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My charity hired a social enterprise consultant and all they suggested was this lousy t-shirt

I can’t help but think this throws into question whether the voluntary sector should describe itself very differently, in a way that actually reflects its changing makeup and the fact that so many charities and other voluntary sector organisations are viable businesses… 

So says Social Enterprise UK (SEUK) chief executive, Peter Holbrook, writing for Pioneers Post in reaction to survey results published by his organisation last week showing charities’ growing appetite for social enterprise. He goes on to explain that: “In fact it’s been a few years since trading took over giving as the main source of income for what is still too-often regarded as a sector run on good will and giving.

According to SEUK, a whopping 92% of charities taking part in the survey “said they would like to increase their income from trading and government contracts in the next three years” while 74% said “there is not enough support available to help charities make the transition from voluntary to trading income, and two-thirds (63%) said more government support was needed.”

The broad idea that the SEUK research reflects is that we’re in the midst of a major shift from a situation where charities got grants and donations to do good stuff, to a situation where charities have to either turn that good stuff into products they can sell or sell something else to make profits which they can spend on doing good stuff.

There definitely is some major change taking place. According to NCVO’s Civil Society Almanac, ‘earned income’ in ‘the voluntary sector’ has been increasing in recent years. The biggest increase (148%) has been in income from government contracts which went from £4.5 billion in 2000/01 to £11.2 billion in 2010/11 while, during the same period but trading income from individuals also increased (40%) by from £5.8billion to £8.1billion in the same period. During this time, income from government grants decreased from £4.6 billion to £3 billion.

As a social entrepreneur, charity trustee and author of SEUK’s popular booklet Why Social Enterprise? A Guide for Charities, I think it’s generally a good idea for charities to become more socially enterprising but I’m also wary of conflating distinct, if sometimes overlapping, trends in voluntary sector income generation.

One major trend is for charities to be funded in a different way to do the same things. I’m a trustee of Voluntary Action Waltham Forest (VAWF), the local umbrella organisation for voluntary sector organisations in the London Borough of Waltham Forest. The vast majority of VAWF’s income comes from the local authority and, as a result of the New Labour-era shift from grants to contracts, this income currently comes in the form of commissioned contracts rather than grants so it’s part of that 148% increase in voluntary sector ‘earned income’ between 2000/01 and 2010/11.

The shift from grants to contracts isn’t meaningless. It means that every two to three years when the local authority commissions the services VAWF delivers, other organisations can bid for them. It also means that VAWF has to deliver against a set of targets – such as supporting local organisations to raise a certain amount of money in grant-funding each year – or risk not being paid in full.

What hasn’t changed in any way is the fact that local authority is paying VAWF to carry out a range of activities that together amount to being the voluntary sector umbrella body for the London Borough of Waltham Forest. These activities were never paid for through ‘good will and giving’ (and it’s difficult to imagine anyone ever running a marathon to raise cash for voluntary sector capacity building). They used to be paid for in blocks with grants and now they’re paid for in blocks with contracts. It’s basically the same stuff,  based on the same business model, administered in a different way.

Clearly, you don’t a 148% increase income solely from reclassifying existing grants as contracts and a second major trend is the government’s ever-growing enthusiasm for outsourcing public services to alternative providers, including the voluntary sector. This results in opportunities for socially enterprising service delivery charities such as Turning Point to compete with private sector providers (or work in partnership with them) to win contracts in a commercial market place. Whether or not this is a good thing, it’s not socially enterprising trading activity replacing grants and donations, it’s socially enterprising trading activity replacing direct public sector delivery. This is new income for doing new stuff.

A third trend (or situation) is that as a result of cuts in grants (and contracts that used to be grants) many charities are now hoping to find a social enterprise model to support existing activity or (potentially) activity that in some way replaces existing activity. In some cases bidding for new public sector contracts might be part of that.

The big challenge, as Beth Parker of Bonsai Bison explains, is to establish the business case for your socially enterprising activity. The SEUK report uses the example of London Early Years Foundation (LEYF) who successfully flipped their business model to turn their core activity, running nurseries, into a business sustained by parents paying for their children to attend the nurseries.

As LEYF chief executive, June O’Sullivan, explains in this interview with me for Social Enterprise, making that kind of change involves a big culture shift for the organisation but LEYF’s starting point – being a non-commercial operator in the commercial market for nursery provision – is a relatively unusual one.

Most charities are not in a position to commercialise their core activities because the end user/beneficiary/customer (delete as appropriate) for their activities is not in a position to pay (a commercial rate). In that case charities either have to stop what they’re doing and do something else that customers will pay for, or do some new things to make a profit and cross-subsidise the activities that are vital to charity’s mission but that no one will pay for. This is the point where social enterprise can be the answer (or part of the answer).


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Innovation stories

In January, I pointed you in the direction of ‘A Creative Collaborate Environment’, my first Innovation Story for NCVO which featured my former employers, Exposure. The other three stories of social innovation in the series are now up and are all worth a read.

In one of them, Leah McPherson – now of the School for Social Entrepreneurs – explains the challenges involved in taking West London-based social enterprise urban farm, Cultivate London, from being an idea to being a business.

In another, Carl Ditchburn and Ian Cockerill, of Community Campus ’87, a Teesside social enterprise set up to tackle youth homelessness in the mid-1980s, talk about being open to new ideas and finding ways to take advantage of different opportunities as they become available, without losing sight of their core social mission.

And finally, the team from Leeds-based care services social enterprise, Angels Community Enterprises, talking about the innovative challenge of combining cleaning services with support to enable people to live independently.

Administrative challenges have resulted in a big gap between the interviews being conducted and the final stories and videos being published online. For this reason, the stats at the bottom of the stories don’t necessarily reflect the current positions of the organisations concerned but the stories still provide (what I think are) really interesting insights into how people are doing social innovation in the UK.


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Innovation Story: A creative collaborative environment

For award-winning youth media charity, Exposure, innovation comes from two main sources, the young people they work with and the creative people who approach the organisation with ideas for projects. Exposure creates the environment for innovation, and then works with partners to make it happen… The first in a series of stories of social innovation that I’ve written for NCVO, featuring my former employers, Exposure.

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Can’t see the fig leaves for the smokescreen

To Northampton last Monday for Seminar 1 in a series of seminars collectively known as Reconstructing Social Enterprise. The aim of the series is: ‘to establish a multidisciplinary group of international academics and practitioners approaching the field of social enterprise from a critical yet sympathetic perspective’.

Alongside a series of interesting academic presentations, the practitioner contributing to the seminar was Andy Benson, Director of the National Coalition for Independent Action (NCIA) and his presentation ‘Social enterprise as a smokescreen for the Privatisation of Public Services’ did something at least roughly approximate to what it said on the tin.

Benson provided a considered and articulate outline of the view that the privatisation of public services is a bad thing in general, and the involvement of the voluntary sector in marketisation of public service delivery is particularly bad for the voluntary sector itself, as well for the people who depend on it. The NCIA, he explained, encouraged resistance to state co-option of the sector and ‘private sector entryism’ into public service provision.

Although, Benson began by saying his response to the term social enterprise was “I spit on it”, he went on to explain that he had no problem with many socially enterprising activities including: local communities running shops and pubs, charities carrying out trading activities to fund their work, commercial businesses delivering a social benefit (I imagine with some form of social ownership) and private sector businesses with a social purpose.  He did object the Big Society idea that public services could be cut and replaced by local people providing services on a voluntary basis – a position many people in the social enterprise movement share.

Ultimately, the only type of actual social enterprise activity Benson was objecting to was – unsurprisingly –  social enterprises and large charities delivering services previously delivered  by the public sector. He slammed big charities such as Turning Point who had “morphed from grant receivers to trading and contracting enterprises”. He also laid into umbrella bodies (in general) for “promoting business values as an alternative to public services” before going on to describe NCVO specifically as an “absolutely outrageous turncoat organisation”, partly because it has organised a workshop called “how to turn a free service into a paid-for service”.

For Benson and the NCIA the proper role of the voluntary sector was primarily about campaigning and innovative local activities which, if they successfully became a service, could be taken on by the public sector. And the overall conclusion was that the Big Society was “a fig leaf to obscure the message of giving up on public services and public subsidy” and that social enterprise was “a smokescreen to describe the outsourcing agenda”.

Clearly this is a world view that benefits from being uncomplicated:

  • Who should deliver public services? Public sector agencies employing public sector workers.
  • Who should be able to use public services? The public.
  • How should public services be paid for? Through taxes. Public sector agencies are not businesses, they are bodies that are given money and then spend it on doing good.
  • What public services should people get? What their national and local elected representatives decide they should get.

This world view also benefits from being grounded in compassion, the belief that the role of the state is to ensure the people have equal access to services that meet their social needs.

Unfortunately, it’s a policy position that doesn’t really lead anywhere other than a defence of the public sector status quo, whatever that may be at the time. The fact that a service is currently being delivered by a public sector agency is not, it itself, a strong argument for it continuing to be delivered (a) at all or (b) by that public sector agency. With or without cuts, people’s needs and priorities change. A group of people with mental health difficulties who need somewhere to meet, don’t necessarily need a day centre staffed by council staff.

Few of us in the social enterprise movement would argue that a reduction in social spending by the state is a good thing in itself but many of us do think we need a different kind of state. Based on the conventional shareholder capitalist model, markets often fail to meet what most people in the UK regard as fundamental social needs. But having accepted that starting point, there’s a philosophical and practical divide between those who believe we should respond to market failure primarily by eliminating markets, and those who believe we can and should respond to market failure by making conventional markets better and creating different markets.

Andy Benson and his colleagues at NCIA may not object to the elements of social enterprise that are about making conventional markets better – by building and supporting businesses that build in social value, by creating jobs for people who’d otherwise find it harder to get them or, in the case of co-operatives, actively sharing wealth amongst workers and customers.

But many is social enterprise also see a role for markets in the public services – through bidding for contracts, personal budgets or through starting organisations that both tackle social need and work as businesses, or a voluntary organisations that aren’t dependent on ongoing state funding. The latter definitely isn’t easy to achieve but the aspiration that groups of people – either locally or based on shared needs – should find ways of solving social problems or managing ongoing social needs is a positive one.

Amongst the options for meeting social needs not met by the conventional market are:

  1. a public service delivered by public sector workers
  2. no service
  3. a public service delivered by outsourced providers
  4. finding alternatives ways to meet that social need more effectively

Realistically, in the current climate, all these options are going to employed to some extent in the UK over the next few years. Social enterprises and social entrepreneurs will have some role to play in delivering option 3 but, hopefully, a bigger role to play in delivering option 4.


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Big ideas

My considered view is that innovation is not only a good thing but one of the defining characteristics of humanity as a species. Strange then that, having attempted to do word association on ‘third sector innovation’, the first word I came up with was ‘hollow’.

In the social sectors, ‘innovation’ often seems to be suggested as an alternative to doing things that people want, doing those things properly and getting paid properly for doing so. If, for example, the council is thinking of cutting your grant, they’re generally sure that a bit of innovation can fill the gap. And pretty soon you’re finding yourself stuck in a room with some shouty consultants offering wacky ideas, possibly with a twist of uncomfortable role play. Lukewarm coffee is then followed by a bit of ‘Thinking outside the box’.

Bearing all this in mind, I was interested when a friend who’s an expert in social enterprise innovation pointed me in the direction of Innovation Matters, NCVO’s guide to ‘How being open to ideas can make your organisation more effective’ published last year. Almost needless to say, the problems above are not problems with innovation – which NCVO define as ‘successful implementation of ideas’ – but with attempted innovation as (a) a desperate by-product of impending disaster and (b) a vehicle for the promoting the new at the expense of the useful.

Innovation Matters is, understandably, grounded in the challenges currently facing our sector(s) – the first section ‘Why innovation?’ includes the sub-heading in ‘Being innovative is a way to survive in hard times’ and the point that “in the currently climate, the greatest risk may be not taking any risks at all.”

Section two, ‘What is innovation?, usefully distinguishes between creativity (having some ideas) and innovation (successfully implementing an idea) before flagging up the need for innovation to solve intractable problems.

Section three is ‘How do you get an innovative culture?’ This includes the reflection that:

“‘Being innovative’ is not a stand alone activity. It is not an explicit function that belongs in a Department of Innovation. Processes and capacity for innovation should be integral to an organisation; innovation should be part of everyone’s job remit, just as one might wish one’s staff to be efficient, outcome-focused or user-orientated.

While this quote clearly degenerates into policy-speak truisms – is it likely that any manager would actively want their staff to be inefficient, disinterested in outcomes and indifferent to the needs of people who use their services? – the essential point is still a good one. Coming up with (at least some) new ideas and (hopefully) implementing them successfully needs to be a fundamental part of what we do.

My social enterprise, Social Spider CIC, has used several innovative approaches in the development of its current largest project, the mental health magazine, One in Four. One in Four is national magazine written by and for people with mental health difficulties. It’s innovative in at least two ways:

1. On the technical side, the Distribution Model: when One in Four was launched it was primarily available through organisational subscription. Organisations were invited to buy copies of the magazine and distribute them to people who used their services. This model enabled the magazine to achieve a relatively large circulation in a relatively short space of time without a significant marketing budget and it also meant that the magazine was quickly available ‘free at the point of reading’ to thousands of people.

This is a fairly pragmatic, unspectacular bit of innovation. Social Spider clearly didn’t invent the idea of bulk distribution of magazines but this innovative application of that process was vital, both in enabling Social Spider as a small social enterprise to even attempt to launch a national magazine and also in terms of delivering a valuable resource at a relatively low cost (compared to the cost of the public sector producing a similar product).

2. On the philosophical side, the commissioning process: over 80% of the content of each issue of One in Four (usually more) is written by people with direct experience of mental health difficulty but, unlike many newsletters produced by charities and service user groups, the aim of One in Four is not ‘to give people a voice’. Social Spider strongly supports the work of charities and service user groups that aim ‘to give people a voice’ but the aim of One in Four is to complement that work by providing something different.

One in Four commissions people with mental health difficulties to write articles on the same basis that journalists are commissioned to write for any other publication. Writers with mental health difficulties are given are a brief and write articles based on (some or all of) their own experiences plus interviews and research. Submitting articles are edited before publication and, assuming their article is accepted for publication, the writer is paid (modestly) for their work. This process treats mental health difficulties as professionals whose experiences mean they’re well place to provide information and advice that may be useful to other people in similar situations.

In developing this model, Social Spider didn’t invented either the process of commissioning content for a magazine in a professional way or the idea of self-help but it did find an innovative way of bringing them together.

These examples – along with many of those in Innovation Matters – show that innovation doesn’t have to be either wacky or disconnected from the core of what you’re trying to do. It doesn’t have to involve plucking an amazing new idea out of the sky and waiting for everyone to gasp in astonishment. At its best, innovation is about finding ways of doing stuff based on what you want to do and the resources you have available.

Ultimately, social entrepreneurs and others in the social sectors don’t need to spend the coming years thinking outside the box. If we need trite metaphors at all, then we’re better off looking in our boxes, working out what’s really there and making some positive use of it.


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