This is a CTP of initiative: Hackspace 1 (North of England, UK)
This CTP refers to the decision to create a company structure to provide greater variety and accountability to the board of directors, increasing sustainability and robustness.
As described in previous CTPs, the hackspace was formed from an online Facebook group led by a single individual, which later took up physical premises in the centre of the city: “I felt that there was a real need for a community round here that did tech and everything creative really, from textiles to woodwork to tech and coding, hardware hacking, and all that kind of stuff. We didn’t really distinguish or discriminate between those. I thought, I want that in my town and it’s not just going to arrive, so I’ve got to do it, I’m well placed to do it”. The first face-to-face meetings took place in a café in the centre of town between a small number of the initial members, in late 2014: “When we started in was 5 people in a café, saying ‘We’ve all met on this Facebook group’. It was totally informal, and we’re learning as we go”.
The original aims of the group were spurred by the idea of “do-ocracy” structures (described in more detail in late CTPs), in which individuals choose roles and tasks for themselves, and then execute them. However, they rapidly became aware that they would need some sort of formal identity, to make them legible to outside bodies. After exploring a number of options, the group decided to incorporate as a community interest company (CIC) in January 2015. In doing so, the group founded a board of directors who have limited liability should the organization fail, and keeps the hackspace responsive to the needs of members, rather than generating profits for shareholders.
At the time of interview, the organization had four co-directors, made up of the original four co-founders; and intended to expand the directorship in the coming 12 months to permit for greater accountability:
“We definitely have to increase the number of directors this year. It lets us spread the load, and gives us more room to breathe if someone criticizes how we run the place and say we’re not running it in their best interest. The more directors we have, the better placed we’ll be to meet that. The argument is that if we have 6 or 8 directors, all unrelated, all with different interests, then that gives us better oversight about what we need to do. Four is ok, but we need some fresh eyes in here too”.
This CTP was co-produced by the creation of CICs in the UK in 2005, under the Companies Act 2004. This form of legal entity was specifically created to support social enterprises that want to use profits and assets for the public good. CICs have proven to be particularly popular, with 10,000 registered in the status’ first decade. They have been designed to be deliberately easy to found (ie. For co-founders who may have no prior business experience). They offer a distinct set of advantages over charities, which the co-founders articulated: the looser financial regulations allow CICs to raise income with greater ease than for charities, and financial reporting is looser.
As described in previous CTPs, the co-founders were able to support the infrastructural needs of the organization (workshop space, machines, insurance, upkeep) by taking on paid ‘hack’ jobs, and running paid courses. As CICs were founded to specifically encourage organisations to achieve ‘public good’ through business activities, the co-founders felt that the CIC model was particularly well-suited to the ‘messy’ nature of hackspaces, where activities were not cleanly defined and often evolved over time:
“What are you? You’re a place for people to come and make, but then you’re also a classroom and a crèche. But maybe someone learns to hack and they start off with a small project but then they think ‘Hang on, I could make money from this’ and then ‘I could do this as a living’, and all of that gets contained in here. Maybe they get their first experience doing paid work here. They run a workshop. You can’t close down the boundaries between those things, and we don’t want to, in fact we’re here to break those boundaries and say ‘Hey, start here but then go there’. Stopping us from doing the things like a business, saying ‘You can only make money this way’ when we can pull in a good support net through what we do, is stifling.”
This CTP was co-produced by the creation of CICs under UK law in 2005.
Co-founders reported no tensions between each other in creating this policy, which was instead intended to facilitate stronger accountability to stakeholders in developing strategies for the organization.
The move to found as a CIC was understood to be critical, as it limited the responsibility of the directors and permitted them greater freedoms in their activities, whilst shaping the direction of the organization. Had the organization not been permitted to set up as a CIC, it may have been forced to operate as a charity, which would have created greater burdens around financial reporting, and would have found it harder to grow (as CICs have greater freedom permitted to them around raising capital). Branding as a ‘social business’ also permitted the hackspace to differentiate itself from other technology and education charities which served communities in the North of England.
One unexpected aspect of the incorporating as a CIC is that it permitted the hackspace to have greater legibility as a business (rather than a charity), and thus minimizing their risk profile. This was particularly important as the activities conducted in the space were seen by outsiders to be potentially hazardous, especially those involving fire and machinery, although the co-founders felt these risks to be over-stated:
“We haven’t had any major injuries – maybe one small soldering iron burn, or a little cut. If there’s an insurance company who takes a little interest in what we do as hackspaces across the country you might find that although on the face of it it looks incredibly risk, it actually isn’t all that risky. The accident rate in a full-time machine shop is worse – they’re doing so much more work so the man hours are higher and the accident rate is higher. We’re a fairly safe space”.
However, the co-founders learnt as they searched for public liability insurance, that being able to be seen as a business permitted them greater legibility, and increased the probability of getting a decent insurance premium. This stood in contrast to other hackspaces in the UK who had not been able to frame their activities in a similar way:
“We do, finally, have public liability insurance. We had a long conversation with insurers who eventually came back with a premium of £400 per year which is alright. We can work with that. But we’ve heard of some insurance companies having insurance problems with hackspaces who don’t know quite where to pitch themselves – you’re not a business, but you’re not a workshop really or a car mechanic or an office. There are so many things that we’re almost a bit like, but we aren’t like. Look at the [hackspace] forums and there’s always a running thread somewhere of someone being massively overcharged for public liability insurance – they get a quote, use that company for a year, and then the premium tripled.”
As the co-founders noted, this CTP is also not permanent – should the directors wish, they will be able to convert the CIC into a charity, if the current structure does not suit the organization as it grows.
This CTP was operational in meeting the hackspace’s transformational aims around education, social welfare, and community building. By incorporating as a CIC, the hackspace’s organisers were required to demonstrate to CIC regulators that they met the criteria of being philanthropic entrepreneurs who used business solutions to achieve public good (ie. Rather than operating as a charity). In doing so, the hackspace was able to look to the structures of the CIC for how this would guide, and thus limit, their activities – as CICs are not permitted to be politically motivated, or serve an “unduly restrictive group”, the hackspace was thus legally required to act as a social innovation body free of control by any political body; and to actively focus on building a wider community than would be served by ‘traditional’ tech and engineer shops (as described in the previous CTP: Intergenerational Learning).
In the wider timeline, incorporating as a CIC has created a form of financial investment in the community around the hackspace, meaning that all revenue generated through membership, workshops, and other income-generating activities stay within the ownership of members. This did not rule out the possibility of hiring staff in the future, as one of the co-founders described – but did mean that any employees would work for members, not shareholders:
“Being a CIC prevents us from paying out any share dividends. Our assets are locked in trust in the community. We could pay a salary, eventually – we’re hoping to get to the turnover state where we can hire a part-time member of staff to tweak things, tidy up, order filament for the printer, little maintenance things like that. Right now we don’t, we are very careful not to employ anyone so no-one has any question that we have employees. But we can’t pay out money to shareholders as dividends. We want to make sure that the cares of our members are completely safeguarded”.
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