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Announcing Snikket CIC

And... what exactly is a social enterprise?
Posted by Matthew Wild on October 28 2020

We’re pleased to announce that Snikket is now backed by a legal entity, Snikket Community Interest Company, registered in the UK.

A Community Interest Company (CIC) is a form of organisation that lies somewhere between a traditional limited company and a traditional charity. All CICs are “not for profit”, which means rather than focus on generating profits and increasing value for shareholders, they have other goals - serving a “community” in some way.

The exact “community” differs between CICs, but must be declared when the organisation is registered with the CIC regulator. Snikket’s “community interest statement” declares that the CIC is for the benefit of:

People and organisations in need of safe and private digital communication. This includes in particular family groups, clubs, local interest groups and other organisations that may be non-commercial in nature.

and that it will also:

[…] provide support to open and non-commercial projects that have similar objectives.

The the term social enterprise has been coined to cover this kind of organisation, regardless of the legal structure used (the options for which may vary from country to country). Although there is no strict definition of what a social enterprise is, they generally all have in common a goal of maximizing their “social impact” alongside or above generating profits.

And this is where a social enterprise formed as a CIC or similar structure differs from a traditional non-profit or charitable organisation. Although the laws vary between countries, a non-profit typically receives tax benefits in exchange for compliance with strict regulations about how it receives and spends its money. Such an entity is usually restricted from trading goods and services for example, and must rely 100% on donations to achieve its goals.

A CIC does not receive the same tax breaks as a charity, however it is free to trade in many of the same ways that a normal company would. This allows for more creative and sustainable ways to sustain the organisation financially, while the CIC protections ensure it keeps a focus on its social mission.

The legal structure of a CIC (particularly the variant that we chose for Snikket) means that it is not possible for us to sell shares, or raise money through venture capital. We feel that this is a good thing - VC funding introduces a certain pressure to ensure a good financial return on the investment. That expectation of return is precisely what makes VC money so very different to a donation (where there is no expectation of return) or a simple transaction where a service or product is received directly in exchange for the money. We wanted to take this option off the table.

What does all this mean for the project?

Well, having a dedicated legal entity means we were also able to open a bank account, which means we can finally accept donations and more easily fund various things. For example, we are seeking funding (e.g. through grants or donations) to help finish the iOS client (if you know anyone who may be able to help get this funded, get in touch!) And even the simple day-to-day expenses such as server costs are now able to be paid from the project’s bank account rather than my personal one. Obviously I’ll still be covering these costs for a while, but I hope in the long run that Snikket will become self-sustaining. This is the first step on that journey!

As for the future, don’t be surprised if we explore additional ways to raise an income - for example through offering services to Snikket users, such as hosting Snikket servers for people who are less able to run their own, or possibly services to help make running a Snikket at home easier. Contact us if you have an interest in either of these, or if you have ideas for other things we could look into offering.

As a not-for-profit, all income raised goes into Snikket and its objectives, such as funding development of the project and the projects it depends upon, and the ecosystem it is part of.

Want to contact us? Email team@snikket.org or join our chatroom.

Interested in learning more about starting a CIC or other form of social enterprise? See these resources:

UK

International

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