Let me take you by the hand…

“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.

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6 Comments

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6 responses to “Let me take you by the hand…

  1. Isn’t this more a case of want your cake (public sector grants) and eating it (being a sustainable “social” enterprise).

    And, as I keep asking – does this mean all the other enterprises are, ipso facto, anti-social because I suspect that’s a tad ofensive to hard-working private businesses.

    In the end the public don’t give a monkeys whether their meal on a wheel (or whatever) is delivered by a state employee, the employee of a “social enterprise”, a volunteer or someone working for “Evil Capitalists Incorporated (Public Sector teat Sucking Division) PLC”.

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  2. beanbagsandbullsh1t

    No, in a literal sense the tag ‘social enterprise’ obviously doesn’t mean that all other enterprises are anti-social, anymore than the name ‘honey cake’ means that all other cakes are ‘anti-honey’ or definitely don’t contain honey.

    The ‘social’ in social enterprise means that there’s additional social aims to the business beyond selling goods and services to make a profit.

    But, as was pointed out in a previous discussion here, there’s not necessarily a broad consensus on what positive social aims are, so it’s for the people paying for social enterprise activities to judge whether social enterprises are offering things they want or need.

    And there’s a lack of recognition from some within the social enterprise of the general social benefits of business, often coupled with the misguided idea that profit is a social evil in itself.

    In terms of the public’s view on who delivers their services, it depends a bit on which members of the public you talk to.

    That said, though, I agree in a general sense that – provided the people who are delivering the services are treated fairly by their employers – most people just want their public services to be good.

    That’s not an argument against the possibly of social enterprises (or any other organisation) giving added value if – in the process of delivering a good service – they can also achieve other social aims such as getting unemployed people into work.

    This may or may not what councillors or voters want in their area. I’m not against it, I just don’t see how it’s more sustainable that other methods of funding and provision.

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  3. Pingback: Best of the web 02/11/09 | www.the-vibe.co.uk

  4. For people not well versed in the technical details of the issues (e.g. myself – and many people I talk to) I think the appeal of “social enterprise” for providing public services is that it involves (a) not-for profit small organisations (cf large, profitable and controversial contractors), (b) innovations and nimbleness (see point (a)), (c) a greater involvement for members of the local community.

    How much that is reflected in reality is another matter of course!

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  5. beanbagsandbullsh1t

    Well, the answer is that some social enterprises are (a) and deliver (b) and (c) but – and this is part of Kevin Curley’s point – you can call quite legitimately call yourself a social enterprise even if none of these things apply to you.

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    • Very interesting post, and replies. Have you seen Allison O-N’s new blog, which she seems to be taking very seriously? – http://ow.ly/BVhv
      On Friday she outed John Lewis Partnership as a social enterprise! Just as some No.10 policy wonks are touting ‘John Lewis style public service provision’. At a stroke, the sector grows by 5 billion. Mind you, I do actually think JLP is a social enterprise (member owned, mission the happiness of the partners, some democratic characteristics). I’ll be doing a guest blog on this whole subject on the UnLtd World site in the next few days.

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