My answers to five tough questions

Matt Black of Pioneers Post first posed, and offered his answers to, ‘Five tough questions for social enterprise in 2013‘ at the beginning of January. With Social Enterprise UK‘s Nick Temple offering his answers towards the end of January, I thought now might be a good time for me to continue the trend, while also reflecting on stuff that’s happened in 2013 so far. Then maybe someone else can chip in with their thoughts in March.

Q1. Can social enterprises survive the economic gloom?

Matt predicts ‘another tough year‘, while Nick suggests social enterprises ‘will perform widely in line with the wider business sector‘. My suspicion is that 2013 – particularly from the beginning of the new financial year in April onwards – might be the year when we begin to see the full impact of public sector cuts on the social enterprise sector. It’s the year that many organisations who have managed to keep going so far by spending reserves and tapping into transition funding will finally find out if they’re sustainable or not. That said, there’s going to be plenty of opportunities, both to win public sector contracts and to find new ways to sell stuff to mainstream markets.

Q2. Can Big Society Capital deliver?

As this post from their CEO explains, Big Society Capital will definitely deliver something. They will definitely spend a significant chunk of cash: “In 2013 we will need to provide additional capital to new and existing social investment intermediaries in a way that allows them to grow and expand their impact. We aim to commit another £75 to 100 million in up to 20 new investments.

But the bolder aspiration is this: “In 2013 we believe that, as a result of our establishment, front-line social organisations will begin to notice a real difference in their ability to access capital.

If, by the end of 2013, they haven’t both made that real difference and – just as importantly – begun to communicate the benefits of their work beyond those directly in receipt of the money, they’ll have some very big problems.

Q3. Can social enterprises, mutuals and the voluntary sector deliver where the state has receded?

In his answer to this question, Nick lists a series of social enterprises who primarily deliver public contracts. I don’t see delivering public contracts as delivering where the state has receded, I see it as delivering on the state’s behalf.

There’s not necessarily anything wrong with social enterprises (mutuals and the voluntary sector) deliver public contracts but the social enterprise movement has struggled to make, let alone win the argument that social enterprises – by virtue of being social enterprises – are necessarily better than either public or private providers (see Q4).

In terms of actually delivering where the state has actually stopped paying for a service – as opposed to outsourcing provision – such as this example of local activists re-opening a public library that their council had closed, it’s not entirely clear whether the social enterprise is mostly for, mostly against or irrelevant to this kind of action. I think this is a discussion we might get to have in 2013, now that it’s no longer buried under the question ‘do you support David Cameron’s Big Society agenda?’

Q4. Can brand ‘social enterprise’ keep clean?

As hinted at in Matt’s answer, I think 2013 and the outsourcing it brings will see social enterprise’s reputation get worse before it gets better. Mainly because we will see an increase in public sector outsourcing to private sector outsourcing giants such as Serco and Capita, and those who oppose public sector outsourcing will continue to regard the role of social enterprises as – at best – oiling the wheels of the privatised gravy train.

These detractors aren’t ‘the public’ – as Nick’s answer suggests, most people still haven’t got the foggiest idea what social enterprise is – but they do include many of the pragmatic local activists that a thriving social enterprise movement could do with having on its side. Social Enterprise UK’s The Shadow State report – published in December 2012, suggests one route the social enterprise movement could pursue to counter this problem. That is attempting to persuade as many as possible of those who accept that public sector ‘modernisation’ is inevitable but don’t support outsourcing to conglomerates that social enterprise offers a viable alternative.

It’s a broadly sensible approach but whether or not it gathers any momentum during 2013 depends on securing some big wins – big contracts that could’ve gone down the private sector route but instead end up being delivered by popular social enterprises with a strong local base. The implementation of the Public Services (Social Value) Act 2012 might help make that happen (or it might not).

Q5. Will the definition debate be settled once and for all?

It won’t but I think 2013 will see a re-emergence of democratic ownership as a theme within the social enterprise movement – partly as an ongoing reaction to the economic collapse of 2008 onwards. Whether the newly-launched FairShares Association makes a big impression in itself, the fact that it’s been launched suggests that there’s growing interest in who owns companies (and who gets the profits) as well as the social impact they make.

Conversely, I also think we’ll see growing numbers of social enterprises set up to receive equity investment. So the overall answer is that the social enterprise movement will become more gloriously diverse than ever in 2013.



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2 responses to “My answers to five tough questions

  1. It is perhaps a tragedy of humankind rather than social enterprise, that it failed to respond to the economic crisis. I remember back in 2009 there was a conversation on the Unltd forum about the potential for an alternative to capitalism. A conversation started by a journalist from Social Enterprise magazine and my response introducing the work we’d been doing in this area was removed. It was a lead in to a sponsored event at OXSEF which asked if a new kind of capitalism was possible. Not only was it possible, but it began by warning about the risk of economic failure and civic uprising. It would not be the last experience of vested sponsorship interests becoming an obsruction. Could it be that we are so predisposed in our culture toward personal gain, that any new system will always be the old system It was interesting to discover recently the extent of alignment with Islam, in business for the benefit of others:

    This otherness of focus is perhaps the most difficulty to understand in the argument for and against profiting from addressing a social problem. It was something captured in a recent RSA Animate about “Outrospection” which seems to have common roots in humanist psychology:

    In the last few days, someone drew my attention to an article in Pioneers Post about the history of social investment. From where I stand, our own involvement as a social business began with the project sourced in Russia, one of the first casualties of the global economic crisis, which leveraged investment in a community microfinance bank. The social investment fund concept we’d advocated throughout was signalled in October 2009 by an incoming US President.

    It is money unfortunately which determines what registers as history


  2. Pingback: Will social enterprises adapt or will their director’s change jobs? | Profit Is Good

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