60% of CICs Serve the Poorest Wards — That's by Design

There’s a narrative that social enterprise serves the comfortable — that it’s a middle-class solution to problems that the middle class have decided to care about. The data on CICs suggests something very different.

Professor John Shepherd of Birkbeck University of London has been doing important work on where CICs operate, and the results challenge a lot of assumptions. In the West Midlands, 60% of CICs work in the poorest 20% of wards. Not 60% in the wealthiest areas, where the capacity to pay for services is highest. Sixty per cent in the poorest areas, where the need is greatest.

This pattern holds across the country. CICs are not following the money — they’re following the need. And that’s exactly what the legislation was designed to encourage.

The community interest test requires every CIC to articulate who it serves and how its activities will benefit the community. It doesn’t reward organisations for targeting wealthy customers or high-value contracts. It rewards them for demonstrating genuine community benefit. The result is a social business sector that naturally gravitates toward the areas where community benefit is most urgently needed.

And it’s not just about location. The core activities of CICs in these poorest wards are health and social care, education, and community development — the services that matter most to people who have the least. The preventative work that keeps people out of hospital, the training that opens up employment opportunities, the community assets that give people a stake in their own neighbourhoods.

The CIC model is structurally counter-cyclical. When the economy contracts and public services are cut, the demand for what CICs do doesn’t go down — it goes up. And because CICs are designed to trade, to generate earned income, and to build assets, they can respond to that demand in ways that charities and public services increasingly can’t.

This is why the spending review is going to be a test of the CIC model, but not in the way most people think. Sure, some CICs that depend on public sector contracts will struggle. But many more will find that the withdrawal of other services creates space for the community-based solutions they were designed to deliver.

The poorest wards in the country have always had the fewest options. CICs are giving them one more — and it’s one that’s designed to work for them, not for shareholders on the other side of the world.