At yesterday’s launch, prime minister, David Cameron, hailed the project proclaiming: “This is just the beginning… For years the London Stock Exchange has made London the home for private finance. Today London can cement its place as the home for social finance, too.“

The exact role of the Social Stock Exchange in building the home of social finance is not immediately clear. What it definitely isn’t,  is an exchange where people or institutions can trade stock: “Can I trade on the Social Stock Exchange. No. The Social Stock Exchange isn’t a trading exchange. It connects social impact businesses with investors looking to generate social or environmental change as well as financial return from their investment.“

On that basis, you would assume that it’s a bit stronger on the ‘social’ side of things. There’s certainly reasonable clarity about what the Social Stock Exchange team consider ‘social’ to mean. As chief executive, Pradeep Jethi, explains on Guardian Social Enterprise Network, member companies are:  “not necessarily what you may think of as the classical definition of ‘social enterprise’, but we think that everyone benefits from being a bit broader about this concept.“

Instead of ‘classically defined’ social enterprise, Social Stock Exchange defines the businesses they’ll be showcasing as ‘Social Impact Businesses’ explaining that: “A Social Impact Business is one that uses commercial models to organize, mobilize and manage a for-profit business that delivers social and environmental change.“

The practical function of the Social Stock Exchange is to: “connect Social Impact Businesses with investors looking to generate social or environmental change as well as financial return from their investment“

The Exchange will “provide investors with the information they need to identify and compare those organisations that deliver value to society and the environment“

The process of becoming a member: “includes the publication of an Impact Report and application for admission to an independent Admissions Panel.“

The eligibility criteria for membership are that: “your company must:

• have social or environmental impact as a core aim;
• be publicly listed.“

Amongst the founder members of the Exchange, the largest by market capitalisation is Primary Health Properties – a company that buys (or builds) healthcare facilities and leases them to the NHS. In 2012, they made a profit of £13.4million in doing so.

This is a perfectly legitimate private business activity but the primary social and environmental change they’re delivering is to take cash out of the social pot (the NHS) and put it into the pockets of their shareholders. Perhaps, their ‘Impact Report’, on Social Stock Exchange might provide some evidence about the additional social value they’re delivering?

Well, what they’ve come up with so far is: “At present, PHP does not operate a comprehensive social impact measurement system on a regular basis. However, in future, it is committed to setting in place a monitoring framework to help it evidence social value.“

It’s unclear whether the Social Stock Exchange we’ve ended up with is the same one that has been failing to appear in the role of Godot on the UK social investment stage for all these years. In an interview with me in 2011, Social Enterprise UK (SEUK) chief executive, Peter Holbrook, explained that: “I think one of the  really exciting developments is the idea of a Social Stock Exchange. It’s been hanging around for a little while but my understanding is that it’s going to be launched this year. I think it’s fundamental in connecting individuals with a true social purpose.”

He continued: “I’ve got my pension in an ethical fund which is environmentally light green if it’s green at all – it’s probably turquoise. I would love to be able to say to my pension fund administrator: ‘Actually, I don’t want your turquoise or your light green fund – which just pulls out the very, very worst offending companies: tobacco, arms and similar activities. Actually, I want to invest in companies that are genuinely socially beneficial and therefore I want you to invest my pension in the Social Stock Exchange.”

I don’t agree with Peter Holbrook on everything but he’s both an intelligent man and someone whose definition of ‘social’ is considerably stricter than mine. I’d be surprised if he’s really spent the last two years getting excited about a vehicle for salving the consciences of the small percentage of people who were being kept awake at night by the idea that their pension was being invested in a tobacco company rather rather than being put to the more positive use of financing the privatisation of public buildings.

Even in the event that they view this outcome of positive, it’s not immediately obvious how the Social Stock Exchange might enable individual pension holders such as Holbrook to bring it about. While Pradeep Jethi claims that the Exchange: “helps to ‘democratise’ social investment, by allowing ordinary citizens to learn about potential investments in publicly listed social businesses, something that’s harder to do with classical social enterprises” there’s no explanation as to how it will do so.

Some example of existing platforms that are fulfilling that function include Ethex and, for those who think ‘classical social enterprises’ might be worth investing after all, the soon-to-be-launched Community Shares platform, Microgenius.

At best, the Social Stock Exchange is a brokerage service for listed companies that engage in some sort of activity that could in some way be described as social. If there’s a market for that amongst companies and investors, it’s a perfectly decent idea for a private business – but not one that justifies either investment from Big Society Capital or a launch by the Prime Minister.

At worst, it’s another in the UK social investment sector’s seemingly endless series of baleful attempts to prove that they can solve major social problems with a form of social business that’s essentially the same as conventional business but produces a few more reports.

So says Social Enterprise UK (SEUK) chief executive, Peter Holbrook, writing for Pioneers Post in reaction to survey results published by his organisation last week showing charities’ growing appetite for social enterprise. He goes on to explain that: “In fact it’s been a few years since trading took over giving as the main source of income for what is still too-often regarded as a sector run on good will and giving.“

According to SEUK, a whopping 92% of charities taking part in the survey “said they would like to increase their income from trading and government contracts in the next three years” while 74% said “there is not enough support available to help charities make the transition from voluntary to trading income, and two-thirds (63%) said more government support was needed.”

The broad idea that the SEUK research reflects is that we’re in the midst of a major shift from a situation where charities got grants and donations to do good stuff, to a situation where charities have to either turn that good stuff into products they can sell or sell something else to make profits which they can spend on doing good stuff.

There definitely is some major change taking place. According to NCVO’s Civil Society Almanac, ‘earned income’ in ‘the voluntary sector’ has been increasing in recent years. The biggest increase (148%) has been in income from government contracts which went from £4.5 billion in 2000/01 to £11.2 billion in 2010/11 while, during the same period but trading income from individuals also increased (40%) by from £5.8billion to £8.1billion in the same period. During this time, income from government grants decreased from £4.6 billion to £3 billion.

As a social entrepreneur, charity trustee and author of SEUK’s popular booklet Why Social Enterprise? A Guide for Charities, I think it’s generally a good idea for charities to become more socially enterprising but I’m also wary of conflating distinct, if sometimes overlapping, trends in voluntary sector income generation.

One major trend is for charities to be funded in a different way to do the same things. I’m a trustee of Voluntary Action Waltham Forest (VAWF), the local umbrella organisation for voluntary sector organisations in the London Borough of Waltham Forest. The vast majority of VAWF’s income comes from the local authority and, as a result of the New Labour-era shift from grants to contracts, this income currently comes in the form of commissioned contracts rather than grants so it’s part of that 148% increase in voluntary sector ‘earned income’ between 2000/01 and 2010/11.

The shift from grants to contracts isn’t meaningless. It means that every two to three years when the local authority commissions the services VAWF delivers, other organisations can bid for them. It also means that VAWF has to deliver against a set of targets – such as supporting local organisations to raise a certain amount of money in grant-funding each year – or risk not being paid in full.

What hasn’t changed in any way is the fact that local authority is paying VAWF to carry out a range of activities that together amount to being the voluntary sector umbrella body for the London Borough of Waltham Forest. These activities were never paid for through ‘good will and giving’ (and it’s difficult to imagine anyone ever running a marathon to raise cash for voluntary sector capacity building). They used to be paid for in blocks with grants and now they’re paid for in blocks with contracts. It’s basically the same stuff,  based on the same business model, administered in a different way.

Clearly, you don’t a 148% increase income solely from reclassifying existing grants as contracts and a second major trend is the government’s ever-growing enthusiasm for outsourcing public services to alternative providers, including the voluntary sector. This results in opportunities for socially enterprising service delivery charities such as Turning Point to compete with private sector providers (or work in partnership with them) to win contracts in a commercial market place. Whether or not this is a good thing, it’s not socially enterprising trading activity replacing grants and donations, it’s socially enterprising trading activity replacing direct public sector delivery. This is new income for doing new stuff.

A third trend (or situation) is that as a result of cuts in grants (and contracts that used to be grants) many charities are now hoping to find a social enterprise model to support existing activity or (potentially) activity that in some way replaces existing activity. In some cases bidding for new public sector contracts might be part of that.

The big challenge, as Beth Parker of Bonsai Bison explains, is to establish the business case for your socially enterprising activity. The SEUK report uses the example of London Early Years Foundation (LEYF) who successfully flipped their business model to turn their core activity, running nurseries, into a business sustained by parents paying for their children to attend the nurseries.

As LEYF chief executive, June O’Sullivan, explains in this interview with me for Social Enterprise, making that kind of change involves a big culture shift for the organisation but LEYF’s starting point – being a non-commercial operator in the commercial market for nursery provision – is a relatively unusual one.

Most charities are not in a position to commercialise their core activities because the end user/beneficiary/customer (delete as appropriate) for their activities is not in a position to pay (a commercial rate). In that case charities either have to stop what they’re doing and do something else that customers will pay for, or do some new things to make a profit and cross-subsidise the activities that are vital to charity’s mission but that no one will pay for. This is the point where social enterprise can be the answer (or part of the answer).

The outward facing side of things is going pretty well with the Prime Minister, David Cameron, preparing to spend some of the next year telling his G8 colleagues about what, in political terms at least, seems like the proverbial silver bullet. And given that the rest of the meetings will mostly be about ongoing global economic crises and intractable civil wars, it’s hard to begrudge the PM a few hours of enthusiastic chat about social impact bonds (SIBs) to lighten the mood.

Whether or not you’re excited about the rise of SIBs (or if you’re reserving judgment), there’s broad agreement that BSC has some work to do in terms of fulfilling the wider mission outlined by Minister for Civil Society, Nick Hurd, last year. Speaking at the launch, Hurd said: “For many years, charities and social enterprises have been telling government how hard it is to access long-term capital. We have listened and within two years have delivered a new institution that will make it easier.“

It’s not going too well so far, at least in terms of getting finance to charities and social enterprises who can’t get investment from conventional sources. As BSC chief executive, Nick O’Donohoe, explained recently: “One product in very short supply but, we believe, in significant demand is unsecured loans for charities and social enterprises.“

He added that: “We already have visibility of proposals in our pipeline that would increase availability by such products. We are also working hard to understand the risk profile of this sort of lending and the link between pricing and demand.“

There’s no reason to doubt that BSC’s team are working hard on this but, despite the fact I’m neither a risk analyst nor a cartoonist, I’m not sure I’d need to spend too long doing the necessary research to produce a half-decent illustration of that risk profile in the form of a short comic strip.

Sam Collin, of intermediary umbrella body, Community Development Finance Association (CDFA), is responsible for this week’s (unfortunately very necessary) statement of the blindingly obvious pointing out that: “Both Big Society Capital and the newly formed Business Bank are keen to improve access to finance for social enterprises and SMEs. But both will only provide capital at commercial rates.“

She poses the question: “if CDFIs are becoming more “ruthless” in their lending decisions, will this limit the range of social enterprises that can access finance to start up or grow?“

Followed by the inevitable answer that: “They’re not going to take a punt on you because they think the positive impact you’ll have on the community is worth the risk.“

The whole premise of (small scale) social investment at ‘commercial rates’ is based on somebody somewhere having a rabbit in their hat that, once pulled out, will explain how relatively small social investment intermediaries will be able to make relatively small, relatively risky investments in small social enterprises without being subsidised to do so.

There isn’t currently any reliable data on how many social enterprises in the UK are viable trading businesses but we do know that, when considered collectively, entrants to the SE100 competition for fast growing social enterprises, receive £8 in grants for every £1 generated in profit.

In the absence of talking rabbits boasting outstanding financial acumen, both BSC and those social enterprise leaders who thought social  investment at ‘commercial rates’ could work for small social enterprises are still as far away as they’ve ever been from even having a serious hypothesis to match their assertions, let alone a practical solution that would make their dreams a reality. It seems quite possible that guarantees might help to increase lending in situations where risk is uncertain but that doesn’t solve the problem of the many situations where investment could have a significant social impact but the risk is quite obviously high.

There’s a few different ways this debate could go. One is that, as suggested by Rodney Schwartz, the social investment industry focuses primarily on the goal of delivering successful social investments even if this involves ‘helping the least needy’.

Another is for the government to follow CDFA’s (implied) suggestion is that it should give their members grant subsidies to support the provision of risky investments in areas of high social need but – if government is going to give out grants to intermediaries to enable them to provide risky loans – wouldn’t it be better off cutting out the middle people and just funding risky social ventures with grants?

It seems unlikely that 2013-14 will see BSC make a decisive leap in any particular direction – it will continue to attempt to accommodate a wide range of different (and often conflicting) ideas about what social investment could be under its £600milllion banner. Either way, creating a social investment market that is (a) commercially sustainable and (b) socially useful remains as big a challenge as ever. The challenge for the social enterprise movement is to make sure that the process of trying leads to as much positive social change as possible.

The exciting black table tennis table is just one striking feature of the shiny home of Wayra Unltd, the new digital accelerator ‘focused on start-ups that make a positive social impact’ which was launched in London this week.

Wayra Unltd was one of two bids funded in February’s first round of funding from the government’s Social Incubator Fund, with fellow tech incubator Bethnal Green Ventures the other successful bidder. It describes itself as “A ground-breaking new partnership between UnLtd, the world’s largest supporter of social entrepreneurs, and Wayra, Telefonica’s global tech start-up accelerator programme.“

The only worthwhile response to any organisation’s claim to be breaking new ground is usually: ‘that’s interesting, what ground are you breaking and how exactly will you be breaking it?’ In this case, though, ‘ground-breaking’ is a reasonable description of what – in UK terms, at least – is an unusual and potentially exciting link-up between a social enterprise organisation and a private sector partner.

The UK corporate sector is fast approaching the point where publicly-stated enthusiasm for social enterprise will be as vital to executive self-esteem as public-stated enthusiasm for a leading Premiership football team. That’s not a bad thing and many of the corporate mentoring and support schemes that flow from it are very positive but the market for CSR-plus is now almost saturated. There’s only so many times you want to go a social enterprise event and hear a CSR guy telling you that what he does isn’t really CSR.

Wayra Unltd is ground-breaking because it really isn’t (just) CSR. Wayra really is a (bit of a) private company coming in to the social sector to do a socially enterprising version of its real work. Wayra run tech start-up accelerator programmes all over the world but Wayra Unltd is first one with a specific focus on start-ups aiming to delivering positive social change.

They’re looking for: “amazing digital start-ups that have the power to improve society, we want to accelerate businesses that do good (e.g. in Health, Education, the Environment – anything that supports improving people, communities or society as a whole).“

The benefits of the investments on offers include:

• Physical incubation for up to 8 months each in a purpose-built Wayra UnLtd Academy
• Seed-funding of £40,000 per team structured as a convertible loan
• The potential to unlock the power of 300 million Telefónica customers globally

One potentially controversial element of the offer, as explained in the FAQs, is that: “All applicants to Wayra UnLtd must be structured as a Company Limited by Shares as our investment will take the form of debt that ultimately converts into equity.“

As they will be ‘for-profit’ companies, it seems unlikely the most of the organisations that receive investment under the scheme will be eligible for the Social Enterprise Mark. Some in the social enterprise movement may see this is a sensible approach, with Wayra Unltd pragmatically looking to support businesses that will ultimately be able find further investment from mainstream investors in the tech sector, others will be angry that the Social Incubator Fund is supporting ‘private companies’.

Wednesday’s launch was packed with social enterprise supporters (and at least two or three social entrepreneurs) and others from the tech world. The importance Wayra attaches to project was emphasised by the fact that their global CEO, Gonzalo Martin-Villa, both turned up and gave a short speech in which he described Wayra Unltd as a ‘great marriage’ with the government as godfather to all the baby businesses.

Emma Jones of Enterprise Nation and Start-Up Britain talked about the fact that 484,000 new companies were founded in the UK and the we were becoming more entrepreneurial than the US, while Unltd trustee and A Very Good Company boss, Natalie Campbell explained that she was considering stepping down as a trustee so she could apply to the scheme.

Amongst all the positivity, Wayra Unltd faces a number of big challenges. One is that the UK has currently has social sectors – particularly large public sector agencies – that are mostly either suspicious of tech or know it’s a good idea (and the future) in a general sense but struggle to grasp its potential to solve real practical problems. And some of those who do see how tech solutions could reduce the demand for their services (not entirely surprisingly) don’t like the idea very much.

Another related challenge is that, so far, tech types who’ve tried to engage with the social sectors have often struggled to fully understand the social problems they’re trying to solve. As an example, you may well be able to replace a doctor’s appointment with regular text messages telling people to do healthy things, and it may be much cheaper but this solution, by reducing regular opportunities for social contact, might create bigger more expensive social problems than it solves. This is not argument against tech but an argument in favour of people doing social tech making sure they do their homework on social problems.

The final challenge is a small ‘p’ political one. Cabinet Office minister, Nick Hurd, sees the Social Incubator as the beginning of a pipeline and that: “The most promising social ventures will then be able to step on to the next rung of the ladder of support. Our £10m investment and contract readiness fund has been shaped by the leading social investors in the country.”

The last thing Wayra Unltd investees need to be spending their time worrying about- far less important than the amount of spin they put on their table tennis serve – is whether their venture is going to be suitable for further support from a government fund that enables social ventures: “to access new forms of investment and compete for public service contracts.“

Hopefully, an unintentional consequence of the government’s big picture won’t be that social entrepreneurs feel pressured to develop ventures with the potential to be scalable online public services rather than practical solutions to social problems at a scale that is both socially useful and commercially viable.

Plenty of questions remain and just about anything (or not very much) could happen but Wayra Unltd has the potential to take some big steps forward, both in terms of social tech in the UK and in terms of real business-based partnership between social enterprise and the private sector.

‘Disruption’ was the theme of the event and, Bank tells us, it provoked statements ranging from Forum founder, former eBay boss, Jeff Skoll’s relatively understated: ”Let’s disrupt our way to a different world” to former Eurythmics star Annie Lennox’s more ambitious “I want to disrupt the entire media“.

As Bank explains, social entrepreneurs “adopted disruption from the world of technology…” with the idea being  ”that new technologies that at first seemed clunky or even useless could nibble at the fringes of established markets with performance that was good enough for marginal customer groups” and that “as performance improved and prices dropped, even core customers would defect to the new approach.”

While Jeff Skoll may know a thing or two about this kind of disruption – I’d guess eBay has had a pretty disruptive impact on the established market for car boot sales – it’s not immediately obvious how the statements being made at the Forum relate directly to the original idea.

The examples Bank gives, of mobilising civil groups to protect civilians from armed conflict, and building local opposition to genital mutilation are both positive activities but they’re about changing people’s beliefs (and the actions associated with them) not about products and services.

One way of viewing this leap of thinking is that because disruption sounds new and exciting, it’s been co-opted as a term for challenging established ideas and practices. Another way of viewing it is as a sign that many attendees of Skoll World Forum believe that the only way (or the best way) to tackle social problems is to regard them as if they were established products whose dominance needs to be challenged.

Based on this approach, Diana, Princess of Wales’ practice of hugging people with Aids could be viewed as a disruptive innovation that challenged the established market in fear and hatred towards those living with the disease.

Meanwhile back in ‘the market’, some of the current generation of disruptive entrepreneurs are taking the concept to a natural, if not very positive, conclusion. Paul Carr’s blog post for the Silicon Valley website, Pando Daily, looks at those for whom disruption means “let us do whatever we want, otherwise we’ll bully you on the Internet until you do.”

He describes a technology conference where the stage: “… was filled with brash, Millennial entrepreneurs vowing to “Disrupt” real-world laws and regulations in the same way that me stealing your dog is Disrupting the idea of pet ownership. On more than one occasion a judge would ask an entrepreneur ‘Is this legal?’ to which the reply would inevitably come: ‘Not yet.’ The audience would laugh and applaud. What chutzpah! So Disruptive!”

A version of disruptive approach has always been a key part of the model of social entrepreneurship promoted by organisations such as Ashoka. In his seminal book, How to change the world – social entrepreneurs and the power of new ideas, which explains social entrepreneurship through the stories of Ashoka fellows, David Bornstein quotes (favourably) the thoughts of management and leadership expert, James O’Toole, on adverse reactions to change: ”O’Toole examines a number of cases in which a potentially beneficial institutional change was resisted and find that resistance occurs when a group perceives that a change in question will challenge its ‘power, prestige, position and satisfaction with who they are, what they believe, and what they cherish’. He asserts: ‘The major factor in our resistance to change is the desire not to have the will of others forced on us.’“

The examples in Bornstein’s book are examples of good challenges to bad practice. They include a man who brought electricity to rural areas of Brazil by offering an innovative, cost-effective alternative to the practices of the state-run monopoly provider and a lady who challenged the Hungarian attitudes to disabled people by setting up a centre that offered supported work and independent living at a time when many state-run institutions still believed it was acceptable to put disabled people in cages.

But there’s a need to distinguish between a positive social change that necessitates some disruption and disruption for disruption’s sake. The desire to challenge people’s ‘power, prestige, position and satisfaction with who they are, what they believe, and what they cherish’ is, when viewed as an end in itself, a characteristic of both school bullies and some of the worst stand-up comedians on the Edinburgh Fringe.

The suggestion isn’t the disruptive social entrepreneurs are schools or bad stand-up comedians but that disruption, if it’s a useful concept at at all, is a tool. And it’s a tool that needs to be used with great sensitivity if it’s to be effective in situations where there are several legitimate, competing views on what constitutes positive social change.

The Disruptive Social Care podcast, hosted by Shirley Ayres and Stuart Arnott, features interviews with people who are using technology to deliver innovation in health and social care in the UK. Many of the ideas discussed on the podcast are about using technology to change the way that established public services operate to enable people who use services to live more fulfilling lives, less dependent on direct interventions of health and social care professionals.

Many of us may regard the goals of this kind of disruption as positive ones but we’d also recognise that the people being disrupted as a result of this kind of change aren’t inefficient competitors in open markets or (in most cases) state bureaucrats delivering an incontestably appalling service – they’re hard-working caring professionals who want to do the best they can for people they care for. And many of the people they care for value and depend on the services they receive in their current, undisrupted state.

Given both the economic climate and our changing needs, these factors don’t constitute an argument against disruption in UK public services but they highlight the need for the people doing the disrupting (or trying to) to think very carefully about how they go about it. Positive disruption in these setting will usually involve both people who use services and (some) professionals actively buying into to changes in the way they do things.

While a criticism of traditional public services is often that they have a top down approach and do things to people rather than with them, that’s an equally valid criticism of some of the self-styled innovation specialists operating in the UK social sectors. If social entrepreneurs are going to disrupt their way to a better world, as opposed to what that’s simply ‘different’, they need to find ways build support for and deliver positive social change, not for disruption itself.

This is the first in a series of blog posts I’m writing for The Young Foundation Ventures Network’s new monthly e-newsletter. Here’s some more information about what the Ventures Network is along with details of how to get the newsletter sent to you.