“I would be delighted to extend an invitation to you to accompany me on a tour of London’s social enterprises, I run a network of 1800 of them. I spend my working life demonstrating to people the power and value in our wonderful movement and I would be delighted to do the same for you.”
So says Social Enterprise London (SEL) boss Alison Ogden-Newton at the end of a storming letter to National Association of Voluntary and Community Action (NAVCA) boss Kevin Curley, who has been posing a series of fairly narky question about social enterprise on Twitter.
Unfortunately, as MD of a SEL member organisation and general fan of their work, I don’t think Ogden-Newton has really won the exchange.
My main gripe is that she missed a clear opportunity to sign-off the letter by quoting Ralph McTell saying: “Let me take you by the hand and lead you through the streets of London, I’ll show something that will make you change your mind.”
But I also think that narkiness aside, Curley raises some important points that Ogden-Newton fails to rebuff or, at least, fails to rebuff effectively.
The least interesting question Curley raises is: “[I’m] wondering about social enterprise. Is it charity plus business for social benefit? Or a respectable veneer for profiteers?” Unless Curley’s spotted something I haven’t, there aren’t many social enterprises making big profits by misleading people. In fact, beyond the big boys in the co-operative and employee-owned sectors, there aren’t many social enterprises in the UK making profits at all.
The next question is a fair one: “Does calling your organisation a social enterprise give you a licence to do anything which makes money regardless of mission and values?” – but I haven’t got anything more say about beyond what I’ve already said at length in previous posts.
The tastier questions are Curley’s final two. First, “Is political enthusiasm for social enterprise – all the parties love it – just an excuse to axe grants in the name of ‘sustainability’?”
The answer to this is definitely at least a partial “yes”.
Ogden-Newton’s response (quoted in full below) misses the most significant points raised by the question. She says: “To imply that politicians see social enterprise as a convenient vehicle to ‘axe grants’ is a misreading of the policies of all the main parties. Certainly in conversations I’ve had, ministers understand that in many cases social enterprises deliver outstanding value for money, but recognise their responsibility to support the ongoing development of the whole of the third sector through financial investment. Social enterprise is not the solution to everything. At SEL we are very clear that not all third sector organisations are suited to a social enterprise model; for much of the sector being a voluntary organisation which uses grants and fundraising to achieve its aims is preferable. But the social enterprise model enables an organisation to use a market driven, business led process to address its mission – it’s a process which is proven to promote innovation, entrepreneurialism and ultimately outstanding social outcomes.”
Obviously ‘we will axe grants and replace them with services funded through social enterprise’ is never going to be a manifesto for any political party. But all three major parties are very keen on the idea that, in situations where a community organisation’s ongoing activities are being funded by a grant, the council (or other agency) can withdraw some or all of the funding for that organisation and the difference will be made up through ‘social enterprise’.
The grant-cutting may be right in many cases (which should particular local groups get a chunk of cash from the council every year forever?) but, though SEL themselves are not prime culprits for this, plenty of politicians and social enterprise advocates both locally and nationally have spent the last five years or so encouraging well-meaning but not especially savvy people running community groups to believe that they can make up their lost grant money by getting their service users to run a café, provide gardening services or engage in some other theoretically commercial activity which – though often enjoyable – will generally cost most organisations more to carry out that they make from it. I’ve been at the conferences and the workshops. This one of the most prevalent policy messages being pumped out into the voluntary sector in recent years and Curley is right to challenge it.
Curley’s final and most crucial question is: “If social enterprise relies on state-funded contracts how on earth does this represent an example of third sector “sustainability”?”
In this case, Ogden-Newton’s answer (again printed in full) is illuminating but, once again, doesn’t actually deal with the most important element of Curley’s question. She says: “It is important to emphasise the distinction between grants and contracts. If an organisation from any sector delivers a public contract then it is providing a service. We do recognise that social enterprises can initially require grant funding in order to develop into sustainable businesses; after all, business development is a process, not an event. But at SEL we are very clear that in order to be recognised as a social enterprise, the organisation needs ultimately to be a business, earning revenue through trading in order to address our most pressing social and environmental challenges.
The social entrepreneurs I work with on a daily basis are some of the most brilliant, community spirited, determined individuals I have ever met. Of course, as with charities, public sector organisations and private companies, the model is open to abuse, but to suggest that at the heart of social enterprise is anything other than the desire to achieve lasting social change is a gross inaccuracy.”
But, in his question, Curley is rightly ignoring the technical labels and following the money. It is, of course, possible to trade with the state and still be a sustainable business with a broad range of income streams. Examples of this include companies flogging photocopiers, graphic design skills or team-building outings to government agencies (amongst a range of other customers) but at the other end of the spectrum you have organisations delivering uneconomic state-funded services – which would previously have been provided by the council or the NHS – to the public on the basis of a contract.
Whether or not their activities are described as ‘trading’ for tax purposes, it’s hard to see how those social enterprises that just provide an outsourced public service in a specific area – and would go bust if the council (or other agency) cut their biggest contract – are businesses in any meaningful sense. Either way, Curley’s point is that these kinds of organisations – that make up a worrying large chunk of the social enterprise sector – are not sustainable unless state funders choose to sustain them.
I don’t know if this is any less true of the organisations that Curley represents (who I imagine are more likely to be funded through grants than contracts) but whether or not it’s a pot kettle black situation that doesn’t make the question any less taxing for the social enterprise lobby. If social enterprise is really a way of doing things that is fundamentally more sustainable than other ways, how and why is it more sustainable? Unfortunately, this exchange reinforces the view that the specific case for the sustainability of social enterprise public service delivery is currently axiomatic to the social enterprise lobby – along with politicians for whom it’s expedient – and entirely inexplicable to anyone else.
Or maybe I’m missing something. Other thoughts much appreciated.