Tag Archives: social enterprise coalition

Where’s the (start-up) money? It’s not just a question for David Cameron

Over at the Guardian Social Enterprise Network, social entrepreneur, Sally Higham, has been writing to David Cameron. She wrote to him over a month ago after posting an article in which:

“I talked about the need for a relatively small amount of start-up funding which would be quickly recouped – and about the numerous social investors who shout loudly about their interest in working with social entrepreneurs but in fact don’t support start-ups – even if you have an excellent track record and high profile supporters. I told you that countless letters to all the big wigs came to nothing.

Perhaps Sally Higham needs to move to the London Borough of Barnet but, failing that, as you’ll see from my comment at the bottom of the original article on May 25th, I broadly agree with what she’s saying. For me, current provision of social finance is not fit for purpose – or, at least, not for purpose that many politicians and commentators believe it can fulfill.  In the recent past, government-backed social investors such as Futurebuilders put up significant sums to organisations needing money to develop services to sell to the public sector if it was pretty clear that public sector clients would want to buy those services, while another government scheme, Adventure Capital Fund, provided cash primarily for organisations to buy (or secure long leases on) premises. These are largescale examples of what the UK social investment business (mostly) does – its funds safe projects that might not attract conventional investment because of the small profit margins on offer but which aren’t very likely to fail completely.

In conventional business, you might get investment for a risky business idea on the basis that an investor has a big chance of losing their money but also some chance of making a massive profit if things go well. When it comes to ideas for social enterprises that might be great but which might not work, an investor usually has a big chance of losing their money and some chance of getting their money at a rate that’s marginally better than putting it in a bog-standard savings account. The massive profit is not a realistic possibility even if the enterprise succeeds.

Existing specialist social finance providers are clearly not to blame for avoiding an approach to investment that would inevitably lead to their own financial destruction – even assuming you invest reasonably sensibly, for every one risky social enterprise that earns you your money back with a tiny bit of interest, there’s likely to be another three? seven? ten? that will lose you some or all of your money – but there’s a massive gap (in the non-market) for investment in socially enterprising ideas that might not work.

Sally Higham is right to ask the funding question of David Cameron but her article should also make us, as social entrepreneurs, question ourselves. On what basis can we describe ourselves as businesses if we’re not in a position to offer people the chance to invest their money with us to their own financial advantage?

I don’t think the answer to that is ‘social enterprises are not businesses at all’ but that we need to be clear about what our business is. And hopefully it’s delivering positive social change, which can be delivered sustainably after some upfront investment. The point is that what’s being invested in – in most cases – is the potential social change not the potential profit. This is not a moral statement against profit in a general sense but a reflection of the fact that most social entrepreneurs are operating in areas or sectors where’s there’s not much profit to be made

The reality is that social entrepreneurs need to find ways of attracting investors who are prepared to – at best – make little or no return but with an above average chance that they’ll lose some or all of their money. Given that people do give lots of money to charity, the idea of an investment that’s a bit like giving to charity but with the bonus that you might get that money back is by no means an impossible sell.

Aside from the positive but structurally complicated community shares, I’m not sure what the mechanisms are currently available for people to put money into social enterprises. Crowd-sourcing platforms such as Buzzbnk may be part of the solution to this problem but probably not all of it. Mr Cameron does need to think about where social enterprises will find the money to deliver a big(ger) society but we as social entrepreneurs need to think carefully both about why people should give us their money and how they could do it.

Next question: where’s the (revenue) money?

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“We learn nothing if we don’t learn from history”- Peter Holbrook interview – part two

Following on from Tuesday’s first installment, part two of my interview with Peter Holbrook, Chief Executive of the Social Enterprise Coalition, begins with the issue that – with the possible exception of social injustice – generates more anger and frustration within the social enterprise movement than any other. Deep breath, do we need a greater emphasis on the social impact that an organisation has, rather than concentrating on whether an organisation has a particular legal form? Is the current balance right?

“Goodness, if only I knew the answer to that! In the case of virtually everyone I meet in movement, the reason they got into this sector isn’t because it’s got a sexy image associated with it, it’s because they want to create social impact. Now that’s great and that’s wonderful but we learn nothing if we don’t learn from history.

We have to recognise that an awful lot of really fantastic businesses have set up with a strong social purpose, committed to social impact and as they’ve become more successful, they’ve become more and more detached from their social purpose. It’s Cadbury, it’s The Body Shop, it’s Ben & Jerry’s – there’s a whole raft of them and some of them I’ve worked for. It’s all very well to be totally committed to social impact when we’re small but how do you maintain that commitment in the longer term?

And if you are building you’re business very publically on that commitment to social impact then I believe you should be committed to social impact in the longer term. You can’t build a business on social impact and then, at a convenient time, sell up to anyone you like – cash in on it and move on. I don’t want to get hung up on legal forms, I think it’s probably one of the driest subjects but fundamentally I do think that, what some fantastic social enterprises show us – whether it’s The Co-Operative group or other huge organisations like Welsh Water – is that you can be big, you can be successful and you can still retain your social values as an organisation.

We shouldn’t get hung up on it but I think protecting against the dissolution of your social commitment is quite important to get right at the outset. It’s important that leaders recognise that at some point, whether they die or change jobs, they will move on and the values that they set up the organisation with, may or may not be lost. Is that a risk people are willing to take?

You do need to think about succession from the outset. When I set up my businesses, I could’ve potentially set some of them up as private businesses and sold them but that was never my intention. It was my intention to protect the values that I wanted to enshrine within those companies when I incorporated them. That’s why I chose asset locked models. So, the emphasis should all be about social impact but it shouldn’t just be about impact in the here and now. It should be about future impact.”

But is there any role for straight, for profit, business models in the social enterprise family?

“If they’re straight for-profit – and that’s their primary objective – then ‘no’ because primary purpose is very important in our family. Our primary purpose has to be social and environmental benefit otherwise there’s nothing to distinguish us from businesses that claim to be ethical. So, it’s unlikely, unless they’re owned, for example, by a charitable organisation.  

But then you have an organisation like Cafédirect. It’s a company limited-by-shares which doesn’t have an asset lock in a traditional way but they’ve set themselves up with a golden share issued to protect the integrity of that brand in the longer term. We’re in a constant state of evolution and change, and I accept and welcome that. That means we need to constantly adapt our thinking around some of these subjects.

It’s not a black and white answer but I don’t think you could have an organisation that simply works in the social economy, which is obliged to maximise shareholder value, in our family. I just don’t see it, unless those shareholders are absolutely and genuinely committed to a clear and stated social purpose.”

What if a company is socially beneficial in both its product and process but feels that a conventional for-profit structure is the best way to bring in investment?

“What people find when they take traditional forms of equity investment is that often it’s a slippery slope. So, take The Body Shop. Clearly started out with a mission to change the way we buy toiletries and cosmetics. And, in doing so, raised some very, very big topics: French nuclear arms testing in the pacific, animal testing, domestic violence, destruction of habitat, Fairtrade.

It was doing all of that, then it needed capital to fund its expansion so it went to traditional financial markets. Initially it didn’t raise enough capital to fund its cashflow needs so it had no other choice but to sell more or lose share value. And, once the Roddicks lost control, the values that were enshrined in that business – particularly when I worked for it – started diluting and dissipating bit by bit.

The reason why I mentioned the social stock exchange (see part one) earlier was that we shouldn’t just go after any investment possible.  Because how would you feel if you were a social enterprise taking money from a giant pharmaceutical company that was, in its best interests, peddling Ritalin to thousands of children that didn’t need it?

When you take investment it’s really important and you should be taking, where possible, investment from sources that you at least understand. And unfortunately, in the financial markets, when you’re getting investment from a pension fund, you’ve got no idea where that money’s been generated. So it could be that on the one hand I’m doing some good over here but by achieving this good, I’m actually creating huge damage over there.

So, I think we need to find ethical instruments and opportunities for people to invest ethically – and supporting ways of connecting those opportunities with those investors is one major ambition that I have.”

But do those investors exist?

“They do exist. I’m one of them and I know plenty of other people. If you think about our own sector – our own sector has 800,000 to 1,000,000 employees and £24 billion turnover. We know the charities have billions of pounds tucked away in reserves. Local authorities that represent us have billions of pounds in reserve. If we can insist that our money – and it is our money, our pension fund money, local authority reserves – are invested in socially beneficial concepts and ideas and projects and businesses – social enterprises – that we might find the capital investment that we need without necessarily losing the integrity of what we set out to do.”

As someone who hasn’t always been supportive of everything SEC has done, I’m interested to see that they’re undertaking what I’ve perceived as a rebranding exercise. I ask why they’re doing that?

“It’s more a review. The world’s shifted, more than anyone ever envisaged a couple of years ago. And the world’s certainly shifted for the Coalition. We were pretty reliant on one major customer: the government. Long before the change of government we decided that that was not a resilient business model and that we needed to diversify our income streams. As far as I’m concerned, this organisation I’m responsible for is owned by the community, the social enterprise community. So, on a shoestring, we’ve gone out undertaken a review and asked members and stakeholders for their opinions.

To ask them, as well as potential customers for the future, and existing stakeholders and customers, what sort of organisation they think SEC should be and how they should be represented. We’ll listen to that and if we think that there is a strong enough will or expectation that we identify ourselves slightly differently – that we use different language to define who we are and what we do – then we will take that on board and do that.

It’s a bit of repositioning exercise to ensure that we are fit for purpose to go and do business because I’m determined to ensure that we become much more of a social enterprise ourselves, much more reflective of the movement.”

If the main customer was the government, who’s the main customer now?

“Government will remain a customer but hopefully a less important customer. I hope that in some cases it will be local authorities, in some cases it will be national charities, it some cases it will be spin-outs. In some cases it will be our members. There are some things that can only be done on a national level. And therefore we have responsibility to provide that service. So whether that’s events, training, products or services – on a national level we need to do that and if we do that successfully, we will our profits back into the social enterprise movement.

There are also international customers out there. People that recognise that what’s happening in the UK is world leading: in terms of political support, in terms of the public services agenda and in terms of the development of new legal forms and financial instruments. If we could actually help other communities in other countries to learn from our experience, that we should absolutely ensure that we do that. And we should ensure that we (SEC) are running a successful and sustainable social enterprise by selling some of those services, not just giving them away.”

The UK social enterprise sector is heavily focused on public funding and public service delivery. Is it time for a greater emphasis on social enterprise in the mainstream, consumer economy?

“Yes. We recognise the current trend is about public service expenditure shrinking – so it’s going to be potentially a more diverse market but it’s still going to be a shrinking market. Yet, we’ve seen that even through the recession, the demand for ethical products and services has continued to grow – with one exception, and that’s organic. So, we know that there is this consumer demand for transparency and kindness in the way that business is done.

I still come across people that are angry about the economic crash and the way business was done in the lead up to 2008. So, there is a huge opportunity there and if we are going to change the way that business is done. We need to connect with consumers; we need to support people to develop products that can be sold both locally and internationally because that really truly is diversifying income. We have to absolutely create a consumer revolution not just a political revolution. And actually that’s safe from political contamination. If we can connect directly with consumers, not only can they become investors and buyers, they can also choose to work in social enterprise and support social enterprise in myriad different ways. So that’s really the next big ambition for the social enterprise movement.

We’ve won the political debate and we’ve got that cross party support. Now we need to bring consumers on board, so people like my mum and my mum’s neighbours know what social enterprise is, and so that people recognise that social enterprise provides opportunities for them – whether they’re young, old, from whatever religious or ethnic background, whether they’ve got disabilities – they actually think there’s something here for me.”

So you’re hopeful that social enterprise can become a mainstream consumer choice?

“That’s my long term ambition. I don’t know whether I will achieve that in my time at the Coalition but I think that’s where we have to head. Actually, in 2008 I think the Co-Op got an uplift in personal account holders by 39% because people understood its value-based proposition. It can be a real benefit to business so why can’t we do that with a whole range of other products and services outside of banking and grocery?

We can do that I think in every walk of life. That’s really what I want to happen because, not only, will it help tackle the challenges we face locally and nationally, and in terms of economic austerity. It will also I believe, help tackle global challenges, of ever greater wealth injustice, social injustice and environmental catastrophe. It’s a big hope and I know it’s not the only solution to the challenge we face but I think it can play a really significant part if we’re able to communicate that more effectively.”

Finally, a question supplied by Nick Temple: “For breakfast, do you read The Big Issue with a cup of CafeDirect and a bar of Divine Chocolate?”

“For breakfast this morning I can tell you I had bowl, at my desk, of crunchy crisp and strawberry muesli. But I did buy it from the Co-Op. And I did have it with some organic soya milk that I also bought from the Co-Op. I do drink social enterprise coffee. I try not eat too much chocolate full stop but, when I do, I love Divine. And I do buy The Big Issue because it’s got the Social Enterprise Mark on it, and I like to see the Social Enterprise Mark.

And Dai Powell(of HCT)’s buses go past my house every 15 minutes – day in, day out – in Wanstead. So I do kind of feel I live the dream. I actually walk an extra ten minutes to my shopping with the Co-Op and I bank with the Co-Op. I can show you my Co-Op members card, my bank cards. Everything I try to do is very socially enterprising. Because I do genuinely believe in it.”

I can confirm that, following the conclusion of the interview, we passed the kitchen on my way out and I was shown the Muesli packet discussed above – plus a range of fairtrade tea bags and jars of coffee. Thanks a lot to Peter for making the time to do the interview.

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“A better way of doing business” – Peter Holbrook interview, part one

2010 wasn’t the easiest time to settle into the job of chief executive of the Social Enterprise Coalition(SEC).

On the plus side, years of lobbying (and some good work by social enterprises) had paid off with ‘social enterprise’ spattered across all the major parties manifestos at the General Election. On the minus side, social enterprise was often portrayed as either a silver bullet solution to the reduction in public spending or a euphemism for privatisation.

Now, over a year into the job, I went to talk to Peter Holbrook at SEC’s office in London – to get his take on some of the big challenges and questions facing the sector.

Firstly on the issue of the role of social enterprise in public sector reform. What does he see as the big opportunities and dangers?:

“I think there’s a huge opportunity in terms of recognising that social enterprise can play a part in creating a more resilient, more just, more inclusive and fair society. In the wake of the 2008 economic collapse, politicians recognise that recent ways of doing business that have emerged over the last 30 years, do not create the plural economy that we need.

The fact that social enterprises have weathered the storm seemingly far better shows they can contribute, not only in tackling social problems but in building that resilient, fair, sound economy. It’s a better way of doing business, right? 

Where the danger exists is that social enterprise is seen as the answer to every ill; the magic solution; because those of us that work within it know, it can be absolutely fantastic but it can’t solve every problem. Particularly when you look at the expectation that social enterprise can single-handedly transform public services.

It’s a brave experiment we’re going through in terms of the government’s mutualism agenda, NHS reform and the public services White Paper. There are huge opportunities for us but if we’re not careful, it could all go horribly wrong. Then we’ll have lost a golden opportunity and we will have created damage to the integrity and reputation that so many brilliant people have spent so many years developing. 

I think we need to remain slightly agnostic about whether the government’s agenda is good or bad but, what we need to do is if this agenda is going to be driven forwards, is to make absolutely sure that we are mitigating the risks and maximising the chances for success.”

What does success mean in this context?

“In terms of public services, there’s three options:

  • we don’t deliver
  • we outsource and privatise
  • or we go down this route of mutualisation and social enterprise

Now, if we accept that just cutting essential services is absolutely not in anyone’s best interests, we’re left with two options: social enterprise or privatisation. If we go down the social enterprise route and the experiment fails then potentially we’re only left with one option, and that is the privatisation of virtually everything – apart from probably the army (although even that’s happened in America). So, we have to maximise the opportunities for these new social enterprises to succeed because it’s in the staff’s interest, the community’s interest and the end recipient of that service’s interest.

We have lots of examples of where this can be done absolutely brilliantly but can we expect that to be replicated, on the scale that is expect of us, in the timeframe that’s expected of us, with the limited resources that are available?

That’s where the risk exists.  If we don’t make this work, mitigate the risks and collectively, as a movement, try and limit the chance of failure for these new organisations – whilst accepting that there will always be some failure (and that’s inevitable) – then I think the experiment will have been deemed to have failed and the private sector will come in and mop up the mess. And we will be back out of fashion as quickly as we came in to fashion.”

I suggest that a key challenge in public service commissioning is where there is a choice between between a social enterprise and a private sector giant like SERCO or Capita. How can a social enterprise be expected to compete?

“I’ve always been clear than social enterprise isn’t just a nice way of doing business. Commissioners shouldn’t buy social enterprise because it’s quirky and feels nice and warm.

The fact we don’t have to generate shareholder return, potentially gives us a competitive advantage. There is no hole in the bucket. We don’t have to leak resources out to hungry shareholders who, ideally, year on year want an ever greater return. And, when you’ve got a well-functioning social enterprise, you have incredibly productive staff and you have incredibly supportive consumers, beneficiaries and wider stakeholders. They want you to succeed and that also creates a huge competitive advantage.

I’m not just that I’m an advocate of social enterprise. I am, but that’s because I understand why these organisations can function more effectively – both in terms of productivity and in terms of providing more value than an alternative form of business.

So, I think we should be able to compete, it’s just a case of whether – particularly in terms of the public sector spin outs –  they will be able to transform their culture within the time period they’re given.”

Right to request organisations had guaranteed contracts for three years. In other instances, that won’t necessarily be the case. Do you think it’s possible for social enterprises to compete from a standing start?

“I think it’s very hard to, if I’m honest. You can’t all of a sudden take eighty or eight hundred staff and say ‘we are now a social enterprise and we’re going to be competition ready’ because you need to restructure and you need to re-organise. You often need to reconnect with your beneficiaries, your service users. That’s absolutely critical and that’s the learning that we’ve taken from some of the best organisations that have come out through the Right to Request. We recognise that they require a period of transition.

For some, it will be less than others but I think there needs to be a minimum period – a minimum cushion in order to reorganise and go through that transformation – of three years, preferably five. Without that, we are setting these organisations up to fail. And when they fail, the most obvious answer will be that the private sector has to come in.

Organisations that come out don’t necessarily have the right skills mix to be competition ready. If you take 80 staff out of a community services group, they’re likely to be a couple of senior managers, some middle managers and service delivery staff. They’re unlikely to have a bid-writing team and a sales force. 

They’re not going to automatically spin-out set up to compete with people who’ve invested for the last couple of years getting ready for some of these market opportunities.”

When Capita got started, they didn’t have team for everything, they were just a few blokes. The difference, I suppose, is that they were in a position to attract investment?

“Yes. We absolutely have to crack this nut: ‘how are we going to find this investment?’

If you form a co-operative or  a CIC Limited-by-Guarantee or a charity, it’s very difficult for you to take investment. You usually come out without any collateral, which means that you limited opportunities to attract any debt finance. You’ve got no track record, which further limited your appeal to those sources, so where do you get that money from? You can’t suggest that it’s all going to come from the Big Society Bank because it’s not. So where else is going to come from?

We have to be very clear that these organisations are going to need some initial investment from somewhere to have a credible opportunity to get going. They’re not going to have the same resources that were available to the Right-to-Requesters who at least had the opportunity to bid in to the Social Enterprise Investment Fund.”

This is a question hanging in the air but who is it a question for? The government?

“It’s a question for both the social enterprise movement and the government. I think one of the  really exciting developments is the idea of a Social Stock Exchange. It’s been hanging around for a little while but my understanding is that it’s going to be launched this year. I think it’s is fundamental in connecting individuals with a true social purpose.

I’ve got my pension in an ethical fund which is environmentally light green if it’s green at all – it’s probably turquoise. I would love to be able to say to my pension fund administrator: ‘Actually, I don’t want your turquoise or your light green fund – which just pulls out the very, very worst offending companies: tobacco, arms and similar activities. Actually, I want to invest in companies that are genuinely socially beneficial and therefore I want you to invest my pension in the Social Stock Exchange.’

I think that is the way that we can actually start drawing mainstream investment. Increasingly we’ve become wise about what we do with our spending power but what about our investments – our pensions, our mortgages? What happens to our local authorities’ money? What happens to the charities’ money?  Often, you find these funds invested in wholly greed driven opportunities.

My reckoning is that if you invest in the social stock exchange, it will fluctuate less and it will probably out-perform in the long-term some of these very risky investments that we saw collapse in spectacular fashion back in 2008.”

Moving on (a bit) from public sector reform. Social enterprise is not popular with everyone in the voluntary sector? Does Holbrook think there’s a disconnect between social enterprise and other voluntary sector groups, or does he think the distinction needs to be emphasised more?

“There is always going to be overlap between the various sectors but we need to be clear about where we are different. I think we need to be clear that we are not based on voluntary effort,  that we want to employ people and that we want to give people opportunities. We want to create robust and resilient businesses that deliver social change. Sometime the messages that come out from the voluntary sector don’t help us to make that case with the clarity that we seek to.”

What sort of messages?

“For example, when Big Society was launched it seemed that it was all about more volunteering. And people thought ‘How an earth are we expected to carry out a full time job, and then go and volunteer at the local library and deliver meals-on-wheels to an elderly person on the way home, before we cut the lawn and plant some daffodils?’

The Big Society for me isn’t just about doing more for nothing. It’s about transforming the way we do things. What, I would say to someone is: ‘rather than expecting to go and work for a company you don’t like and in the evening do lots of voluntary activity, bring the two together and work for a company that you think is socially beneficial. You can meet your values and achieve your personal ambitions through the way you work and through who you choose to work for.’

So I think, in terms of Big Society, the narrative created by some of the more traditional voluntary organisations, hasn’t helped move the debate on. For too long social policy and economic policy have been seen very separately and to have any hope of meeting the challenges we face as a society and as an economy, we need to bring the two together.”

I suggest that part of the cause of resentment between social enterprise and the voluntary sector is the suggestion that social enterprise means the voluntary sector turning everything they do into a business.

“I think that’s a very un-entrepreneurial way to look at it. When I was at Sunlight, there were certain things that we did that you have very little chance of charging for directly. The domestic violence drop-in is one. It’s very successful and we used to get a lot of women coming in to that – and occasionally men – that really were desperate and needed help. Now the idea of charging for it on a full cost recovery basis is ludicrous. But our community wouldn’t have had that service unless we had a social enterprise in our community that was able to profit in other ways and take some of that profit and deliver services that were identified by the community as being needed.

It’s not always that everything has to become a business, it’s about being entrepreneurial and being enterprising as a way of meeting the needs of a community. I think there is a misunderstanding that we within our sector want to turn everything into a business, when what we want to do is find a sustainable solution to delivering the services that we need.

I don’t think that that means that we think that the government doesn’t have a role. Government does have a role but either you’re going to take an ideological position and campaign for the funding to come through for a service that you think government should support, or you’re going to take a pragmatic, enterprising approach and say: ‘this is really needed, and we’re going to find a way to deliver it’.”

Other sceptics in the voluntary sector say social enterprise should be more honest about its dependence on grant-funding…

“I don’t have a problem with grants. My organisations wouldn’t have got going without some initial grant funding but I think it should be seed funding. I think the word that you’ve used which is really important is dependent. Should you be dependent, or should you use grant funding, as a catalyst, or as a fertilizer, to grow out of dependency?

Some organisations that I’ve looked at that are social enterprises are, frankly, too grant dependent. Others are too dependent on one customer. And actually the way to build a resilient social enterprise is to diversify your income streams so that, if one goes, you’re not screwed overnight. I think it’s about moving away from dependency full stop.

Now, if someone’s offering you a grant, you’d be a fool to say ‘I’m sorry, I’ve got an ideological problem with taking grants, no thank you.’ You should be able to take grants but you should always see it as a route to greater sustainability.

I know that some fantastic organisations out there that are very culturally socially enterprising are still grant dependent but they know which direction they’re heading in. If they are culturally and psychologically social enterprises and trying to move into a more enterprising future then I think ‘great’.”

The second and final part of this interview will be published on Thursday. It looks at internal issues – such as the ongoing question of legal structure vs. social impact – and the wider challenge of bringing social enterprise into the mainstream.

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Beyond market failure

With the looming cuts in public budgets and the dawning of The Big Society, the social enterprise movement is facing plenty of challenges. One of the biggest is the challenge of definition – not just in terms of the important but increasingly tedious debate over ‘what is a social enterprise?’ but also in terms of the more interesting question of what social enterprise and social enterprises do.

I don’t agree with all the ideas put forward in the Social Enterprise Coalition’s recent report, Time for Social Enterprise, but where it does succeed is in questioning assumption that social enterprise’s primary (or only) role should be to correct market failures. That is, the idea that social enterprise is about more efficient and enlightened management of public services (or regulated former public services), or that a social enterprise is the model for providing a shop in a village that has no shop.

Both these functions of social enterprise are positive ones that I either fully support (in the case of village shops) or often support (in the case of public services) but neither of them involve a fundamental challenge to the existing economic models that many social entrepreneurs and many people regard as having failed both people and the planet over recent years.

That leads us to the question of what, if anything, social enterprise can offer in situations where – at least superficially – the market is working. Luckily this question is being examined, though not necessarily in exactly those terms, by chef Arthur Potts Dawson and the members of The People’s Supermarket(TPS), which is currently featuring in a documentary series on Channel 4.

TPS is a co-operative, with members working in the shop for four hours per month in exchange for a 10% discount on their groceries. It’s broadly based on the model operated by the successful Park Slope Food Co-Op in New York.

As the Channel 4 documentary makes clear, it’s a project motivated by delivering social change rather than – as with a village shop – meeting an immediate need. Potts Dawson and co. didn’t come up with the idea for TPS because the residents of the London Borough of Camden have nowhere to buy food for their dinners – their shop is an explicit challenge to the what they regard as the negative social impact of the options that are currently available.

Episode three of the documentary focuses on one of the biggest issues for Potts Dawson: food waste. The big supermarkets fill their shelves with a huge range of stock and throw lots of it away when it isn’t sold, and the proliferation of enticing two-for-one offers means that often much of the food that is bought by customers is ultimately chucked in our bins without being used. Then there’s vegetables – such as slightly bent cucumbers – that are perfectly nutritious but aren’t stocked (and therefore get thrown away) because supermarket stock has to look right (in the case of cucumbers, they have to be straight).

When it comes unusually shaped veg, Potts Dawson has a solution that works for everyone – buy the veg cheap (the farmers can’t sell it to big supermarkets so any price is better than nothing) and sell it cheap to customers.

The challenge of overstocking is a more complicated one. The problem is that big supermarkets overstock so that the things we want are always (or, at least, usually) available. The TPS approach involves stocking fewer products, in terms of both range and volume. That means that if members (and other customers) are going to buy their weekly shop from TPS, they have to be content with buying a selection of what the shop has, rather than all the products they’d ideally like to buy.

The documentary shows Potts Dawson coming up with a number of creative ideas to tackle the problem – from setting up a kitchen in the shop to cook ready meals using food that’s about to go out of date, to going round to a potential customer’s home to cook a dinner for her family using TPS produce  – but none of them really solve the problem that, even with a 10% discount, shopping at TPS is not as convenient (and may not be as cheap) as shopping at a conventional supermarket.

That reality means that for TPS to work, it needs to attract a viable number of members and customers who buy into its social goals enough to spend enough, regularly enough to make it work.

Not everyone will agree entirely with Arthur Potts Dawson’s criticisms of big supermarkets but TPS is definitely a social enterprise started with the clear aim of driving social change within a competitive market place. That’s the ultimate challenge if social enterprise really is going to be a movement that can change the world.

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Strategic departures

Finally announced yesterday the news everyone – within the social enterprise lobby – had been waiting for, the guidelines for the OCS ‘transition’ strategic partner funding*.

For those organisations thinking that it might an idea to jump aboard the strategic partnership bandwagon as it slows to halt in 2014-2015, the news is not good and the operative questions are about how many of social enterprises representatives will be able to cling on. As reported previously, the current list of 40 partners is being slimmed down to 15 and the available cash for the coming year (2011 – 2012) is down from the previous £12.1 million to £7.5 million.

Logic would assume that these criteria:

1.  The programme is open to:

  • existing OCS Strategic Partners only, either individually or jointly with an(other) organisation(s) as part of a merger (under way) or formal collaboration.

2.  The new Strategic Partners must be:

  • national membership organisations that represent a clear constituency within the VCSE sector; and
  • capable of representing the sector on a broad range of national issues and activity.

mean that current strategic partners SSE/Unltd (who are not membership organisations) and SEL (who are not a national organisation) are not eligible for renewed funding – although this position may be clarified at later point, and it’s not yet entirely clear if organisations who don’t fit some criteria could be involved in partnerships.

In light of these developments, I’d point people in the direction of Andy Gibson’s thoughts on social enterprise and The Big Society – particularly his point (4) re: social enterprise and infrastructure. Now is certainly the time for social enterpreneurs to think about the kind of support they would like the government to fund while their are still a range of options available.

One leading social enterprise commentator based outside London recently told me that he’s lost interest in what he regards as ‘increasingly irrelevant’ London-based national lobby activity and questioned whether or not we need a national sector body to represent us at all. That’s an interesting question. I’d be keen to hear people’s views on that.

Equally interesting is the question of whether we need more of the practical support that Andy calls for in his post. My concern is that a lot of what Andy is suggesting is right but there’s a big danger that we could actually have considerably less of that practical help available to social entrepreneurs from April onwards.

I don’t have a clear enough understanding of what OCS want to do with their strategic partner pot to be clear about whether that the right source for that work to be funding but I do know that support from organisations such as SSE and SEL has been extremely important to me and my organisation. If the Big Society is going to work, practical support to the people and organisations who  are going to deliver it is surely a priority.

 

*I am a trustee of Urban Forum which is a current strategic partner. My views expressed here are personal views which do not reflect the views of Urban Forum’s trustees, staff or members. Urban Forum is not involved in delivering social enterprise support services.

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Supporters seeking support

Anyone who knows their Old Testament will know the story of Moses, who followed God’s orders to lead the Israelites out of slavery in Egypt, spent a very, very long time walking round and round in circles then, having got his people close to where they were going, finally caught a glimpse of the promised land.

It’s a hard time to be a leading figure in the social enterprise lobby. Having spent nearly ten years following New Labour’s commandments, particularly ‘Thou shalt never allow the facts to get in the way of a mutually beneficial political story’, the social enterprise movement is now approaching (what some regard as) the promised land of The Big Society. More diligent Bible students will worry about what might happen next.

It’s not that the coalition government specifically hates social enterprise support, it just doesn’t like the structures and funding streams that used to pay for it. It’s easy to knock regional development agencies or programmes to support the development of third sector infrastructure – they don’t perform many live-saving operations and have no direct role in emptying anyone’s bins – and it’s proved equally easy to cut them.

While some regional support agencies, such as Social Enterprise London, boast expertise that means their consultancy services are in high demand from councils and health service agencies looking to spin out services into new social enterprise structures, most face a future without any funding that will enable them to provide services to members, unless those members can pay for those services directly at close to market rates. Some in the sector may see this as being broadly a good thing but it’s definitely not great news for small social enterprises and early stage social entrepreneurs.

The picture looks even bleaker for national umbrella body, The Social Enterprise Coalition (SEC) – possibly because the activity it’s carried out most successfully since its inception is lobbying the government, and the new government may not see the need to foot a relatively hefty bill for an organisation to lobby it.

With tough times looming, the SEC leadership is clearly hoping to bolster the organisation’s claim to be representative of the sector.  They are currently advertising two jobs – immediate start preferred – that run between now and the end of April (this April). One involves overseeing Voice 2011 (the organisation’s flagship national conference, taking place in March), along with three other projects. The other involves recruiting 500 new members in the next three months. Given that SEC currently has less than 400 members in total, recruited over the course of nine years, this is a fairly ambitious target.

While my organisation are SEC members, I’ve always been, at best, a highly critical friend of their approach to many issues – particularly the Social Enterprise Mark. But we do need a social enterprise umbrella body and SEC is the one we’ve got. The months ahead are crucial ones in determining the kind of social enterprise lobby and support structures we’ll have in place as we face the challenges of actually delivering on some of the promises that the movement has spent the last decade making.

As social entrepreneurs we have to make the case for the support and representation we want, as well as making the case to the government has to at least provide some cash to fund it.

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Happy Xmas (Is Social Enterprise Over?)

The important question then is whether the different organisational types will feel the need to describe themselves as social enterprises in the future, and whether there remains any value for governments and different organisational types in portraying a strategic unity around the social enterprise construct.

It’s been a big year for social enterprise. A year in which a government which needed social enterprise to fill the ideological void at the heart of its thinking, has been replaced by a government which needs social enterprise to at least help to fill the financial black hole at the heart of the nation’s budget (by delivering public services for cheaper than the public sector).

Some social entrepreneurs and most of the social enterprise lobby got really excited during June and July. With honourable exceptions, most of these people are feeling far less optimistic now. As someone who was sceptical about the ‘our time has come’ line that was so popular a few months ago, I’m almost as sceptical about the current climate of doom and gloom. As a citizen, I’m as worried as everyone else about what government agencies may or may not be able to deliver with reduced resources in the coming months and years but, as social entrepreneurs, I think it’s our duty to look at opportunities on offer to deliver positive social change and find ways to make the best of things.

The ‘important question’ quoted above is the one posed at the end Simon Teasdale’s paper What’s in a name? The Construction of social enterprise, published by the Third Sector Research Centre in September. Lurking behind this question is the stark reality that, as Ben Metz eloquently outlined in October, the strict definition wing of the social enterprise movement has, for better or worse, lost control of its own terminology. That process is not reversible in any positive way. It is possible (though not likely in the short term) that the idea of social enterprise will gradually go out of fashion. It’s virtually inconceivable that – as some within the movement still seem to hope – that social enterprise will both grow in popularity and narrow in definition. Without rehashing my general criticisms of the Social Enterprise Mark, readers can insert their own cliches related to putting genies back in bottles and horses bolting.

Teasdale’s question – whether ‘social enterprise’ will survive as even a broadly defined term for a type of organisation – isn’t a practically important one either for most people running social enterprises or for the people who are hopefully benefiting from their services – it’s likely that for most people the experience of: (a) receiving a service from, or working for, a charity or employee-owned not-for-profit company that operates in a social enterprising way, or (b) receiving a service from, or working for, an organisation that defines itself as a social enterprise, will be remarkably similar.

On the other hand, it’s a very important question for the social enterprise movement. As Teasdale outlines in his paper, while there’s always been (for hundreds of years, if not since business began) people carrying out trading activities for reasons beyond generating private profits, giving the label ‘a social enterprise’ to some of the organisations carrying out those activities has – in the UK, at least – been primarily a political decision, based on a particular set of recent political circumstances.

Those circumstance have now changed and, while the future for social enterprise (the activity) looks brighter than ever, it may be that for ‘the social enterprise’ (the noun) 2010 marks the beginning of the end.

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