Branching out

they could have used their CSR budget and expertise to help reduce offending, but they planted trees instead!” – this is an anguished statement from a Northampton-based entrepreneur which apparently prompted this partly intriguing but mostly baffling outburst of advice on engaging with corporate CSR departments from Northampton University’s Simon Denny.

The self-styled ‘leading university on social enterprise’ has become increasingly interested in the sector over recent years and provides free-to-access social enterprise support through the Inspire2Enterprise service.

If you happen to live in or around Northampton, you may or may not want your local corporates to be spending the Corporate Social Responsibility (CSR) budgets on planting trees rather than helping young offenders, either way the underlying problem is that corporates CSR departments are giving their money to causes that aren’t social enterprises, and social enterprises would like to get that money

Denny offers a 10 point plan suggesting how a social enterprise might go about getting CSR departments to give it some money. If you don’t want to plough through all 10 points, the essential message can be summed up in five words: “Take begging bowl. Polish first.”

It seems like a reasonably logical, if in places patronizingly simplistic, check list for a small local charity hoping to get some corporate sponsorship but it’s not clear what it’s got to do with social enterprise – an activity carried out by organisations, as the university’s website helpfully points out: ‘trade products and services to further social and environmental goals’.

To the extent that he’s advising them to sell anything at all, the product or service that Denny is encouraging social enterprises to sell to corporates is ‘social value’. There’s a potentially interesting debate to be had about whether or not it’s possible to sell social value to a private business – public sector agencies have to buy things on behalf of society but could private sector organisations choose to? – but Denny isn’t taking us down this route.

Here’s point 7: “End your account by making a clear proposal – we will give you these outputs, and credit for them, and pages in your annual report, and….if you give us £x cash or expert support in kind. Discuss the proposal, answer questions, ask your own questions, find out what other information might be needed.

What he’s actually talking about corporates stumping up some money in exchange for some good PR. It’s the traditional charitable model of corporate fundraising (although I’m sure any charity fundraisers reading would be quick to point out that it’s a pretty slapdash and simplistic rendering of the traditional charitable model of corporate fundraising).

The reason why this piece is particularly annoying is that if there’s any unifying idea in the UK of what social enterprise isn’t, it’s this. Social enterprise is not organisations knocking on the door of big companies (or councils, or charitable trusts) saying ‘give us some money please, we do really good things for the disadvantaged people’.

If there’s one thing that unites the people (mostly) in Scotland who think social enterprises should never distribute profit under any circumstances with the people in Shoreditch who think social entrepreneurs should be able to make as much profit as they like as long they have a social purpose, it’s that social enterprises are definitely businesses that deliver positive social change through the process of selling goods and services to people and organisations that want to buy those goods and services.

Large private sector companies may or may not be good customers for social enterprises – in depends on what they’re selling but increasing numbers of social enterprises are finding that they are – but the starting point when looking for new customers is to aim to sell them something.

So a slightly more useful alternative to Denny’s point 1: “The first stage is for the social entrepreneur to produce a ‘hit list’ of corporates it wants to target. The list could be by geography or business sector.” might be to produce a ‘hit list’ of corporates that might want to buy the goods or services you sell.

Having done that, depending on how their company works, CSR people may or may not be able to help you get your foot in the door to get you a meeting with the person in the company who buys the stuff you’re selling – and may also point out the additional positive publicity the company would get from buying from a social enterprise (as a bonus) on top of getting some high quality products or services.

Denny’s conclusion is that: “No large private sector business is going to buy social value and impact from a social entrepreneur that is not professional about its marketing.”

Frankly, no large private sector business is going give a social entrepreneur money to deliver social value with no commercial value, that’s a charitable donation and they’d be giving their money to a charity. Social enterprises sell stuff.

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14 Comments

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14 responses to “Branching out

  1. Fair comment David,
    For us having corporate customers was determined by the product we supplied them before migrating to a social purpose model. Recently two of them have formed partnerships with Grameen in social business models.
    Both partnerships offer benefits in improving healthcare.

    This is of course not so much a supply chain issue as one of social responsibilty, an act of philanthropy from the company perspective.

    Yesterday the philanthropic act of a software business drew my attention. It was to create a department of social impact investing at the University of Utah, with greater emphasis on investing than social purpose.

    Its a reasonable argument that some may choose to profit by addressing a social problem rather than doing nothing at all. OTOH those who choose not to benefit financially may reason for an approach which is not consequential, by the way, but tightly focussed on the social objective. A focus on business being for the benefit of others with no personal gain:

    http://www.p-ced.com/1/node/44

    The Scots have created a faculty alinged with social business at Glasgow Caledonian with a focus on poverty and healthcare. They profess to partner with social business with strong social missions. We’re a social business with a focus on poverty and healtcare and a proposal for a department of social enterrpise in a n overseas university. If that’s not a strong social mission then they don’t have one either.

    http://www.p-ced.com/1/node/54

    It stands to reason that we might expect at least a word of support, let alone partnership. As is so often the case i9n CSR, ‘ not under my banner” it seems.

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  2. The point I’d make as a CSR manager for a large corporate is that there is definitely a viable opportunity for investment in social value through CSR spend if it aligns clearly with business objectives. Social enterprises are just as attractive to work with in this regard as charities, but there will be an element of education needed for the corporate to understand how the social value created is at least as impactful as donating to a charity (in cash or in kind).

    In some cases there will be an implicit commercial element to the “selling” of the social value (whatever form it may take) in that the corporate will be “buying” skills development or team building for its employees through their participation in the work of the social enterprise (and not planting trees, unless they really, really love trees). This can be a commercial arrangement in a different way to donating to charities. But I’d doubt it would be considered as a deliberate strand of work within the business plan for a social enterprise unless it was regular and sizeable enough to be material.

    The other route of course is for the goods and services of the social enterprise to be procured through the corporate’s supply chain (aka the Holy Grail). Again, this is either due to the goods and services being financially competitive versus the alternatives, or by the attractiveness of a corporate being able to articulate the additional social value arising from procurement through social enterprise versus a non-SE alternative. I can see substantial progress being made in this regard over the next year or two, but it will undoubtedly be driven by alignment with the values and business objectives of the company.

    Whilst you may consider the checklist to be simplistic, it is amazing just how many charities and social enterprises (I do understand the distinction) don’t get how to make a sensible approach for corporate funding, procurement spend or investment. The checklist is a reasonable summary of how to do so but your point at the end of the article about the difference between commerce and charity is important to include.

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  3. Beanbags admin

    Ian,

    Thanks for your comment.

    I completely get the point about skills development and team building but, for me, if a social enterprise is selling those things, it’s starting point needs to be that they’re selling those things as services.

    I don’t think it’s helpful – in terms of the social enterprise working out what its doing it and why – to regard selling some skills development and team building as selling ‘social value’.

    If social enterprises are genuinely selling these opportunities as an alternative to paint-balling, they’re selling commercial value up against the people selling paint-balling – with the additional social value they offer hopefully helping them to provide more commercial value that the paint-ball company.

    In terms of selling social value in the sense its described here, I know plenty of charities who seek and receive CSR support based on making proposals that are well aligned with companies’ business objectives and based a set of specific outcomes they will provide as a result of the support they receive.

    I’m not saying this is a bad thing – it’s a good thing – but don’t see how a social enterprise approach to this would be different to a charity one.

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    • I think we’re in agreement David. The skills development aspect only works as a secondary strand, adding value beyond the core purpose of the social enterprise. I don’t see it as providing social value in of itself.

      On your last point, it’s an interesting distinction, and could be very blurred. I’m a trustee of a charity in South London (Emmaus South Lambeth), whose principal activities are very much focused on social enterprise but which is incorporated as a charity. A significant proportion of our turnover arises from recycling and upcycling furniture and white goods, mainly sold into low-income households, supporting the development in skills and confidence of ex-homeless companions within the Emmaus community. If we were to pitch to a corporate for support or business, I don’t think it would matter whether we were a charity or a social enterprise as what we would be offering would be engagement with the social purpose, delivered through an explicitly commercial approach. What would matter is the effective articulation of purpose and value pretty much in line with the Simon Denny checklist.

      Interesting times and thanks for maintaining such a thought-provoking blog.

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      • An anecdote from Streatham where we introduced our self sustaining model to the UK. A couple of friends were involved in a local furniture renovation on Brixton Hill called Brass Tacks. They were describing the effort going into re varnishing furniture so I told them about a very easy way I’d discovered using something called Danish Oil which could be bought by the gallon from a shop in Jebb Avenue. A few months later I was told they’d gone over completely to using Danish Oil. Unfortunately the self-sustaining social enterprise model, though also free to use found greater resistance.

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  4. Allow me to explain adding value through the supply chain as described in the 1996 pape which set out the concept, using the hypothetical example of a software business:

    “With an initial P-CED business enterprise set up in a given community, it becomes possible to bring people into the fold, so to speak, of the Information Age. No existing company need change anything whatsoever about how it does business. New web development, software development and information management enterprises, for example, can be set up quickly for extremely low seed capital outlays. Existing businesses who need web/software development and management services can have their business readily enhanced for costs that are relatively insignificant compared to increased viability and long-term profitability of entering into a much broader marketplace–without a brick being laid. The design firm wins, the existing business wins. Most importantly, the community-at-large wins by way of decreased poverty and unemployment, since the design firm’s profits for the most part go back into the community–for adult education or retraining, high-tech head start programs for underprivileged children, seeding new small businesses, and social relief. Along the way, the design firm’s employees benefit from good wages, profit sharing, and normal benefit packages. Well paid employees in effect produce, inevitably, highly desirable social and community outcomes. In short, everyone benefits. In that this new enterprise effectively becomes a primary node and locus of much-needed information for the community, it is appropriate to seek seed capital to start the enterprise from traditional development and aid funding sources. The result is a self-sustaining and self-perpetuating enterprise that feeds on the very need, or demand, for resources that hampered the community and its people to begin with.”

    In 2004, the software development business became a reality and BASF one of the corporate customers I refer to above have informed me that the resource scheduling product we supply is business critical. Other customers like Medway council say that they want to keep using it it never goes wrong, so they don’t need to pay for the support service. Where its used in the NHS, it allows clinical resources to be better managed which must surely represent a cost benefit to the public.

    With the revenue this creates, we can fund the research and design strategic initiatives to tackle poverty,as has been the case since 1999

    http://people-centered.net/Services.aspx

    The corporate customer doesn’t know and it doesn’t have to know what we do with our profit. All we expect isn to be paid for what we deliver.

    .

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  5. Hi David + Ian.

    Interesting conversation this. I think what we’re finding working with larger companies is that the CR or CSR department is often a way-in but, as you both say, social enterprises ultimately want to sell their goods and services, which is how they create social impact and social value. For a few, including ourselves at SEUK, employee engagement + skills development etc *is* one of the goods + services, so it’s core business. But for the catering firms, cleaning firms, toiletry suppliers, software testers etc, it’s clearly not.

    Clearly, getting into the supply chain (or the Holy Grail as Ian calls it – something that resonates a little!) is only suitable for those social enterprises who are B2B or possibly B2C – those with the public sector as customers are less likely to get into the supply chain (unless the private sector company itself has the public sector as a large client + needs a ‘social value’ sub-contractor; we’re starting to see the Social Value Act drive some of this behaviour).

    Ian is right to say there is overlap, of course, but what differentiates most charities is that they don’t trade or earn a majority of their income (Emmaus does earn + trade a fair amount – indeed, some branches label themselves social enterprises); the fact that this article seemed to be advising social enterprises on how to do corporate fundraising (grants + donations) was therefore the thing that was a bit baffling. Of course, the advice is accurate on those terms – knowing what the customer wants, getting your marketing up to scratch etc – and applies more broadly, but social enterprises should be focusing on their key customers who will *buy* their services.

    Where I do agree with the article is that the marketing + communications of a lot of social enterprises currently undersells their value and purpose. We’re planning to do much more with our members this year on exactly that kind of articulation and communications work.

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  6. A couple of years ago one James Perry made a point of telling us that boomers just didn’t understand social investment.

    Today I noted that Pioneers Post refer to his radical idea of applying social business in public supply chains.

    It would be radical if it hadn’t been suggested a decade ago by those who introduced a social business model to the public domain.

    I quote from a copyright business plan:

    “Profits can be set aside in part to address social needs, and often have been by way of small percentages of annual profits set aside for charitable and philanthropic causes by corporations. This need not necessarily be a small percentage. In fact, there is no reason why an enterprise cannot exist for the primary purpose of generating profit for social needs — i.e., a P-CED, or social, enterprise. This was seen to be the potential solution toward correcting the traditional model of capitalism, even if only in small-scale enterprises on an experimental basis.

    Enterprise for the primary objective of poverty relief, localized community economic development, and social support became the business model which guided P-CED’s efforts and development at a time in the US when terms such as ‘social enterprise’ and ‘social capitalism’ had not yet been coined.

    Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”

    http://www.p-ced.com/1/node/30

    Perhaps responsible journalism should precede responsible capitalism?

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  7. Beanbags admin

    Jeff,

    As I understand it, James Perry’s radical suggestion isn’t that there’s a place for social business in public sector chains – I imagine you’re one of several people who’ve suggested that over the last ten years – it’s that public sector commissioners should only buy from social businesses,

    Whether or not that’s a good idea, it’s a specific idea that isn’t included in the passage quote above.

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  8. thanks for an interesting discussion David et al ….. helping social enterprises improve their marketing is one of the things the Social Enterprise Mark was designed to do. Here at the Mark, we provide a range of marketing support to Mark holders, including one-to-one advice and forthcoming webinars on sales and social media, for example. We advise social enterprises to compete on quality and price, then highlight the social value delivered as the icing on the cake, (ref Lucy Findlay’s blog http://lucyfindlay.wordpress.com/2012/06/27/understanding-and-fulfilling-your-customers-needs/). These are also the lessons being learned from 50in250, where corporates tell us that they expect a consistent, high quality product/service, which competes on price, delivering social value (assured by the Social Enterprise Mark) to help them build sustainable supply chains (http://www.supplymanagement.com/news/2012/purchasers-urge-support-for-social-enterprise-scheme/). Currently, we’re providing a brokerage or shortlisting service, free of charge, for corporates and private businesses looking to find certified social enterprises to buy from.

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  9. Hi Jeff
    We always try to be helpful – as confirmed with feedback recently received:
    “Thank you and your team for all your work, so far you are the only ones who have actually been able to give me an answer about what I should do as opposed to just saying what I have done is wrong!!!!”

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  10. Anne How I wish there was sometimes an expression of thanks for what we gave at out own considerable cost.

    The Social Enterprise Coalition said we were outside their focus but took the subscription anyway. Perhaps the worst experience of sharing our work was with Erste Bank a Grameen Partner who ran a social business ideas competition in 2010.

    I introduced the six year effort we’d made alongside local activists to source a social enterprise centre in Kharkiv. Not long after, our own government funded their own version of our proposal and Erste became one of their partners.

    http://economics4humanity.wordpress.com/2012/09/03/a-conversation-with-grameen-partner-erste-bank/

    There was nobody to speak up for us, because it was outside their focus.

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