Is social enterprise a model for creative organisations?

1
Is social enterprise a model for creative
organisations?

• Scottish Charitable Incorporated Organisation
  (SCIO)

2
What is it?

• Scottish Charitable Incorporated Organisation
  (SCIO)
• Charities Trustee Investment (Scotland) Act
  2005
• Newest charitable legal form
• Available since April 2011
• Purpose built specifically for Scottish charities

3
Main Features

• Charitable and incorporated (but not a company in
  traditional sense)
• Regulated by OSCR only
• Limited liability for Members and Charity
  Trustees
• Separate legal personality
• Flexible - single tier /two tier
• Member importance greater legal duty ultimate
  control

4
SCIO Fundamentals

• Head office must be in Scotland
• At least 2 members (may include some or all of
  the Charity Trustees)
• Must have 3 Charity Trustees
• Existence depends entirely on charitable status
• Register of Members AND Charity Trustees must be
  kept
• Members Duties/Powers
• Asset lock not for profit and non distribution
  of assets upon dissolution

5
SCIO Fundamentals

• Two tier or single tier
• Two tier separate Members and Trustees
• Single tier Trustees are the Members
• AGM must be held annually
• Must contain SCIO in name and/or on
  branding/paperwork
• Must pass charity test
• May set up trading subsidiaries

6
Benefits

• Separate legal personality
• Limited liability for Members AND Trustees
• Single regulatory requirements OSCR
• Protects against charity trustee personal
  liability
• Accounting procedures less onerous for smaller
  charities
• Less administration (i.e.no need to notify about
  appointments/resignation of Board)
• Viewed favourably
• Open/transparent
• Charity tax relief
• Rates relief
• Can receive donations and gift aid
• Greater access to funding streams
• Merging with other SCIOs requires little
  paperwork

7
Barriers

• When SCIO winds up it ceases to exist entirely
• Not quick to establish (3 months minimum)
• Must keep register of Members as well as Trustees
  could be onerous if large membership
• Existence dependent entirely on charitable status
• Cannot convert to another legal form
• As with any charitable form, restrictions in
  activity and trading
• Must be purely not for profit
• Still unknown outwith sector
• Cannot grant floating charge in support of debts

8
Establishing SCIOs?

• Prepare SCIO constitution
• Application to incorporate as a SCIO form
• Trustee Declaration form
• Application must be delivered to OSCR for
  processing along with any supporting documents
  like a business plan/funding application

9
Establishing SCIOs?

• Within 90 days you will be informed of a decision
  or asked for further information or clarification
  about your application
• You must pass charity test charitable purpose
  activity public benefit!!

10
Summary

• Is the SCIO suitable for social enterprises?
• Yes as much as any charitable legal form is!
• Social enterprise - businesses working to
  achieve social and environmental objectives
• Similar use of profit aims and objectives BUT
• You may not as social enterprises wish to be so
  restricted in trading/activity
• Charity first and foremost but may still operate
  as a social enterprise
• Do not have to be charitable lots of structure
  options available
• Retain flexibility of non-charitable legal form
  to allow you to be more entrepreneurial?
• Option of social enterprises as trading
  subsidiary?