“We don’t need public services and welfare spending primarily because commercial markets are a bad way of meeting social need but because they’re a bad way of determining what ‘social need’ means… ” – the latest in my series of Pioneers Post blogs on public service reform and social innovation.
“Governments, led by the UK, embraced “social enterprise” as the “third way” – income-generating charities that did not depend wholly on public coffers but dealt with the increasing number of social problems that defied government solutions. My main concern about this viewpoint is that it stripped the notion of innovation and systems change – the essence of social entrepreneurial endeavour – right out of the approach. In the UK and those countries that have followed, social enterprises have become part of the ‘social enterprise industrial complex’, sub-contractors to government and feeding into a dysfunctional system.“
Pamela Hartigan, Director of the Skoll Centre for Social Entrepreneurship, announces herself as the Dwight Eisenhower of the social enterprise world in a recent blog for Oxfam. The next sentence is: “But that is for another blog” so we don’t yet know what the ‘social enterprise industrial complex’ actually is but, from what precedes it, the suggestion is that Hartigan may have some concerns about the role of social enterprise in UK public service outsourcing.
The service is brilliant because we’re brilliant and we’ve got the contract
She’s not the only one. July saw the publication of (at least) two papers looking at the changing relationship between the social sectors and the state. In ‘Failing the public?‘, a ‘provocation paper’ published by NPC, Fiona Sheil asks whether charities’ increasing focus on delivering contracts within existing public service systems inhibits their ability to innovate and advocate for change.
While acknowledging the value of specialist services funded by the state, Sheil questions the assumption (widely held by many in social enterprise) that the fact that a social organisation ends up delivering a public contract is a good thing in itself: “in more generic, universal provision, how much value does a charity add when under contract? Many charities argue strongly that service delivery by a mission-driven organisation with a beneficiary focus can produce better results, and that taking on contracts is the best way to prove this. However, studies show that in some cases contract terms and pricing is so tight that charities end up delivering services of no better quality than providers from other sectors.“
For Sheil, charities need to be able to provide better evidence of the kind of services that are needed. She explains: “Research work is often considered a nicety, not a necessity. Funding tends to be sporadic, and limited, and systems and skills for collecting evidence and demonstrating impact are often not planned or embedded. As a result, the charity sector is operating in a public service system that is itself deficient, because of its lack of commitment to evidenced based decisions, and the charity sector is doing too little to alter that.“
Even more important is the role of people who use services. While politicians of all parties have been ramping up the rhetoric about co-production, Sheil believes that it’s up to the charity sector to demonstrate the reality: “The charity sector itself is a demonstration of user and peer-led activity. Charities should be knocking down the doors of Whitehall to promote all methods of service and system structure that give users greater power and control.“
Ultimately, Sheil’s point is that charities need to focus on how they can best work with and influence public services to achieve a positive social impact rather than assume there’s a direct correlation between positive social change and growth in their own turnover: “The sector needs to identify where it adds specific value through the delivery of public services, and where delivery by any competent provider would achieve a similar result. If the system is well structured, and its principles and evidential basis sound, it matters less who delivers the actual service to people.“
The key difficultly with Sheil’s paper is that, primarily due to the fact that it’s a relatively short opinion piece, it’s easy to endorse many of sentiments without being clear how they’d translate into practice.
Your grants are lovely but your contracts are instruments of neo-liberal co-option
Equally sceptical about the voluntary sector’s role in public service outsourcing, albeit for slightly different reasons, is Glasgow Caledonian University academic and former MP, Les Huckfield. Huckfield’s paper, ‘The Rise and Influence of Social Enterprise, Social Investment and Public Service Mutuals‘ is part of the National Coalition for Independent Action(NCIA)’s ‘Inquiry into Voluntary Services‘.
The NCIA are a campaign group known for their robust, if not especially nuanced, arguments in favour of a voluntary sector that either campaigns for social change or delivers mostly small scale, grant-funded activities that fill the gaps left by the public sector. These organisations may also develop innovative approaches that could be adopted by the public sector in order to be rolled out on a larger scale.
In his paper, Huckfield starts from the assumption that the marketization of public service delivery is a very bad thing and provides a blow-by-blow examination and denunciation of the policies and organisations connected to it (some more directly than others). He claims that: “the landscape in which NCIA organisations operate has been completely transformed by New Labour and Coalition Government promotion of Social Enterprises and Social Investment, and by the Coalition Government’s introduction of Public Service Mutuals. ‘Social Enterprise’ has become a generic term for Third Sector organisations delivering public services.“
Those of us who are politically ambivalent about public service marketisation often ignore the work of the NCIA on the basis that they’re more focused on (re)stating an honourable position than suggesting ways that charities and social enterprise might respond to the everyday challenges of keeping going within the modern economy. In some areas of public service delivery (such as residential care) rejecting marketization, rather than campaigning for different types of markets, is practically irrelevant. In others (such as supporting independent living) it’s simply wrong.
It would be a mistake, though, for social sector pragmatists to ignore this paper entirely. Partly because while bemoaning the raft of initiatives aimed at ‘the transformation of voluntary services providers into quasi-businesses‘, Huckfield also does a good job of explained just how unsuccessful many of them have been.
Social investment is a particular area where successive governments have been so keen on the idea in principle that they’ve been broadly indifferent to the practical realities. Huckfield gives a concise of overview of how the UK social investment market arrived at its current predicament before concluding: “All these evaluations above show that ChangeUp, Futurebuilders and the Social Enterprise Investment Fund [SEIF]– all of which sought to fashion more of the Third Sector within the Government’s procurement agenda and to become vehicles for Social Investment – have not been very successful.“
If anything, the assessment of SEIF as not being very successful is, as reported previously, unduly generous. Huckfield is right to point out the gap between the huge coverage given to initiatives such as Social Impact Bonds and the reality of the emerging social investment market: “As a proportion of all Social Investment, the [GHK] Report shows that 90% was for secured loans, mostly through social banks, and only 1% for Social Impact Bonds, These Reports shows that despite considerable Cabinet Office funding and continuing publicity hype by Big Society Capital and SIFIs, the concept of Social Investment is making only slow progress.“
The problem is that Huckfield is so successful in demonstrating the failings of attempts to entice the voluntary sector in public service markets, he struggles to make a convincing argument for why those attempts must be defeated.
Brolly bad show
The other reason for reading paper, though, is to enjoy Huckfield’s charge sheet directed at umbrella organisations who have, as he sees it, functioned as ‘The Government’s ‘Little Helpers” in supporting an increased role for the voluntary sector in contracted public service delivery. The guilty parties include: Social Enterprise UK, Locality, ACEVO and NCVO.
Some of the charges levied at these umbrellas seem more relevant than others. For example, Social Enterprise UK is criticised for allowing private sector businesses to become supporter members and for being: ‘equivocal on the crucial issue of the role and power of equity and shareholding in social enterprises’.
We’re also told that: “Alongside Social Enterprise UK and ACEVO, NCVO forms a national triumvirate of Third Sector organisations which have underpinned Government policy on contracted and outsourced delivery of public services and has consistently argued for a ‘level playing field’ to allow voluntary agencies to compete with the
private sector for outsourced public services.“
It’s not clear whether Huckfield believes these organisations should instead argue for their members to be discriminated against in commissioning processes, whether they should argue for a sloping playing field (perhaps with commissioners changing ends at half time) or whether they should just argue less consistently.
On the other hand, Huckfield is surprisingly matter of fact about ACEVO chief executive, Sir Stephen Bubb, and other voluntary sector leaders placing themselves at the heart of Andrew Lansley’s controversial Health and Social Care Act 2012. In Bubb’s case, by chairing the “Choice and Competition: Delivering Real Choice” Panel for the NHS Future Forum.
Huckfield notes that, while in that role, Bubb reiterated his support for: ‘the principles set out in the White Paper – the principles of diversity, of choice, of transparency, of free competition‘ but there’s no wider consideration of the extent to which the workings of Pamela Hartigan’s ‘social enterprise industrial complex’ may have been partially responsible for the legislative dog’s dinner that emerged at the end of the process.
Huckfield successfully proves leading umbrella bodies entirely guilty of following their publicly stated policies, policies which he and (presumably) NCIA members disagree with. He doesn’t prove that in doing so they’ve misled anyone, let down their members or made the world a worse place as a result. Nor does he suggest how charities and social enterprises, their members or the people who use their services, would be any better off if they followed the NCIA’s rejectionist line.
Ultimately, though, what Huckfield, Fiona Sheil and Pamela Hartigan all remind us of, in very different ways, is that charities and social enterprises don’t exist in a political vacuum. If a social organisation takes on a public contract, it isn’t just taking on a contract, it’s engaging with the system that produced that contract and the political assumptions and decisions that underpin it.
There haven’t been many times in recent years when I’ve been reading a report on social innovation or social enterprise and I’ve found myself thinking: ‘the author of this section has missed Social Impact Bonds and they’re genuinely relevant to this discussion’.
If European social innovation research collaboration, Tepsie‘s report Building the Social Innovation Ecosystem in Europe achieved nothing else, that would be quite a feat. Fortunately, given that there’s 105 pages of it, it does achieve some other things, too.
While the one they’ve gone for is snappier, a more accurate title for the report would ‘Describing the possible component parts of a Social Innovation Ecosystem in Europe should one come to exist’. The bulk of the report is made up of snapshots of the landscape of interventions emerging to support social innovation in different parts of the world, written by social innovation academics from around Europe.
Where’s the innovation?
Keen to avoid a social innovation definition debate, the authors make clear that they’re: “particularly interested in socially innovative organisations that emerge from civil society and the third sector, including social enterprises, co-operatives and mutuals.”
The problem with the choice to focus on socially innovative organisations rather than socially innovative activity (wherever located) is that while some subsections – such as the one on ‘prizes for social innovation’ – are about support for innovative activity which may ultimately lead to the creation of organisations, most of the subsections focus on resources, organisations and networks that support new or growing social sector/civil society organisations in a general sense.
In many subsections, the specific relationship between this support and those organisations actually having and successfully executing any new ideas or models is either not explained at all or explained through gratuitous speculation such as this on crowdfunding: “A fourth advantage particularly for social innovators is that it pays for them to be really innovative: Whereas they often do not fit into more traditional funding schemes just because they are ‘too innovative’, they are likely to attract crowdfunding more easily by being innovative, if they succeed in making innovation comprehensible and convincing to ‘the crowd’“
The report divides the ‘Social Innovation Ecosystem’ into three main sections:
- Enhancing the supply of innovative goods and services
- Enhancing the demand for innovative goods and services
- Intermediaries: transferring knowledge about social innovation
There’s over 60 pages on ‘Enhancing the Supply’, divided between different types of: ‘Financial Support’, ‘Non Financial Resources’ and initiatives developing ‘Skills for Innovation’, 15 pages on the different ways of ‘Enhancing demand for innovative goods and services’ and 12 pages on ‘Intermediaries’, looking at networks and evidence.
The subsections are written by different researchers from Tepsie’s partner institutions and, perhaps unsurprisingly, they’re a real mixed bag. The intended model (demonstrated by the good ones) is: explain what the activity is (for example, ‘crowdfunding’), explain what it’s got to do with socially innovative organisations, give some examples of some current approaches including interviews with people involved and provide ‘reflections’ on what this means for the social innovation eco-system.
Ventures needs grants because ventures need grants
It’s a model that works particularly badly for the subsections on Financial Support. Gunnar Glänzel of University of Heidelberg is the co-author of a very good paper I’ve read on social investment in Germany but he gets lost somewhere between writing superfluous beginners guides and complicated specialist analysis of topics that (on this evidence) he’s not really a specialist in. As a result, the first three sub-sections here on ‘Grants for early stage development’, ‘Crowdfunding’ (see above) and ‘Loans’ are stews of confusion peppered with blindingly obvious filler.
For example: “The rationale behind early-stage grants is that social innovators who are about to set up ventures are in need of relatively small amounts of money at low or no cost” and “As long as an idea remains just an idea, it continues to have two major drawbacks: First, it does not make any difference in the world; and second, it does not generate any job opportunities for anyone.“
Particularly baffling is the subsection on loans which is apparently aimed at someone who needs to read a 500-word description of what a loan is beginning: “A loan is a form of funding where a lender provides money (the principal) to a borrower on pre-defined terms concerning the repayment of these funds” but can understand the idea of ‘mezzanine’ capital with no explanation at all.
As if this lurch from spoon-feeding to jargonitis wasn’t enough, the mezzanine is reached in an interview with Charity Bank. Charity Bank are really good but they’re virtually the only organisation offering loans to UK social organisations who don’t claim to be particularly interested in social innovation. Sure enough, Glänzel also interviews Triodos before noting: “It needs to be pointed out that both examples refer to banks that make loans to organisations that should not be seen as social innovators.“
Fortunately, other sections are much better. The subsection on ‘Mentors and Coaching’ by Jeremy Millard of The Danish Technological Institute includes an interview with Servane Mouazan of Ogunte and is a really good summary of what the point of those activities is – something which many social enterprise support agencies that refer social entrepreneurs to coaches and mentors could do with explaining better. It’s less good as explaining why socially innovative organisations need different mentoring or coaching to anyone else but there may not be a reason.
Does anyone actually want to buy this stuff?
While it’s worth dipping into the ‘Supply’ section to read about the different types of support available to socially innovative organisations around the world, the most interesting thinking in the report is in the demand section.
To begin with, it’s great that the section exists at all. It’s no great revelation that there’s loads of support for people looking to bringing socially innovative organisations ‘to market’ but there’s currently very limited understanding of what or where the markets for their social innovations are.
Millard’s subsection on Campaigning and Advocacy looks at the role of socially innovative organisation in simultaneously campaigning for and delivering social change. In the case of the first example, The Ghana Friendship Groups, the organisation literally does both things itself, pushing the Ghanaian authorities to provide children with the formal education they’re legally entitled to by delivering preparatory courses for children so they’re ready to enter the education system and training local ‘barefoot’ teachers, while simultaneously campaigning for politicians to fulfill they’re responsibilities and securing outside funding from Danish aid agencies. The other example is used is Social Enterprise UK and their work on boosting the market for social enterprise (which is apparently assumed to lead to a bigger market for social innovation) both through public campaigns and with engaging with politicians on initiatives such as the Social Value Act.
This subsection loses its way in the ‘reflections’ which ends up as a discussion of the pros and cons of campaigning rather than reflections on the interaction between campaigning and social innovation. For some social organisations campaigning may be the best way of creating a market for an innovation which they themselves can deliver. Hearing loss charity, the RNID’s work both demanding that the NHS provide digital hearing aids then working with them to make it happen is a good example.
The Young Foundation’s Rachel Schon does an extraordinarily good job of providing a high level overview of the fiendishly complicated topic of the place of social innovation in ‘Commissioning and Procurement’ explaining the problems of big contracts suited to big providers, risk aversion and excessive monitoring of processes rather than outcomes.
Impossible to tackle in the three pages of the subsection but important to the paper overall is the question whether governments actually want to buy social innovation and, if so, how they go about doing so.
(Possibly the only situation ever where) Social Impact Bonds get less coverage than they deserve
Unfortunately, the snapshots of the landscape format, while probably the most logical one for a report by multiple contributors based in various different countries, is a particularly bad one for considering how different organisations and initiatives function within an ecosystem.
The relationship between the different components of ‘An Ecosystem For Innovative Social Purpose Organisations’ is outlined in a diagram on page 11 but never explicitly mentioned again after that. As a result, the ‘supply’ section creates the impression of a ‘Social Innovation Ecosystem’ as a building constructed entirely from scaffolding that socially innovative organisations may or may not choose to visit to get what they need to succeed.
Some critics of social enterprise support and government funding for it might feel that impression is accurate but, either way, this non-engagement means failing to examine approaches that either consciously link together different forms of support or promote social innovation on both the supply and demand side.
To take two UK examples, not because I think they’re likely to be the most important ones in the world but because they’re the ones I know about: the UK’s social investment ‘pipeline’ and Social Impact Bonds.
For the last two years, the UK government has – it believes – been promoting social innovation through a social investment pipeline that begins with a socially innovative idea being supported by an accelerator funded through the Social Incubator Fund, moves on to ‘investment readiness support’ through Big Potential or the Investment and Contract Readiness Fund, and ultimately ends up with innovation social ventures received massive investments from Big Society Capital-backed social investment funds to scale up their services and sell them to public sector commissioners.
This pipeline may not work (or even meaningfully exists in a practical sense) but it’s a good example of several parts of s social innovation ecosystem that have (in theory) been designed to fit together and deliver some end products – and it would be useful to consider whether it’s a good idea and whether there’s comparable stuff going on elsewhere on Europe (or elsewhere in the world).
The hyperbolic promotion of Social Impact Bonds (SIBs) in the UK has been so successful that, despite the fact that the first SIB only published its first (half-decent but hardly breathtaking) results last week, they’re already being promoted as a key solution to the challenges facing whole countries.
It makes sense for serious social innovation researchers to be sceptical about the marauding progress of the SIBs bandwagon but that doesn’t negate the relevance of what they’re attempting to do. SIBs are:
(a) a form of theoretically commercial finance specifically designed to fund social innovation
(b) a model of funding with a built-in relationship between financial return and social outcomes
(c) a model of funding social innovation that’s received a phenomenal level of government support
Even more critically, though, they attempt to tackle the conundrum that governments are the most likely customers for many new approaches to doing social good but governments can’t risk spending (large amounts of) money on services that haven’t yet been proven to work.
Who pays and why?
Ultimately, socially innovative organisations don’t (or shouldn’t) exist primarily in a social innovation ecosystem. The ecosystems socially innovative organisations need to find their places within are their local communities, or the national or international communities of interest that want to see a solution to particular social problem.
The effectiveness of the growing range of supply side support for socially innovative organisations is based entirely on whether there’s ultimately anyone who wants to pay for what’s supplied. Ironically, given that grant-funded activity is often seen as an outdated alternative to socially enterprising approaches, Julia Unwin’s The Grantmaking Tango is one of the few UK publications I’m aware of that looks at a market for social goods provided by social organisations (grant-funding) and considers how that market affects the business models of the social organisations that deliver those social goods.
It would be really useful for UK or European researchers to do something similar, the Social Innovation Shuffle (?), that looks at the different markets for social innovative end products -governments in particular but also grant-funders, private sector businesses and individual consumers- and how a social innovation ecosystem could most usefully interact with them. This report makes a good start by telling us more about what’s currently out there.
You don’t need to go beyond the executive summary of Making It Big – Nesta‘s new report on ‘Strategies for Social Social Innovations’ to see just how confused the UK’s leading thinkers are about the subject.
In sentence two we’re told ‘Many social innovations have become part our daily lives – think pre-school education, first aid, e-petitions‘ while in sentence three we’re told that ‘In the developing world, organisations like BRAC and Pratham are approaching transformative scale, starting to solve the social problems they set out to tackle.‘
From this we can deduce that social innovation could be a new branch of an existing sector, an essential basic service or a new method of communicating your views to people in power. On the other hand, it could be a large NGO that provides huge range of different services designed to help poor people.
It may be that it’s not useful to define ‘social innovation’ beyond the suggestion that it’s something with a social aim that seems to work but what about ‘scale’? According to Making it Big: ‘Social innovations can be said to have scaled when their impact grows to meet the level of need‘.
On that basis, pre-school education and first aid are a long way off reaching (worldwide) scale while many would argue that e-petitions reached scale some time before the first one was set up (apologies to radical hippies and Shoreditch libertarians who oppose both pre-school education and first aid but love e-petitions).
No more heroes
Making It Big isn’t a bad report – it’s a good report that reflects a confused situation. As Nesta boss Geoff Mulgan reflected at the recent launch event, 10 years ago the dominant view in (newly emerging) social innovation policy circles was that the UK would see an explosion of Ashoka-model, Richard Branson-style heroic social entrepreneurs.
(He didn’t add that) a few years before that Charles Leadbeater’s The Rise of the Social Entrepreneur had seemed to herald the approach of a disparate army of new social leaders who, between them, would replace outdated public services aided only by five disgruntled local people, a 30 minute crash course on how to do proper business from a kid on KPMG’s graduate scheme and their terrifyingly passionate personality.
It wasn’t a good idea but it was an intellectually coherent one. Unsurprisingly, it hasn’t worked. No heroic social entrepreneurs at all have solved a global social problem (or even replaced a relatively small existing public service) by scaling up themselves and doing their passion. The heroic social entrepreneur model has now become so discredited that at this year’s Skoll World Forum many of the world’s leading heroic social entrepreneurs were refusing to associate themselves with (the heroic image of) themselves.
In the UK, it just quietly didn’t happen. So Making it Big successfully reflects a landscape where we know being a great person and really meaning it is not enough. It does a good job of outlining different potential routes to scale: influence and advise, build a delivery network, form strategic partnerships and grow an organisation to deliver.
Do more vs. doing more good
It’s useful to look at scaling social innovation from two angles simultaneously. One is operational scale. Are you doing the thing you do either in the most efficient way you can or delivering it at the most efficient volume possible? Any of the available routes might be the best one to reach that point.
Have you reached the point where you’re doing something to the greatest possible extent that your skills, the resources available to you allow and the markets – in the broadest sense of the term – you operate within allow you to and are you able to keep on doing it?
Then the social impact question might – at that optimum operational level – does the social bit still work. Do the social returns diminish, why and by how much? Does the service that worked brilliantly for people in Norfolk, work just as well for people in Wales – and does it still work as well for people in Norfolk now you’re trying to deliver it in Wales, too?
Unfortunately, the trade-off between operational and social will probably involve taking a position on some difficult questions. Do you want to make your social good available to the biggest possible number of people or the people who need it most? Clearly, both but what if you have to make a choice?
What if the best way to make your social innovation simple enough for millions of people to use is to make it in a way that means particular groups of people can’t use it? What if ensuring your social innovation fits the market for helping for a particular group of people means you have to design it in a way that means it will never have a wider application?
It’s too much to demand that social innovations need to have entirely solved social problems to have been regarded as having scaled but how do we work out which scale model we should be aiming for if we want to achieve the best possible of operational effectiveness and social impact.
Markets don’t care about your social innovation
What remains under-addressed – both in Making it Big and in current UK social innovation debates in general – is the trade off between (scaling) social innovation as a technical process and social change as a battle for resources.
In Section 4, we’re told by Ted talk hero, Simon Sinek, that “people don’t buy what you do; they buy why you do it” and therefore you need a ‘clear vision’ to scale up. The may be a great piece of advice in some contexts but it’s problematic in many of the social sectors.
In the social sectors people often buy what you do – in terms of giving up their time to engage with it – because they’re desperate, lonely, bored, or a combination of all three. That’s also true in purely commercial sectors but, in social sectors, the fact that your service is being used is (hopefully) not enough.
In conventional economic terms, many of the people who most need many social innovations don’t buy anything because they don’t have the power to do so. On the other hand, the people who do have the power – the people who might actually pay for the scaling of your innovation – buy whatever the hell they want irrespective of what you do or why you do it.
Breaking into many major social markets isn’t really about you and your social innovation at all. Do you have a scalable model for helping people back to work in the UK? Would unemployed people like to use it? Frankly, who cares? The Department of Work and Pensions aren’t going to pay for it through their lowest common denominator Work Programme scheme.
Unfortunately, there’s not much room in the think pods at Nesta for discussions that acknowledge the fact that some people have more power than other people, and research that considers how that affects both the kind of social innovations that emerge, and the projects, products and businesses that succeed.
Without that, some good stuff will happen but the broad state of confusion the social innovation world will continue.
“Despite its popularity with politicians (or perhaps partly because of it) public service marketization is rarely discussed in a practical useful way…. ” – the first in a new monthly series of blogs I’m writing for Pioneers Post on social innovation and public service reform. Next two are on: ‘Who pays when the state can’t?’ and ‘Do all public services have to be delivered by professionals?’
There’s no shortage of exciting rhetoric about social investment in the UK but what does the market actually offer to charities and social enterprises? What questions do you need to ask before you decide whether to look for social investment at all or to help you decide which forms of investment might be relevant to your organisation?
Over recent months, I’ve been working with Social Enterprise UK – Nick Temple in particular but also Dan Gregory and other members of the team – to write Social Investment Explained, a new guide commissioned by Big Lottery Fund, that hopefully provides an accessible introduction to social investment in the UK. It would be great to here what you think of it.
“Is love an essential requirement for a successful social enterprise? Or is it actually a by-product, the mechanism or even the result of one?“
In recent months, my social enterprise, Social Spider CIC, has been working with Intentionality CIC on Social Enterprise: What’s love got to do with it? – a report on the role of love in social enterprise. The report is available to download here. It would be great to hear what you think.