Another defined mess

Anyone who’s ever been a ten-year-old child who enjoyed telling people interesting facts will know that, according to someone or other who’s definitely right, you’re never more than six feet away from a rat.

Similarly, anyone who’s ever been to a social enterprise conference will know that, in such a setting, you’re never more than six minutes away from the social enterprise definition debate. At Social Enterprise Question Time, a series of Question Time-style events that my company, Social Spider CIC, organises in partnership with the School for Social Entrepreneurs, we ensure that ‘How do you define a social enterprise?’ is the final question put to the panel at every event. Not because it’s an interesting question but because, if we guarantee that panelists will answer it at the end, they can’t be asked to answer it during the rest of the event (and, in doing so, bring to an end all discussion on social value, scaling up or whatever the overall topic of the discussion might be).

This week, we have the bizarre news that someone has decided to launch a rival to the Social Enterprise Mark. I’ve had my say on the Mark in the past and, while having great personal respect for the individuals involved and their dedication to positive social change, my views on the (lack of) usefulness of their product to either social enterprises or their customers remain unchanged.

Whether or not they actively object to the Mark or have just never heard of it, the vast majority of social enterprises in the UK have not applied: based on the most recent figures I’m aware of, fewer than 450 social enterprises have the Mark. Earlier this year The Cabinet Office claimed that: “Britain alone has over 180,000 social enterprises, generating £55 billion for the economy“.

It’s anyone’s guess who most of these 180,000 social enterprises are or where they might but whatever the ‘true figure’ is, it seems slightly bizarre that Milan Pastor, founder of Fairbusiness, is claiming, in an interview with Social Enterprise Buzz, that his new rival accreditation is necessary to challenge the Mark’s ‘monopoly power in the UK’.

In a narrow sense he’s correct, the Mark is currently the organisation that offers organisations the opportunity to call themselves a certified social enterprise as its only product. That said, Social Enterprise UK (my organisation is a member) offers members the opportunity to call themselves a social enterprise, along with a range of other benefits, for less money.

While Michael Porter is referenced on his website, Mr Pastor unfortunately doesn’t seem to have made it to the chapter of Competitive Strategy that deals with substitution.

Membership of Social Enterprise UK is one obvious substitute for buying the Social Enterprise Mark but others which potentially work just as well are registering as a Community Interest Company or, in the vast majority of situations, just telling people that you’re a social enterprise and explaining what it is you do.

There’s no evidence that customers – either public sector commissioners or people buying stuff in shops – have any greater desire to buy goods or services from an independently certified social enterprise over an organisation that calls itself a social enterprise that does have a certificate. Mr Pastor is challenging the Social Enterprise Mark’s monopoly power over a market that doesn’t (currently) exist.

Mr Pastor may, of course, succeed in creating a market, but he offers no evidence as to what entitles him to certify social enterprises beyond liking social enterprise and having set up a website. While a key selling point of the Fairbusiness certificate is that: ‘An annual membership from Social Enterprise Mark for a business with income between £500,000 and £1,000,000, for instance, costs £550, compared with £320 from Fairbusiness’, £320 seems quite a lot to pay for a bloke with no specified credentials to give his opinion on the social nature of your business.

That said, I don’t necessarily believe that Mr Pastor’s view on whether your organisation is a social enterprise has significantly less commercial value to a social enterprise than mine or the Social Enterprise Mark Company’s. They’re all equally valueless.

Potentially more interesting was last week’s suggestion from Big Society Capital (BSC)’s chief executive, Nick O’Donohoe, reported by Third Sector, that: “We need a clearer definition of social enterprise.

In turns out that ‘we’ in this instance is ‘BSC staff and corporate social responsibility specialists’ trying to get corporates to buy products and services from social enterprise. O’Donohoe explained that corporates: “… want to hire social enterprises and invest in social enterprises,” but “… they worry that they can’t identify them easily.

He added, possibly with a slight glint in his eye, that: “It’s fine for people in the sector. They can look at an organisation and tell at a glance whether it’s genuinely focused on a social mission. But for those who aren’t specialists it’s much more difficult.

Having already agreed with O’Donohoe once in recent months, I’m not going to say he’s necessarily right in this instance but I do think the idea of a government-backed social enterprise registration – available to organisations with a wide range of corporate based on a simple set of conditions – is worth considering, possibly as an extension of the remit of the CIC regulator.

As with charity registration, the function of social enterprise registration would not be to prove that an organisation is a successful social enterprise, so many of the conditions specified by both Social Enterprise Mark and Fairbusiness would be irrelevant, but it would show that an organisation had met a set of basic legal requirements around ownership, profit distribution and social purpose.

I’m supportive of O’Donohoe’s desire to help more corporates get social enterprises in their supply chain but an equally useful outcome from social enterprise registration would be that government departments seeking to fund or contract with social enterprises wouldn’t have to redefine social enterprise every time they set up a funding stream or enact a new law. That said, I’ve assumed that politicians and civil servants like doing that and that that’s why they’ve avoided a legal definition in the past.



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8 responses to “Another defined mess

  1. When it came to certification, we took up with what was formerly known as ‘See What You Are Buying InTo’ It cost close to £1000 and didn’t do anything for us. I’d approached B Labs in 2009 and got the message that it wasn’t possible to evaluate UK businesses at that time. It was also in 2009 after several attempts, that I got a response from Rise-SW, the originator of the SE Mark. I’d introduced our self sustaining model of business for social benefit and the impact we’d made since 1999 in Eastern Europe.

    The same criticism of handing over money to someone unqualified can be levelled at the SE Mark.

    This statement may be found on the SE Mark website:

    “We are the only UK and international body to independently prove that a business is putting people and planet alongside profit”

    Clearly this isn’t true.

    In 2009 we’d been presenting to the opening plenary at the International Economics for Ecology conference on – The “Triple-Bottom Line” of financial, social benefit, and environmental benefits It was an introduction to the work we’d done on an alternative to capitalism.

    Just weeks later, the Oxford Social Enterprise Forum hosted an event at the Said Business School on A New Form of Capitalism.

    Whenever I hear someone say we need a new anything now, I recognise it as meaning I want to rebrand something as my own, It usually works for those who are well connected and funded.

    For those of us who conceive and share our models, invest our funds and perhaps our own lives, it is only those who’ve contributed likewise who can be considered qualified. Certainly not an organisation who’ve been supported by public funds and taken none of their own risks.

    So someone has the temerity to challenge a closed monopoly. That’s how a free market works. It can;t be prescribed to others, while defending one’s personal territory.

    If Michael Porter is the inspiration for this interloper, then they’re already 10 years behind. Porter is now suggesting something argued 10 years ago in one of our proposals for economic development:


  2. Another excellent piece David. In terms of its audacity and chances, this move reminds me of when WWE wrestling supremo Vince McMahon tried to set up a rival to the NFL!

    However, interesting to see in the S.E. Buzz article you reference that 28% of the public think social enterprise is a marketing ploy! This, and Nick O’D’s recent comments, suggests there is a at leaset a desire for the ‘sector’ to get its house in order. If social enterprise is really post-ideological and beyond labels, perhaps a more nuanced approach is required, such as the ‘Trust Engines’ debate? This seems a more likely way forward to me


  3. Beanbags admin

    Hi Stephen,

    Thanks for your comment. I assume the SE Buzz article is referring to this research from 2011.

    Corporate supply chain issues aside, I imagine Nick O’Donohoe’s motivation may also be partly that he’s being barracked from all sides for not investing in (intermediaries who invest in) social enterprises and, if he asks what a social enterprise is, people either offer him one of 20 or so different definitions or smugly inform him that there isn’t one. I think I’d be getting a bit narked off if I were him.

    Where has the trust engines debate go to?

    I think SE Mark team should be honoured that you’re comparing them to the NFL!


  4. Regrettably social enterprise has increasingly morphed into a marketing ploy. Read for example what Liam Black is saying about slick city types entering the impact investment arena.
    In 2010 I petitioned a newly elected David Cameron for policy support for an initiative to place children in loving family homes. Investment was needed to transition from institutional to fostee care with resultant reduction in cost to the state.
    It didn’t come from financiers intending to profit from a social cause, it came from a social business which invests surplus in social causes.
    Just weeks ago, we were being offered examples by the same PM of how the radical new idea could place children in loving family homes.

    It needn’t have been this way, if social enterprise support orgs actually functioned to support practitioners .


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  6. As in every new ventures, there is always a burst of new options until things settle a bit. This may happen with social enterprise associations in the UK too. To add to this discussion, there is also the possibility that regional bodies may play a part in new developments. For example, “Social Enterprise West Midlands” has a logo which members can display too


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