Video : What is social procurement?

You asked, so I’ll answer – What is social procurement?

Social procurement – which is sometimes called social purchasing – is a way for businesses, public sector bodies and Housing Associations to buy more wisely. It helps to generate social value beyond the goods or services they require.

It encourages businesses to buy from organisations that will have a wider benefit on people, the environment or the community.

Why would you have a charity and a CIC?

You asked, so I’ll answer – Why would you have a charity and a CIC?

Traditionally, charities used to set up trading subsidiaries (as standard limited by share companies) where the charity owned all the shares in the subsidiary. The main reason for doing this was if the charity wanted to undertake a trading activity that wasn’t part of the charity’s objects or core activities, or if the activities were seen as too risky (financially or reputationally) to keep within the main charity as they may affect the charity’s ability to deliver its core activities if it failed.

It’s also used where the subsidiary will be selling an activity, product or service that is completely unrelated to what the charity does – like an educational charity that sets up a subsidiary to make and sell cakes – with the expectation it will generate a profit that can be given to the charity.

Why don’t CICs get the tax breaks and discounts that charities do?

You asked, so I’ll answer – Why don’t CICs get the tax breaks and discounts that charities do?

Charities receive a lot of benefits due to the special nature of their legal structure – it is specifically for organisations that are doing something charitable and intending to have a public benefit. As a consequence of this, charities don’t pay tax on surpluses; can get up to 100% business rate relief; access to free software; reclaim Gift Aid on any donations they receive from individuals; and many more things.

However, CICs don’t get any of these benefits (they may receive some relief from business rates but that’s at the discretion of the individual local authority), and many people wonder why – especially when CICs are doing something good for the community or the environment. It’s because CICs don’t have to have a public benefit – so they aren’t actually charitable – they can restrict who they support.