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 SCIO’s 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?