The Social Enterprise Mark – what went wrong

It’s always been my intention for this blog, where appropriate, to be robustly critical of negative developments within the social enterprise world but to avoid being gratuitously rude or nasty. I’ve been attempting to come up with a suitable response to the article from the Mark team in this month’s (generally very good) issue of Social Enterprise magazine but unfortunately, the Mark saga has now reached a point where it feels distinctly unpleasant to be stating the facts.

The Mark’s Marketing and Communications Manager, Lesley Foster, explains that nine months on from its launch as a ‘national brand’ there are now ‘more than 250’ Mark holders. Based on (Mark partner) the Social Enterprise Coalition(SEC)’s claim that there are 62,000 social enterprises in the UK, the Mark is still some way off signing up 0.5% of those eligible. With grant funding for the project totaling between £814,000 and £964,000, current figures (now reported by the SE Mark team as 275*) show each £99 Mark award being subsidised with at least £2,960 of grant income*.

With 275 social enterprises signed up, trading income equals £27,225*. At best this represents slightly over 3.2%* of the project’s turnover. Given that at least 50% of a Mark holder’s income needs to come from trading, the Mark team must now be contemplating the possibility that – even if the project receives a further injection of grant or government funding – it will be morally impossible for The Social Enterprise Mark Company to display the Mark on its own website after March 2011.

As mentioned previously, I’ve never been a supporter of the Mark. It neither tells commissioners about what organisations do and how they do it, nor tells consumers about the social impact of the products they buy (like, for example, the Fairtrade Mark). I’m remain willing to sign-up to a Mark that does either of those things but I see no benefit in buying into what a friend in the movement describes as ‘a bumper sticker that delivers no social impact’.

Despite my own opposition to the Mark, I’m genuinely surprised it’s been as unsuccessful as it has been. My hunch at the time of the its launch was that as many social entrepreneurs are optimistic people, keen to try and make the best of things, often against their better judgment, many would apply for the Mark as a gesture of social enterprise solidarity.

As it is, the speed and scale of the comeback necessary for the Mark in its present form to become a sustainable business would, if achieved, rightly see the Mark Company registered as a religion in the next census. The Mark has been a cock-up from start to (looming) finish. Given the resources expended, the number of social enterprises signed-up is significantly less than the number who could reasonably have been expected to have been engaged in lengthy one-to-one discussion on their needs during the market research stage. Instead, the Mark has been a political fudge – who can forget the darkly hilariously proposals for a three-tiered accreditation system – that failed disastrously to even fudge the politics of the issue.

A clue to the debacle may possible lie in the fact that the project was pushed forward by a “14-member social enterprise identifier project steering group that was set up to find a way to brand the sector with professional marketing advice from the government’s Central Office of Information (COI).” I’m sure there are some good uses for a 14-member steering group but I don’t think any of them are directly-related to starting a sustainable business.

Current SEC chief executive, Peter Holbrook, is not to blame for what’s happened. He’s loyally and honourably backed the Mark after finding it in his inbox on taking up the job this year but he will hopefully be able to play a role in both sorting out the mess and making sure similar mistakes don’t happen again. Between them, Rise, SEC and the late Office of the Third Sector have – with undoubted good intentions – cooked up an embarrassingly expensive dogs dinner. Most worryingly, the Mark saga demonstrates the failure of many in the upper echelons of the social enterprise lobby to understand either what social enterprises need or how social enterprise works in practice.

Recriminations are no use to anyone but it’s time for a bit of humility and a lot of listening. I hope that it’s not too late to salvage something from the mess. Maybe there’s still time for a new Mark product, developed in consultation with people running social enterprises rather civil servants and umbrella body executives and enabling social enterprises to better explain what they do to commissioners and/or customers, to be brought to market.

*Figures updated in response to new information provided by the SE Mark team.

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28 Comments

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28 responses to “The Social Enterprise Mark – what went wrong

  1. I take your point, David, and similarly have stated some concerns/caveats in the past, but I think this is unnecessarily harsh. The reality is it’s still very early days for the mark, and the new company leading its dissemination / promotion. It is now in the hands of social entrepreneurs / practitioners, and it will be judged in the fullness of time by what it achieves. But it is noticeable that it is being used in the (interminable) definition debates, or for clarification with new agencies in the field (O2 etc), which may demonstrate its use.

    I’d only add that many social enterprises and organisations have been pump-primed with grant funding; at least the Mark is setting out to achieve its own sustainability and walk the walk. I’d say “give it a chance / the jury’s out” even if there have been mistakes + missteps on the way (but haven’t there been for all of us?!)

    The irony of the NCVO Sustainable Funding Project getting a substantial grant (£842k) from Big Lottery last week, on the other hand, seems to pass people by….

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  2. beanbagsandbullsh1t

    Nick,

    Not in any way disputing the principle of pump-priming by grants.

    I think it’s best method of launching most social enterprise projects – although many in the lobby (not SSE) tend to reckon loans are the way to go for social enterprises other than themselves.

    Aside from generally just being one of the pleasant and optimistic social entrepreneurs I mentioned above, you may be right about the early days point but it has taken them three and a half years to get where they are.

    I’m not clear where the money’s going to come from to keep it going unless they get another large grant. Maybe I’m missing something.

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  3. We at the CIC Association would have loved to have been ‘pump primed’, when set in context the outcomes achieved for quite a substantial chunk of taxpayers money must be regarded as hugely disappointing.

    What happens when the heavily discounted price period ends? We already find it hard to understand why CICs would have to pay a second audit fee to be recognised as social enterprises, many members regard it as an extra tax.

    A mark that divides recognisable SE groups such as charities, co-ops, cics was never going to work.

    My comments were seen as competing, and indeed I would have loved the chance to compete fairly for the funding that was on offer. I requested the chance to present a case for CIC infrastructure to be prioritised ahead of this, but to no avail.

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  4. John Wootton

    Very interesting and incisive blog David.

    My reaction to the Mark – beyond the blatant kick in the teeth to any kind of ‘value for money’ premise the Mark operates within – has principally been confusion as the navel-gazing it represents.

    Most worryingly for me, is that I see the Mark as something of a referendum on SEC’s view of what represents a social enterprise.

    On this count, it is an embarrassing result to gain less than 0.5% after spending the best part of a million pounds.

    I doubt very much that it is because of a lack of knowledge about the existence of the Mark within the sector that it has not been a success.

    You and others have pointed out the limitations of their overly narrow definition before, so perhaps it is time to call an end to this debacle and ensure that public money doesn’t continue to be thrown in the direction of something that just hasn’t worked.

    I for one wouldn’t want my organisation to be associated with the Mark after seeing the figures above.

    John

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  5. My concerns are similar. To us based in the South West, RISE-SW were a regional SE support org, I made 3 attempts to contact them between 2006 and 2009, finally to be told that they were too busy with the SE Mark.

    I’d described our work and the sustainable business model conceived in 1996. I’d described the same model to Big Lottery in August 2009, in a bid for BBC Village SOS.

    The SE Mark bore a remarkable resemblance when it appeared, though it is reasonable to assume that they’d arrived at similar conclusions, albeit in a much more expensive way than reading my communication and networking as first requested.

    Grant funded SE support appears to mimic capitalism in not trickling down to those most in need of it.

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  6. The key question for me is this: can the Social Enterprise Mark make the same journey to corporate acceptance and consumer appeal as Fair Trade. If the answer is yes, then it’s worth the early investment. If not, then someone has to ask why.

    My fear is that the current mark is too prescriptive aroiund what you are, with too little recognition of the potential social and environmental impact you can have whilst also delivering a decent return to investors and entrepreneurs with the savvy to make it happen.

    It’s a good starting point – but that’s all.

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  7. Visibility is the problem for social enterprise, together with selective promotion by media and support organisations.

    I had hopes for the numerous third sector directories and even the See What You Are Buying Into network which scrutinises and publishes member compliance with social, ethical and environmental criteria.

    Can anyone here say that they’ve been able to raise the profile of what they do and attract customers through any of these approaches?

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  8. beanbagsandbullsh1t

    Robert,

    My broad position on this is similar to yours but there’s three reasons why I’m a bit less optimistic than you:
    1. the Mark project is at this starting point three and a half years into a funding four-year funding package, having presumably spent most of the money that would enable it to develop a more useful product.

    2. the SEC don’t regard the failure of the Mark to recognise socially enterprising ‘for profit’ companies* as a problem because these companies fall outside their definition of social enterprise.

    But for me, one of the strongest arguments for having an SE Mark is to recognise socially enterprising activities by for-profit companies (as the Fairtrade Mark recognises products produced according to Fairtrade standards, whether or not all the products offered by the companies offering making the product are Fairtrade). In situations where structure is an issue, saying ‘we’re a CIC’, ‘we’re a co-op’ etc. does the job fine. I think it’s the activity of social enterprise – in terms of products and services – that may need a Mark to promote it not ‘social enterprises’.

    3. The issue of the differing needs of organisations primarily selling to commissioners and organisations primarily selling to customers – in terms of fulfilling the information needs of those commssioners and customers – is not addressed by the Mark.

    I don’t think the Mark in its current form addresses either effectively but a good starting point would be to pick one or the other as a focus.

    *Unless they have set limits on profit distribution

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  9. I think I’m going to give it a chance, 250 companies is not bad really – considering companies are only recently starting to get their head around what it is.

    @Jeff – I’m not sure I think it’s that great that Nestle are allowed the glory of Fairtrade being stamped on their products when you look at them as a whole company…

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  10. beanbagsandbullsh1t

    Claudia,

    The 250+ figure includes over 80 who were signed up to the original Mark before the national launch at the beginning of February. 170 or have signed up in the 8 months since the launch at an average rate of around 22 per month – about one per working day. There’s over 4000 CICs, to take one example, that are reasonably easy to find and contact.

    That said, you may be right that things will pick up once people find out more. And I admit that – my own views aside – the key commercial problem for the Mark is not heartfelt opposition but indifference and lack of knowledge.

    That and the SEC’s ludicrous continued use of the 62,000 figures for social enterprises – which makes their results look worse than they are.

    In means that if the Mark got 10,000 SEs signed up it would be a phenomenal achievement that I’d respect enormously and 2500 would be a decent achievement but, in theory, it will still mean less than 20%/5% of SEs had signed up.

    If only to make themselves look less silly, SEC ought to find a working figure for organisations that actively identify as social enterprises. My guess is that it’s in the region of 15,000 – 20,000.

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  11. I think what everyone is missing is the point of view of the consumer.

    So far, the mark has spent a lot of money patting social enterprises on the back as the sector as a whole seems to enjoy doing. But there is absolutely no point in this if the consumer don’t care.

    So far the marketing has been all wrong. It’s been marketed to social enterprises who then pay to be told what they already knew. Surely the point is that the public are made aware of the advantages of buying from an SE?

    The first step should have been getting the biggest SEs on board – the household names – as these guys would have created public interest. Then the little guys can benefit.

    Sadly, the marketing and comms on this has been schoolboy at best and going in completely the wrong direction.

    Still, time to sort it eh?

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  12. The Social Enterprise Mark Co has much to say to correct the inaccuracies and myths that seem to be perpetuated by various blogs, which do not represent the views of 275 Social Enterprise Mark holders.
    See our update http://www.socialenterprisemark.org.uk/blogs/2010/10/06/penny-newman-and-the-mark-demystified/

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  13. beanbagsandbullsh1t

    Dear Lucy,

    Aside from the fact that you are now using a specific figure of 275 to ‘over 250’ – I will update any relevant numbers accordingly this evening – please explain what in my post is inaccurate.

    If I am making incorrect statements of facts – as opposed to opinions or analysis that you disagree with – I’m keen to amend or remove them.

    It’s obviously not my view that views opposed to the Mark represent the views of the organisations signed up to it. The problem is that by, your co-owners, the SEC’s figures there’s 275 signed up and 61,725 not signed up.

    I agree with your apparent suggestion that the 62,000 figure is wrong.

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  14. Scott

    I think a lot of people seem to be missing one crucial point.

    As the blog mentions, the Social Enterprise Mark company won’t be eligible to hold the mark itself until it earns more money from trade than it does from grants.

    But a huge proportion of organisations calling themselves “social enterprises” are actually in the same position.

    The Fairtrade Mark company wouldn’t have qualified for years after it was first launched, and neither will many of the thousands of CICs.

    There are a lot of organisations out there with noble intentions who struggle to become financially sustainable.

    There are just as many who achieve financial sustainability by cutting corners on the social aims.

    The Social Enterprise Mark is a badge of honour for those who have achieved the gold standard of 50% income from trade and 50% profits to social purpose.

    I wonder how many of the Mark’s detractors are just feeling left out because they haven’t made the grade yet.

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  15. Fascinating post and discussion. I haven’t given the mark much thought, to be honest, but I’m feeling stimulated by the debate unfolding in the responses section. It makes me think about the debate around The Big Society and a comment that labelled me as a cynic because I suggested via Twitter that it’s a re-branding exercise of what already exists…and then asked why and who it benefits. Anyway, the point to this ramble is we should challenge and ask where and how value is being created from these entities.

    At the same time, I suggest we allow for fairness and even a bit of generosity. The Social Enterprise Mark and The Big Society, I suppose, attempt to improve our social enterprises and communities. We just need to offer input and advice when we perceive they’re going off course (case in point: this blog post). I just hope that they’ll listen and take some of the advice on board.

    When I helped to set-up a regional social enterprise support organisation a few years back, I spent a lot of time talking with the people we were meant to serve in order to find out how we could help them do their jobs…and to be financially independent (i.e. ween us off RDA funding). Through that process it became clear how we could add value and earn money. Unfortunately, interests of some of the strategic players became about their own organisations’ survival/power and not about who we were there to help. That’s when I left. In a similar way, I just hope the Mark and Big Society are about “them” and not “us”.

    All that’s left to do is to invite you all to come to the next SE Alley drinks at the Barbican Lounge on 21 October where we can talk this out. Besides your time and the effort to socialise with some interesting people, the event is free and there are no dues or forms to fill in. It’s volunteer led (me) and always breaks even (there is no budget). Hope to see you there.

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  16. beanbagsandbullsh1t

    @Scott

    Whether or not 50% of profits have to go to a social purpose is a decision that people take when they set up an organisation or when they change its constitution.

    I don’t believe that restricted distribution is socially useful in itself: https://beanbagsandbullsh1t.wordpress.com/2010/03/26/why-the-anti-distributionists-are-wrong/

    Income from trading is more complicated. My personal view is that I want to deliver positive social outcomes with whatever income is legitimately available, so my organisation either will or won’t generate 50% in trading income in any given year depending on the opportunities that happen to be available that year.

    My gold standard is based on achieving positive social change not on a % of income from particular sources.

    And, to pick up on Deniz’s point, I don’t see what relevance the issue has to customers.

    That said, I understand why many social enterpreneurs would think that, for example, a community cafe which gets £50,000 worth of grant funding to support the fact that its there and sells £5,000 worth of tea and cakes probably might not be considered a social enterprise.

    The trouble is the distinctions between trading and non-trading are rarely that simple in real life.

    Many social enterprises deliver services paid for by public agencies where the question of whether they’re described as trading income will differ based on administrative factors that have no meaningful relationship to the service being delivered or the people who end up benefiting from it.

    It’s an arbitrary measure that doesn’t provide useful information.

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  17. Let’s give the Mark time and meanwhile support it, promote it !

    I manage the Social Enterprise Mark map at http://www.socialenterprisemap.org on a voluntary basis and independantly of SEM Co. If anyone doubts the enthusiasm for the Mark following the national roll out from the South West in February 2010 just take a look at the growing regional spread of the 250 mark holders, better still check out the some of the big name social enterprises that have been most willing to benefit from this trail-blazing initiative – much the envy of many in Europe, the US and elsewhere.

    Fair Trade took over a decade to achieve its tipping point. I agree with those who say ‘ Let’s give the Mark time and meanwhile support it, promote it !

    Bob Northey
    Director, Social Traders CIC

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  18. Clearly a social enterprise and many other kinds of business with exceptions such as human or drug trafficking have a social dimension. Some reflect that in the service they provide.

    The point of “at least 50%” from our perspective was that a conventional business could trade conventionally in the free market with the agreement by shareholders that at least 50% of profit was re-invested in a community or social purpose.

    As described in 1996, the suggestion was not to allow 50% to be distributed to shareholders at all, but that the remainder would be retained for business growth with 10% distributed in amployee profit sharing.

    Having established that model under a guarantee company in 2004, it was described in my 3 attempts to communicate from 2006 onwards.

    You will also see from that paper which has been viewable online in the public domain for nearly 14 years, that is also says that it’s up to other businesses to decide what the contribution of profit, 1% or 5% should be.

    I know for example that in the US you’ll find B-Corporations who re-invest 1% into a social purpose. They were described not long ago in a Business Week article – What a Good Company Looks like.

    For us with a 100% trading income, paying corporation tax it’s a little more than irritating to see public funds go to support orgs who won’t communicate, especially when one knows that what public funds were spent on was available and offered free.

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  19. @beanbags – Deniz was saying that customers/consumers need to recognise and seek out the Mark… I’m assuming the whole point is so clients can seek out social enterprises…

    Social enterprise is not as easy as fairtrade to define, so this was never going to be an easy one.

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  20. In the light of all this, I think I am going to start a Social Enterprises BUYER Mark…

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  21. beanbagsandbullsh1t

    @Claudia my point is that I don’t see why consumers would favour an organisation (or not) based on the % of their income that comes from trading.

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    • @Jeff Mowatt I like SEE.
      What I meant is a mark for people/private individuals and businesses who BUY services. So someone who thrives in buying from equitable supply chains, would get rewarded for their bahaviour/attitude. You could up that by giving extra points to people who buy less but upcycle, recycle, swap, barter, etc, for instance. Now, what do you think???

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  22. Ah now that would be interesting Servane. I have several customers who endorse and even fund social enterprise who are 2 years or more in arrears with payment and worse, which I won’t go into here.

    Part of what I link to above requires explanation of how a business contributes to education, carbon reduction, minority groups, but not the extent to which each buys into another.

    In my 6 years experience of trading as a social enterprise, none have in fact. Those I refer to above remain customers because of the product value with knowledge of our commitment and that’s how it’s remained.

    None of the directories for social business have sourced new business. Not even the one I’ve just described. I suggested that they might encourage members to engage with each other but that drew no response.

    When I look around most seem to be in social enterprise media or advise others to become social enterprise, they don’t do any tangible social enterprise or want anything to do with those that do. Perhaps they fear this might tarnish their brand.

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  23. Two organisations, Addictions UK Ltd. and Addictions North East made an enquiry to the Social Enterprise Mark. After the SE Mark Techies had sorted out their web page problems, we received a detailed e-mail from them (with our Mem and Arts – which they obtained from Companies House (it would have save money for us to have sent them to the Mark) with a detailed critique as to why they questioned whether we were a bona fide Social Enterprise. After a phone call with their representative we received their view on how we could satisfy their criteria – we had to lodge our recorded minutes at Companies House stating that Directors and Shareholders cannot qualify for dividends (this was agreed at the outset of our incorporation. We also had to agree to an asset lock – something we rejected on incorporation. We thought about becoming a CIC for a short while but after recognising we did not need ANY grants at all we dismissed this idea. Addictions North East was also a non-starter! We were told that they would have to reach the magic figure of 50 percent trading figures to qualify! The Social Enterprise Mark Organisation are really good at setting outcomes and outputs for their applicant members.

    We resent the idea that the SE Mark can dismiss us as an established Social Enterprise when our credentials as such an agency are impeccable. The SE Mark organisation have forced our Directors to question whether we can allow unaccountable people to dictate to us. Are they the new Police Force for The Social Enterprise Sector? Addictions UK Ltd. gains no fiscal advantage from being a Social Enterprise.

    Addictions UK Ltd will now participate in the debate about this organisation and the wider questions of what constitutes a Social Enterprise.. Our view is simple – Many SE zealots embarrass us all with their politically correct and seemingly illiteracy on some of the founding principles that influenced us to become a Social Enterprise. We believe that people with addictions problems are emphatically an excluded group in Society. We will not allow the Social Enterprise Mark to be the only voice that determines whether Social Enterprises are legitimate. We have created our own profits – no organisation has donated any grants to us (let alone to the level the SE Mark has received). We support the concept of Inclusivity of membership criteria into what a Social Enterprise definition. As a member of Social Firms UK we subscribe to the concept of employing people deemed by others to be the problem. All out staff members are all “in recovery” themselves from the dreadful illness of Addiction. We do not intend to place an asset lock in place because we intend to continue striving to be the largest Provider of Home-based Addictions Treatment in the UK – and beyond. We are now working to replicate our model in India.

    We would welcome comments from people on their views of the Social Enterprise Mark. We wish that this organisation had been included in the recent Coalition Government cull of QUANGO and GONGOs. Out vote would be to disband them and to pass on their duties to existing Social Enterprise Agencies with a less restrictive policy.

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