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Tribute to Stephen Lloyd: Creator of Community Interest Companies

08/27/2014 12:51 EDT | Updated 10/27/2014 05:59 EDT

The charity world lost one of its most important and innovative intellectual leaders. On August 20, London lawyer Stephen Lloyd died in a tragic boating accident while on holiday in Wales.

Very few Canadians knew of Stephen Lloyd. However, the charitable sector in Canada is indebted to Stephen's legal expertise and creative intellect. Stephen had the dynamism, tenacity and strategic skills to convert good concepts into good law.

I first met Stephen a quarter century ago through his work with the London City law firm Bates Wells Braithwaite. I was working with his law partner, Andrew Phillips, who in 1998, was made a life peer, Lord Phillips of Sudbury. It was the era of perestroika, and we were advising the Supreme Soviet of the Soviet Union (which evolved into the Russian Federation) on drafting a law of charity for "post-Communist" Russia. Andrew and I were formally named as foreign legal advisors to the first Charities Act passed in Russia.

It was through Andrew's boundless respect for Stephen that I came to know and appreciate the leadership he gave to cutting edge issues facing charities. Stephen opened my eyes to the potential of bringing investment funds into the benevolence sector for social benefit. He didn't let the inhibitions of charity law stop him from promoting innovative social enterprises.

Stephen would never let a good idea languish and die in a lawyer's boardroom just because there was no easy pathway to implementation. He had the chutzpah and political sophistication to pioneer unchartered pathways and invent new vehicles for doing public good, and Canada is indebted to his conceptual imaginings.

The Community Interest Company ("CIC"), is a product of Stephen's inspired leadership in charity innovation. CICs were created as a legal vehicle for social enterprise in England's Companies Act 2006. They are a conceptual legal hybrid that restricts the use of a corporation's assets to applications designed to achieve community good. They also restrict dividend and interest payments made to shareholders and financiers to levels calibrated to both achieve community good and attract investment capital.

Stephen undertook the intellectual heavy lifting required to create the CIC as the vehicle for community-oriented enterprises. Last year, roughly one in every 200 new companies created in England last year was a CIC, and there are now almost 10,000 CICs on the Regulator's register.

In May 2012, Stephen Lloyd's corporate legal hybrid crossed the Atlantic. British Columbia enacted the first hybrid social enterprise structure in Canada: the Community Contribution Company. Nova Scotia soon followed BC's leadership and passed the Community Interest Companies Act.

The political leadership for this social enterprise initiative in Canada came from BC Premier Christy Clark rather than from Ottawa. At the Canada Revenue Agency, the status quo reigns supreme and there has been no movement to facilitate tax benefits for these social enterprise hybrids.

Stephen is also credited with persuading the Charity Commission to accept the promotion of sustainable development as a charitable purpose. When the United Kingdom's Parliament enacted the Charities Act 2006, it specifically listed "advancement of environmental protection or improvement" as a charitable purpose. The Charity Commission's Guidance explicitly accepts "the promotion of sustainable development and biodiversity" as a charitable purpose, a mandate that has recently led to charity audits here in Canada.

In the current political environment in Canada, it is unfortunate that, if Stephen had charity clients here, they would be audited for alleged "political activities" unless their view of "sustainable development" allowed oil pipelines to run through environmentally fragile ecosystems.

Stephen demonstrated how a charity lawyer can embrace a modern cause that is beneficial to the community and convince authorities that it is indeed "charitable". He used his vast knowledge of existing charity law to convince the powers that be that the progressive purpose he championed was analogous to existing charitable purposes. He had the political skills and tenacity to convince Parliament to change the law when erudition and arguing analogy was not enough to achieve the goals he believed important for public good.

Tragically, Stephen Lloyd left us when he was only 63. We can honour him, even without having known him, by employing erudition and persuasion to modernize purposes that the law recognizes as being charitable. Failing that, we can seek to achieve public good by operating outside the "exclusively charitable" sector, as do Community Interest Companies.

Stephen Lloyd will be missed. The benevolence sector is better for the time and skill he devoted to it, and for that, I salute him.