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.