Beanbags and Bullsh!t

May 23, 2012

More hope than expectation

I was up in Nottingham last week for the Fit for the Future conference on the role social enterprise in the future of health and social care services. The conference, organised by Social Enterprise UK in parternership with social enterprise events organisers, Sensevents, brought together a range of health experts and social enterprise leaders to survey the landscape of healthcare in the UK. It’s a landscape that’s seen plenty of upheaval since the arrival of the Coalition government in 2010.

In the good old days social enterprise conferences we’re top heavy with enthusiastic people making outlandishly optimistic statements about their ability to change the world. Nowadays you can avoid that stuff entirely if you don’t go to the session on social investment. Everyone else is busy getting to grips with the grim reality of what happens when the party’s over.

Bob Ricketts from the Department of Health set the constructively sombre tone for the day with his keynote address. He began by pointing out that ‘nobody owes you a living’ before explaining ‘hospitals will close but it’s worse for you (social enterprises) because you don’t have the political clout’. His message for social enterprise might not have got worse after that but it didn’t get much better. He emphasised the need for social enterprises to establish relationships within the new structures being established under the Health and Social Act, while acknowledging that the changes give new Clinical Commissioning Groups major scope for deciding how they use competition in the commissioning of services.

He noted that, in terms of commissioners’ ability to favour providers offering greater social value over private or NHS alternatives that social enterprises “shouldn’t just accept an argument from commissioners that ‘the law won’t let us do that’” but said his big worry around social enterprises in healthcare was that many social enterprises who left the NHS under the Right-to-Request scheme might not have the commercial skills to keep contracts when they come up for renewal (or to expand their businesses).

An additional challenge was that, Ricketts felt, social enterprises have not yet won the argument that social enterprises are not privatisation.

Against this relatively gloomy backdrop, other speakers offered a more positive outlook in terms of the situation for existing health and social care social enterprises. Geoff Walker, CEO of leading social care social enterprise, Sandwell CCT – who have a turnover of £18 million and a staff of 700 – endorsed Ricketts’ view that social enterprises don’t have a divine right to commissioners’ business but emphasised that, with a highly motivated staff team providing good value for money services, there would be plenty of chances for social enterprises to win contracts. He demonstrated the diversity of his company’s approach by explaining that they had set up training centre that trained unemployed young people to work in call centres, and this had generated enough profit to pay for dementia care services that were needed but did not receive public funding.

At the workshop on ‘Creating and Embedding a Culture of Enterprise and Social Innovation’, Jo Pritchard, Co-Director of Central Surrey Health – regarding of one of the most successful NHS spin-out social enterprises – explained her organisation’s approach to involving their staff team in decision-making. They have a ‘co-ownership council’ made up of a cross-section of staff from across the business who set the company’s operational strategy. They also devolve budgets to the lowest possible level so that staff have the opportunity to take decisions (and take responsibility for them). The organisation has managed to make significant savings while increasing productivity primarily through implementing changes suggested by frontline staff.

Unfortunately, being a really successful, and winning one of the government’s Big Society Awards, has not been enough for Central Surrey Health to hold off competition from bigger players in the private sector. In response to a question from the audience, Pritchard offered a few thoughts on her organisation’s controversial failure to win the contract to deliver community services in south west and north west Surrey – when they lost out to a company with less relevant experience in healthcare but more relevant experience in being backed by a massive conglomerate.

She explained that: “We got the best score. We were the top bidder. We lost on a technicality which we got to the high court on.” Citing the difficulties facing social enterprises without a significant asset base up against subsidiaries of large private companies she added: “If you’re part of a big commercial enterprise, all you need is nice letter (from your parent company).”

The overall picture that emerged from the conference is one of there being everything to play for – in the sense that, in the coming years, we’re likely see £billions of public funding for healthcare spent outside the NHS – but that, in most cases, social enterprises are not likely to win.

Some of the factors in whether more health and social care services end up being delivered by social enterprises are down to the social enterprises themselves – on whether they can demonstrate that they offer something specifically different and better that public and private sectors can’t provide.

Other challenges are more political. Can the social enterprises movement successfully make the case to trade unions and other sceptics that social enterprise either does not amount to privatisation or is the least worst option in the long-term?

What social enterprises can’t control is the approach of public sector commissioners when they’re deciding how to spend public money. As Sandwell CCT’s Geoff Walker noted at the conference, social enterprises shouldn’t expect to get contracts for being nice people. But it’s equally important that social enterprises aren’t excluded from the marketplace because they’re not backed financially by the state or a large private company.

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May 16, 2012

Our friends in the north (last week)

The strapline: “Impact investment isn’t a movement any more, but a real and fast growing asset class” was almost enough to send me off to read something else but I heartily reccomend having a read of Per Granvist’s report on SOCAP recent conference in Malmo (on CSRwire).

UK readers may not be aware of Social Capital Markets but they run an international events series “that connects leading global innovators – investors, foundations, institutions and social entrepreneurs” with the aim of helping to build the market “at the intersection of money and meaning.“

Granvist’s report on their Malmo event fortunately doesn’t focus on the issue of whether impact investment is becoming an asset class – is someone going to issue a commemorative t-shirt with ‘I’m in an asset class of my own on the front’? – but on the more interesting question of what-on-earth the fast-growing global band of social investors are actually going to invest in. It’s good to see that people are just as confused about this in Malmo as they are in Manchester.

Part of the problem is that existing social entrepreneurs are finding the going tough: “After a few minutes of networking, I recognized a social entrepreneur who is now a year into realizing his dream of providing a crowdsourcing solution to fund projects to create better neighborhoods. It quickly becomes obvious through our conversation that the journey hasn’t been as easy as he expected. In fact, this fall he plans to enter the speaker circuit to supplement his salary. The irony isn’t lost on him – he expects to make more money talking on his idea than he should be making by actually working on it. ‘But as soon as times get better, I’ll be back full time on my project!’ he quickly added, clearly in response to my shocked expression.“

I’m certainly not in a position to criticise somebody who finds themselves helping to finance their socially enterprising activity by pontficating about social enterprise – did I mention this training event we’re running? – but it’s a darkly, very familiar story. The number of social entrepreneurs with succesful business models to match their ideas and deliver their social purpose seems relatively small so far and I don’t see any evidence (yet) that the reality of growing funds for social investment will, in itself, lead to the creation of more commercially viable social ventures – or even a set of logical arguments as to how and why it might do so.

Later, Granvist talks to another delegate about, how to decide which social entrepreneurs to invest in: “The first step in screening potential entrepreneurs? Answering whether they are really hoping to solve a problem or merely address the symptoms of that problem. Even those in the first category will sometimes realize that the problem isn’t as pressing as they did when they came up with idea and then shift into reverse to create a livelihood by talking on their idea instead, a lot like the crowdfunding entrepreneur I had met on day one. The second step: Understand how the entrepreneur is going to cope with the challenges that scaling a business will bring. ‘Is their business model focused enough or are they trying to achieve a number of things at once?’ offered Seil. Without clear scope and having defined what you’re not doing, it’s impossible to scale.”

The first of these points demonstrates a clear disjuncture between social enterprise as most of us understand it in the UK, and social enteprise operating primarily on the US-model in the rest of the world. The majority of the relatively small number of UK social enterprises who are likely to be in a position to take on significant social investment in the near future are not problem-solving organisations in the sense Granvist is describing – they’re organisations looking to provide mostly publicly-funded services on an ongoing basis.

What unites social entrepreneurs across the world, though, is the sense that they face the same challenges as those faced by anyone else starting a business then trying to keep it going – plus the additional challenge of delivering a demonstrable positive social impact in the process.

For Granvist, in Malmo, the future looks bright: “I look around the room, filled with people bubbling on about how their innovations will change the world and forward-thinking investors with a desire to fund the next big idea. I look at my glass of wine and decide it is not half empty, but half full after all.“

I share his optimism about the ability of people to change the world for the better but, when in comes to generating ongoing revenue rather than investment, I’m not sure we’ve got enough of the answers (so far) to the questions about where the money comes from.

The Best of Beanbags will soon be available as book – find out more here.

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May 8, 2012

Making the sums add up

“An experienced businesswoman who identified significant service demand among local women in County Durham and managed to attract some local council and other funding, she nonetheless couldn’t make the sums add up. She found that the social enterprise rhetoric did not mean her, that Big Society Capital was aimed at the big boys and that little other dedicated funding was available or easily accessible either.“

Cathy Pharoah of Cass Business School writing for Third Sector about the experiences of Linda Kirk, who set up the Just For Women Centre in County Durham. Few in the social enterprise sector are more critical of over-optimistic social enterprise rhetoric than me but I don’t think it make sense to blame all that gushing and bluster for the difficulties facing individual businesses.

Fortunately, Pharoah goes beyond this predictable cry of anguish to make some important points about the business challenges facing social ventures. She (rightly) rejects the ideas that social enterprise success is primarily driven by the creative, problem-solving genius of entrepreneurial individuals and points out two of the key challenges facing new local social enterprises: “One is poor access to intelligence and analysis of local market opportunities, and how they can best be used to meet need, or to fund ways of meeting it. The other is the ongoing lack of appropriate easy access to small-scale, higher-risk social finance. Small ventures need help to respond quickly and flexibly when a market opening appears.“

From a social enterprise perspective, the first point is a polite way of saying ‘is selling product or service (X) really a viable way of funding social outcome (Y)?’. In the case of the Just For Women Centre, based on the information I have available that question becomes ‘is selling recycled rugs, cushions and jewellery really the most viable way to fund a centre providing a range of support for women in the local area?’ I don’t know much about rugs, cushions and jewellery in a general sense – and I know even less about the quality of the products made by this particular business – but it’s not a proposition that immediately inspires confidence.

At least, it doesn’t inspire confidence in the sense of it becoming a sustainable, unsubsidised business. In general, one of the biggest mistakes, made most regularly, in social enterprise is to attempt to carry loss-making social activities on the back of a small business doing something that isn’t directly related to those social activities. A mistake that’s made almost as often is to expect core activities with a clear social purpose – such as bringing some people together to make things – to become a viable business activity that will pay for itself, let alone generate profit to support other work. Of course, neither of these are impossible to achieve but they’re much more difficult than running a successeful small business (which is quite difficult in itself).

I don’t know if either of these models are in place in this case but, despite the local council paying its rent, the Just For Women Centre needs £40,000 to keep going. Linda Kirk believes that misunderstanding of the term ‘social enterprise’ is the key to her financial problems telling The Guardian: “I believe in the big society, but a lot of people think of a social enterprise as a business and think, ‘Why should we fund a business?’ It is a not-for-profit organisation – the difficulty is getting that across to people“.

As so often, it depends a bit on what you mean by social enterprise. I think that rent (which I’m estimating at around £10,000 per year) + £40,000 sounds like a pretty reasonable subsidy for a local organisation that, according to The Guardian story, has helped over 250 people in 15 months (since January 2011). If we round that down to 200 women using the centre in a year, that would be a subsidy of £250 per person per year. It costs the NHS around £60 an hour to provide psychotherapy.

I don’t think it’s useful to debate whether projects like Just For Women Centre – and the tens of thousands of other social ventures who deliver high social impact at a relatively low cost – are social enterprises. The people involved clearly are socially enterprising. What does need more thought is whether these ventures are likely to thrive in the current economic climate, and in the brave new world of social investment.

The social investment model promoted by Big Society Capital is about social enterprises generating a trading profit to pay off loans. That’s not much use to socially enterprising organisations who can’t sell their core social impacts as products but can, across their organisations as a whole, make relatively small amounts of public money pay for far greater positive social change than direct public sector delivery (or delivery by some larger charities).

There is, located somewhere in the future, the bountiful promise of approaches to commissioning that would enable projects like Just For Women Centre to get properly paid by commissioners for helping women rather than making rugs. What’s not currently clear is how (or whether) we’re going to support these kinds of social ventures until the promise comes true, if it ever does.

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May 1, 2012

Social entrepreneurs can’t evade politics

In a sign that social enterprise is continuing its drift toward the mainstream, US social entrepreneurs recently found themselves skewered on the end of the pen of New York Times opinion columnist, David Brooks. You may remember that Brooks provoked a flurry of interest in the UK’s quality-press last year with his book, The Social Animal – which was at one point alleged to be sitting on or close to the coffee tables of both Prime Minister, David Cameron and opposition leader, Ed Miliband.

Brooks limbers up for his attack with a (reasonably) gentle caricature of the social entrepreneur as youthful hipster: “If you attend a certain sort of conference, hang out at a certain sort of coffee shop or visit a certain sort of university, you’ve probably run into some of these wonderful young people who are doing good. Typically, they’ve spent a year studying abroad. They’ve traveled in the poorer regions of the world. Now they have devoted themselves to a purpose larger than self.“

A ‘but’ is clearly on the way and here it is: “It’s hard not to feel inspired by all these idealists, but their service religion does have some shortcomings. In the first place, many of these social entrepreneurs think they can evade politics.“

Social entrepreneurs shun the political process in favour of working to deliver change on the ground. For Brooks: “That’s a delusion. You can cram all the nongovernmental organizations you want into a country, but if there is no rule of law and if the ruling class is predatory then your achievements won’t add up to much.“

Further down the page, any social entrepreneurs tottering to their feet to defend their practical, grassroots idealism are floored with another rhetorical jab: “Yet one rarely hears social entrepreneurs talk about professional policing, honest courts or strict standards of behavior; it’s more uplifting to talk about microloans and sustainable agriculture.“

In emphasising the central importance of professional policing and the rule of law, Brooks is (hopefully) focusing primarily on the limitations of social enterprise projects set-up by Americans in countries where these things don’t currently exist but the underlying questions also apply to socially enterprising activities closer to home in the US and the UK.

One is ‘To what extent can social entrepreneurs evade politics?’ but another is ‘Is trying to ‘evade politics’ really a fair description of what those who chose to focus on helping some people directly rather than wider political transformation are doing?’

In the context that Brooks is discussing, there’s clearly many countries in the world where the overall positive social impact of the effective implementation of the rule of law, and an end to governmental corruption, would be considerably greater than providing some of the population with the opportunity of ‘selling their crafts in boutiques around the world.‘

Unfortunately, as a social entrepreneur, you’re unlikely to be in a position to choose between doing one or the other.

It’s not easy but it clearly is practically possible (if you’re talented, committed and fairly lucky) to set up a business that enables some people to earn a decent living despite living in a country plagued by corruption and institutional dysfunction. It’s more difficult to unilaterally impose a functional legal system on the place where those people live. The US government – which possesses a reserve currency, a massive professional army and a considerable nuclear capability – has a very poor track in its attempts to do so. On that basis, it seems a bit much to ask of some socially entrepreneurial graduates armed only with their i-pads and Benetton t-shirts.

Social entrepreneurs faced with Brooks’ accusation of attempting to evade politics would be well placed to respond that they’re taking the choice to take pursue action that is open to them (working in partnership with the people who they hope will benefit from their social enterprises), rather than wringing their hands and complaining about how much more they could do if the starting point was different. They could equally argue that the stable governing structures and institutions that Brooks champions are more likely to come into being in response to increasing, more widely dispersed, economic and social development than through people campaigning for them in the abstract.

But I think Brooks has hit on important point – whether or not it’s one he’s intending to make. That point is that it’s not possible to seperate your social enterprise (or socially enterprising activity) from the political context you’re operating in. Many social entrepreneurs in the UK, like the ones Brooks encounters in the US: “have little faith in the political process and believe that real change happens on the ground beneath it.”

That’s a perfectly legitimate position to hold but, given that the political process is a vehicle for exercising of power and the distribution of money, it’s not possible to be unaffected by it (even if chosing not to engage provides the benefit of independence at a cost of lack of access to resources).

In the UK, where such a high percentage of socially enterprising activity is either paid-for entirely or supported by government cash, social enterprise is unavoidably intertwined with politics. Whether or not we as social entrepreneurs support a political party, or engage in political campaigns, by taking government money we play a political role.

What that political role is, is another matter. It’s clearly not that same for everyone. It could be to provide cover for particular government policies. It could to be change the relationships between citizens and the state. It could even be to provide examples of the virtue of pursuing pragmatic actions to make people’s lives better rather than largescale political transformation.

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April 28, 2012

Big Society killed by its contradictions

“In my opinion Big Society is one of the most inspiring governmental initiatives … where has it gone?“

This question is posed by Tessy Britton, beginning a thoughtful blog post on the apparent disappearance of Big Society from the government’s policy agenda. The post, and the reactions to it, are particularly interesting because they provide an insight into the current views of people who can broadly be described as ‘big society enthusiasts’ working in branches of what the current government calls ‘civil society’.

The consensus, broadly speaking, is that while there’s lots of successful activity going on that could fit well under the Big Society banner, Big Society as an idea has not caught on amongst the population of the UK – and is now being sidelined by the Prime Minister and other leading figures in the government.

Britton lists five reasons why she believes the government is now adopting a ‘hands off’ approach to Big Society. I don’t disagree with any of them but it’s an analysis that only really applies to one interpretation of Big Society.

That’s the interpretation that sees Big Society as promoting, in Britton’s words: ”The optimistic view of the future… where we are more connected to our neighbours, where we are more productive and socially aware, where this emergent and cultivated connection and trust might start to work on serious social problems such as crime, unemployment, truancy, depression, isolation“.

This Big Society is about people getting together to do things for themselves and each other. It’s not about replacing public services with altruistic volunteering but with a mixture of co-operation and self-help. It’s the view of Big Society that we (at Social Spider) saw the potential for in the world of mental health in our thinkpiece Better Mental Health in a Bigger Society? (published last year by Mental Health Providers Forum).

But this is only one approach to Big Society. As Simon Teasdale and co. from the Third Sector Research Centre have pointed out, the Conservative Party has at least two strong ideas on what the Big Society involves. One is the community self-help approach promoted by Tessy Britton – supported by Chris White MP in taking forward his Public Services (Social Value) Act – and the other is the view that Big Society is primarily about creating ‘open markets’ in public service delivery and/or withdrawing funding for public services and hoping altruistic volunteers will fill the gap.

Unfortunately, in political terms, while the community self-help approach to Big Society has won the odd battle – the passing of Chris White’s Bill being one example – it’s losing the war. In terms of government’s stated ‘three key parts’ of Big Society – Community Empowerment, Opening Up Public Services and Social Action – there’s only one that public sector agencies have the ability to control (as opposed to encourage).

That’s ‘Opening Up Public Services’. In that area the government quite firmly chosen the ‘free market’ approach to Big Society ahead of the community self-help approach. In terms of major national programmes, such as the Work Programme, they’ve adopted what might charitably be described as an unreconstructed approach to public procurement. The focus has been on large contractors taking on contracts which shift risk off the public balance sheet – and even relatively large charities and social enterprise have struggled to compete with corporate outsourcing giants on these terms.

The Coalition’s attitude to public procurement is not the sole reason why the Big Society idea has run out of steam, and why prominent Big Society projects – such as Your Square Mile – are struggling to make an impact but it is the most important. Ultimately, it doesn’t really matter whether David Cameron or other government ministers genuinely think (the community self-help) Big Society is a great idea if they don’t put their money where their mouth is.

Of course, central government can’t (and shouldn’t attempt to) force local councils and NHS commissioners to give contracts charities, social enterprise and local social businesses. And the Public Services (Social Value) Act is step in the right direction in terms of encouraging that.

It’s also true that:

(a) a community self-help approach to Big Society is about much more than questions around how public services are funded and delivered and

(b) there are plenty of people who just don’t Big Society is a good idea and will never support it.

But the government could have led from front and helped to give Big Society the momentum to succeed. It’s chosen not to do so and, as a result, it may be too late to save Big Society as the label for a set of ideas.

What’s not going anywhere is the need to respond to growing social needs with decreasing resources. The people who want to get on with doing that are still there, at least for the moment, but if Big Society’s dead there’s a gap in the market for a set of ideas to explain what they’re doing and how it can best be supported.

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