Is social enterprise a model for creative organisations?

Scottish Charitable Incorporated Organisation (SCIO)

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

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

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

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

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

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

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

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!!

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?