘per share’ limit will be removed. This is expected to come into effect in October 2014.
This change will allow even those owning nominal £1 shares to have the opportunity of being paid a greater dividend, subject of course to the CIC having enough profits and payment of dividends being in the company’s best interests. The Regulator and the CIC Association are hoping that the move will lead to more people setting up CICs limited by shares and more investment into the sector.
Funding opportunities
A number of helpful pots of money have been announced recently including the Big Issue Invest Corporate Social Venturing Challenge (up to £500,000 investment), and the £2m Cabinet Office fund to help those volunteering with older people.
In addition, the Office for Civil Society has just launched a consultation on a proposed £40m fund to help with the sustainability of VCSE organisations. Click here for details. It is now open and will close on 24th July
Social Saturday
Finally (and particularly if you’re a forward planner), you might want to put Saturday 13 September in to your diary. Social Enterprise UK is promoting the day as a way of raising awareness of what social enterprises can offer, look out for events being planned near you, you could even start your own!
Our newsbrief covers the following topics: Social values, employment, procurement, mental health and health and safety. Click on the relevant subject to read the latest article.
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