A seemingly disingenuous intervention into the loans vs. grants debate through a report commissioned by the Adventure Capital Fund (ACF) who claim that “Organisations that use loan funding to develop social enterprise grow faster than organisations financed through traditional grant-giving”. ACF, who as the managers of a massive government loan scheme are obviously not disinterested participants in this discussion, claim that their report “found that its investees’ income had grown by 160 per cent over six years, compared with an average of 19 per cent for other similar-sized charities.”
According to Stephen Thake, ‘author of the report and a reader in urban policy at London Metropolitan University,’ this shows that “by engaging in social enterprise, community-based organisations can become more sustainable.” The detail of the report may or may not show that but if the headline news reflects the full contents then it shows nothing of the sort. It shows that community organisations that are running projects that have the potential to be viable businesses – whether they call them social enterprises or otherwise – can use loan funding to develop those businesses and achieve increased income.
This is positive news but it tells us precisely nothing about the most sensible ways of approaching uneconomic activities that do not have any clear potential to be sustainable without some ongoing grant subsidy. Does ACF reckon that all community activities that cannot be made into businesses should just stop? ACF’s position also appears to suggest that its axiomatic that the best way for a charity to improve the lives of its beneficiaries is to deliver year-on-year growth in the charity’s turnover – as opposed to doing stuff that meet the needs of beneficiaries, possibly in partnership with other organisations. These seems remarkably similar to the approach to economics that’s just catapulted us into a global slump.