Tag Archives: voluntary sector

Social enterprise and ‘the ailing third sector’

A couple of readers may have noticed that there’s been a shortage of Beanbags posts in recent months. This is mainly because I’ve working on lots of other writing including:

but blogging is important and I’m keen to respond to Andy Brady’s recent post: “Can social enterprise revive the ailing third sector?”

While umbrella leaders will point out the many charities to which the problems raised are not directly applicable, it’s a good overview of the challenge for the particular part of the professionalised, service-delivering voluntary sector that’s currently facing up to the end of government grants and increased competition for other grants and donations.

My instinctive responses to the central question were: (a) to note that it might’ve revived the ailing (section of) the third sector already, and mostly hasn’t and (b) to wonder what problems social enterprise solves that traditional voluntary sector approaches don’t.

Social Enterprise has been the next big thing for a really long time

On (a), Andy’s blog focuses specifically on the example of Furniture Resource Centre (FRC). FRC are one of a handful of long-established, relatively large social enterprises – HCT and Greenwich Leisure are other, larger examples – who (while they have existed for longer) came to prominence and began to grow significantly in the early-2000s New Labour golden era of social enterprise.

These organisations are rightly acclaimed for their successful track records but – with the possible exception of some public sector spin-outs – it’s not clear that there is a new generation of social enterprises emerging with the ability to operate at a similar level.

As a self-confessed social enterprise nerd, if a friend or family member asked me to name some social enterprises they might have heard of, I’d still name either these examples or some of the handful of famous consumer-facing social enterprises from (roughly) the same era: The Big Issue, Fifteen, CafeDirect, Divine Chocolate.

These 7 organisations would have been 7 of the 10 (off-the-top-of-my-head) most famous social enterprises in 2005 – I probably would’ve added The Co-Operative Group and The Phone Coop, and possibly John Lewis – and would still be 7 of my 10 now.

Aside from London Early Years Foundation (LEYF, which existed in 2006 but wasn’t a prominent social enterprise), there’s no obvious new entrants to the list in 2016.

While we may have seen a big increase in overall social enterprise activity over the past 10 years, and a few large contract-focused charities such as Turning Point and Catch 22 have rebranded themselves as social enterprises, we haven’t seen the emergence of a significant number of widely recognised social enterprise brands.

This is not to assume that a social economy characterised by growing numbers of large, well-known social enterprises is necessarily desirable but I think many of us expected it would’ve emerged by now and it hasn’t.

Taken for granted

When it comes to (b), Andy gives a decent overview of some of the difficulties facing the traditional charitable sector over recent years, followed by the FRC example of a social enterprise that has been successful providing services that have a viable trading model – through the combination of local government/housing contracts and people buying furniture.

I’m not sure how far this helps us to understand whether or how social enterprise is an alternative to grant and/or donation based models.

With the (possible) exception of The Big Issue, all our two hands full of famous social enterprises – and the relatively big newer social enterprise spin-outs we haven’t heard of – have succeeded by entering existing markets and competing successfully with private sector providers.

This is difficult because they have to:

  1. provide products and services that people want to buy
  2. provide those products and services at a price people want to buy
  3. do additional social good either in the process of provide those goods and services, or on top of providing those goods and services

But it’s not as difficult as trying to trade in a market that doesn’t exist.

As we at Social Spider CIC found out when trying to create a commercial model for a mass circulation mental health magazine , it’s hard enough when the reason that a market doesn’t exist is that there’s some people who plausibly might buy your product or service but they choose not to.

Unfortunately, the situation for many of the most socially vital grant/donation funded charities is much worse than that: they are operating in situations where there isn’t a market because a customer does want and/or need their service – whether it’s a food bank or mental health support group – but can’t pay for it.

Taken together, the facts that:

  • your charity exists because the market doesn’t meet a particular social need
  • the government is unwilling or unable to pay you to meet that need
  • and you can’t get (enough in) grants and donations to meet that need

do not add up to ‘social enterprise is the answer’. They are more likely to add up to ‘we have to close’.

LEYF, my single example of a new, well-known social enterprise emerging in the past 10 years, are a phenomenally rare example of a charity taking (an adapted version of) their grant funded service, flipping the business model and selling the service successfully in an existing commercial market.

There is definitely more than one charity in the UK with the potential to do that but it’s highly unlikely that there are thousands.

The question is whether, if grant/donation funded charities can’t just sell their grant/donation funded services to a market, social enterprise can enable them to do something else.

If you’re currently a grant/donation funded charity: does your social track record provide you with any kind of commercial advantage that would help you to create a viable trading business? And will the business you could create help you to meet the social need you were previously meeting through grant/donation funded activities?

Charities who can’t answer a strong “yes” to both of those questions shouldn’t set up a social enterprise. Just because there are fewer grants and donations to be had, that doesn’t make trading a better model for paying for products or services that no one wants to/can buy.

Where that potentially leaves us with is gaps where the market is not meeting social need, government is not meeting social need and the organisations that were created in response to market failure have themselves failed to attract grants and donations. And that’s the gap for social enterprise. Where do we sign?

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Sustainable business models: Avoiding an ‘annual cycle of finger-crossing’

Popular grant funding body, Big Lottery Fund, have set up a website, Your Voice Our Vision, to stimulate discussion about how they’re going to spend £4billion between 2015 and 2021. They’ve been asking various people to chip in with blog posts on how they view the current and future funding situation for civil society/the voluntary sector/VCSEs (delete or replace entirely according to preference). Here’s my contribution:

… As Managing Director of a small social enterprise and, until recently, vice chair of my local CVS, I’ve observed many different attempts to answer the question of what to do when the money runs out. Understandably given the pressure of the situation, many of them aren’t very well thought through...” – full blog here.

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It’s not dead, it’s trading?

Earlier this month, The Guardian‘s Voluntary Sector and Social Enterprise networks published ‘The Voluntary Sector is dead. Long live the voluntary sector‘, an article by Tim Smedley looking at some of the different ways that voluntary sector organisations responded to the (growing) financial challenges they faced in 2013.

While the article started with the line: “Throughout 2013, the fate of the voluntary sector hung by a very thin thread” the key argument is not that ‘the voluntary sector’ (define according to taste) is literally facing an existential threat but that, as argued towards the end: “The voluntary sector as we know it may have reached its breaking point in 2013, with a fragmented sector now following different paths.

In order to explore those different paths, the article links to case studies of organisations responding to funding cuts (and related problems) through merger, consortium-building, corporate fundraising and (as you might expect) social enterprise.

Smedley notes that: “Another area of growth is social enterprises – effectively charging for services rather than providing them for free with the aid of grants” before linking to a case study of (award-winning and really good) Darlington-based social enterprise, Patchwork People.

The idea that social enterprise is the answer (or one of the major answers) to problems of  the voluntary sector is not a new one. It’s an idea that was already becoming popular when I got my first job in the voluntary sector in 2000.

In the post-2000 New Labour period, the move towards social enterprise was more about ideas than it was about financial necessity. For politicians and some sector leaders, being a business with customers was newer and better than being a charity meeting need – largely irrespective of what this meant in practice.

There was plenty of money. According to figures from NCVO’s UK Civil Society Almanac, the voluntary sector’s income from the state was increasing from £9.1 billion in 2000/o1 to a high point of £14.3billion in 2009/10 and while (old model) grants from (different bits of) the state totaled £4.6billion in 2000/01, reached a high point of £5.6billion in 2003/4 and by 2009/10 had almost halved to £3billion, this didn’t mean that most voluntary sector organisations were getting less cash. Income from contracts with various bit of the public sector jumped from £4.5billion in 2000/01 to £11.3billion in 2009/10 – an increase of over 150%. 

Some of this money was new income – with larger national charities (in particular) winning contracts to deliver services previously delivered by the pubic sector – but at the local level a lot was the same grant money was being repackaged as trading income.

The move ‘from a grant-based model to a commissioning model’ happened in different ways and at different times in different areas. It had a big impact on processes – reporting requirements were usually more onerous and financial penalties for non-delivery were possible, and local charities were more likely to find themselves competing with each other for a single block of funding to deliver a particular service or function in their local area – but it didn’t lead to large numbers of local charities fundamentally changing their underlying business models. Ultimately, they’d gone from providing services for free with grant-funding from the council to providing services for free based on a contract with the council – and supplementing that contract income with a mixture of donations and grants from elsewhere.

Now though, the money has run out and the question unequivocally is about survival rather than ideas. My entirely anecdotal research suggests there’s at least as many people in the voluntary sector who think the idea of turning your charity into a social enterprise belongs in the New Labour past as there are who now believe it’s ‘the future’.

In a Twitter discussion with me and other earlier this month, Toby Blume – formerly chief executive of Urban Forum and now working on, amongst other things, Lambeth’s co-operative councils programme – suggested than of the voluntary sector organisations claiming to be social enterprises: “Many are really just charities but clearly see that as a less valuable/valued ‘brand’. shame. Has the idea of charity been so devalued that we rather pretend to be social enterprises than be charities?” before questioning whether the demand that charities become more entrepreneurial had gone too far.

Blume is certainly right to point out that many of the organisations that claimed to be social enterprises in the New Labour years only noticeably differed from ‘traditional charities’ in the sense that they said ‘we are a social enterprise’.

On the the hand, plenty of social enterprises like Patchwork People – that focus on generating as much income as possible from a range of sources of trading income – do exist and do work. The problem is their stories don’t necessarily offers any clear pointers to established local charities trying to find a new way to keep going.

For charities that are in the position of losing some or all of their regular funding and considering social enterprise as a possible route out of the mire, there’s lots of points to consider and these are four of them:

Things about social enterprise which are true:

  1. Social enterprise can be a tool for charities to grow their income – this guide that I wrote for Social Enterprise UK give some ideas about how
  2. If the money for doing what you used to do is no longer available, social enterprise might offer a way to help the people you exist to help by doing something different

Things about social enterprise which are not true:

  1. A social enterprise model is inherently more sustainable than a grant/donation based model – it’s not.
  2. The way to save a (financially) failing charity is do anything and everything you can think of that involves selling something and call it a social enterprise

It’s the headless chicken-flavoured: ‘let’s open a community cafe in the training room run by volunteers who can also repair your shoes while painting your portrait and teaching you to do yoga’ approach that’s ultimately the most dangerous in the current climate.

Even its harshest critics, would accept that one good thing about ‘the end of grants’ under New Labour was that, in most cases, it wasn’t real and there was enough money sloshing around for people to waste money enthusiastically attempting to become sustainable by doing a load of unsustainable nonsense.

Now there really is no (easy) money.

It’s very unlikely that a charity that sets up a small business doing something it doesn’t know how to do in addition to (what it perceives to be its core services) will avoid losing significant amounts of money running that small business. Expecting that small business to make enough profit to replace your lost council grant/contract is (in practical if not legal terms) an even worse idea than blowing the remainder of your reserves on lottery scratchcards and hoping for the best.

Now is a good time for charities and other voluntary sector to be considering whether social enterprise is for them, and how the assets of their organisation might be used to create a business. It’s the worst time to ever to panic and hope that setting up or re-branding yourself as a social enterprise will enable you to magic some money out of thin air.

 

 

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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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What’s the point of social investment – November 8th 2012

Following on from the recent several blog posts on the subject, I’m hoping to continue the process of taking discussions about social investment beyond the world of politicians, intermediaries and support providers by holding a free event.

It’s taking place next Thursday at The Mill in Walthamstow, the community space where we (Social Spider CIC) are based. Details are here. Please sign up if you’re interested in attending.

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How do we scale down?

If you run a social enterprise, or a charity that bids for public contracts, you may be thinking that it’s about time you started to scale up. The number of people in politics and ‘intermediary’ organisations that want you to scale up your social venture is far greater than the number of people who care what your social venture is or does.

It’s an interesting progression from the situation in the 2005 – 2009 period, when the number of social enterprise consultants helping people to write business plans vastly exceeded the number of social entrepreneurs with a viable plan for a business. So, there is now a growing artificial market primarily focused on not scaling up the viable social ventures that weren’t started then.

Unfortunately, while the government in particular is artificially stimulating the market for people to help companies get bigger, it has been simultaneously shrinking the markets that most social enterprises and contract-focused charities would be most likely to trade in, in order to get bigger – partly through cutting public spending in general and partly through spending money in ways that favour massive private outsourcing companies rather than social enterprises.

Whatever our views on particular government policies, though, most of us would accept that – whichever parties end up in power – for the foreseeable future there will be less money in the overall social pot. For that reason, it’s a shame that there’s been so much emphasis on helping organisations to scale up and so little support and advice for organisations who are forced to scale down.

The  story of Wiltshire Mind has been prominent in the voluntary sector world this week. The charity lost its core funding from the local council in 2010 and, according to Third Sector, its approach since then has been: “The charity also sold one of its offices, applied for a variety of grants and set up a funding arm, Friends of Wiltshire Mind, to try to bolster its finances. The latest published accounts show the charity’s income was £89,792 in 2010/11 and its spending was £191,379.

And the current situation is: “Wiltshire Mind employs 10 staff and receives support from about 13 volunteers. The charity runs eight groups that provide support to almost 100 people.

There are situations where it does make sense for a business to spend twice as much in a year of trading as it brings in – the launch of this now profitable free magazine being an example – but, from the varied but limited information available, this doesn’t seem like one of them.

Whether or not it’s entirely true in this case, there are many organisations around the UK who’ve responded to the challenge of having what they regard as ‘their funding’ cut by throwing absolutely everything they’ve got into trying to continue to deliver the same services, with the same number of paid staff but without the income.  In some cases because they’re fighting to get ‘their funding’ back. In other cases because they’re trying to raise similar amounts of money from other sources.

While the Old Testament stories of Moses may have a lot to teach us, it’s unlikely that the story of his adoption – where the baby Moses is set adrift in a basket on the Nile by his mother and ultimately adopted by the Pharoah’s daughter – was intended to be interpreted by charity trustees and social enterprises directors as a business strategy. Moses’ mother didn’t have any other options and the positive result was so gloriously unlikely that at least three major religions are still talking about thousands of years later.

Unfortunately, plenty of charities and social enterprises are effectively pursuing the approach of putting their organisations in the river and hoping that a public sector agency, grant-making trust or corporate sponsor will miraculously come along and fish them out.

The point is not that it’s wrong – when faced with funding cuts – to approach public sector bodies, trusts and anyone else who may be interested and make clear to them what will be lost if your services have to stop and what will be gained if they support you to enable those services to continue. It’s the right thing to do but, once that hasn’t worked, it is wrong to just repeat the same approach over and over again until you run out of reserves (or worse).

When faced with a situation where some of your income streams are reduced or no longer available, it’s vitally important to stop and consider what your organisation’s for – who you’re there to help, what outcomes you’re meant to be achieving – and then explore all available options for doing that sustainably.

Unless they’re specifically involved in delivering supported work placements, charities and social enterprises do not exist to preserve the employment of their existing staff team for as long as possible. Most of us, as trustees and directors, do want to keep our staff in work – and that’s a legitimate position  – but it’s vitally important to separate that intention from the vision and mission of the organisation. That’s easier said than done. From a personal point of view, the honourable intention to keep staff in post has been the single factor most likely to lead to wrong decisions being taken or, more often, right decisions being idiotically postponed.

That’s not to say that a better approach for organisations who lose funding is to just make everyone redundant and go home. The point to find different ways to do things you exist to do and help the people you exist to help.

In the case of a local mental health charity that loses funding the key question to ask at that point is not:  ‘how can we preserve our existing services?’ but ‘what can we do to help our members and other people with mental health difficulties in our area?’

The right answers would depend on the combination of what members and people with mental health difficulties want and the money available to pay for those things. It’s seems unlikely that, in most cases, the only two choices are: (a) get a set amount to provide a particular set of existing services or (b) close.

I don’t know enough about the specific situation of Wiltshire Mind to know the extent that this applies to them but, in a general sense, if an organisation has £100,000 to spend on temporarily preserving unfunded services for a year, it has £20,000 a year (subsidy not total income) to spend over five years supporting members to do stuff for themselves.

Scaling down properly isn’t easy but it’s just as important as scaling up. In the social enterprise sector, we’ve seen several regional and national support organisations close or dramatically reduce their activities very suddenly rather than move to new, more sustainable ways of working.

Sometimes there isn’t always a new, more sustainable model to be found and, in other cases, there is no longer a need for the services that organisations have been providing but as organisations dedicated to delivering positive social  change, it’s vitally important that we keep on putting creative and enterprise into achieving our social goals, rather than maintaining the existing structures and approaches of our organisations.

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Faith, hope and charity (and social enterprise)

The issue also lies with some charities themselves, those that are not currently enterprising – though of course many are. There seems to be a complacency and passivity about seizing social enterprise, of people ‘maybe thinking about trying some of that social enterprise’. This is a dangerous way of thinking.

So says Duncan Thorp, parliamentary, policy and communications officer for Social Enterprise Scotland, writing for The Guardian‘s Social Enterprise Network. In terms of the basic arguments, it’s fairly standard stuff from the social enterprise lobby but, as always, it’s not entirely clear what specifically charities are being asked to do and why.

If the position of the social enterprise movement (or the social enterprise lobby, at least)  is really that it’s all over for the old-style charitable model, then even those charity trustees who are sympathetic to socially enterprising approaches in principle might quite reasonably ask to see the numbers.

Thorp doesn’t offers numbers but he does link the idea that a shift towards social enterprise is both inevitable and right with the current economic situation noting that: “Our society is not going through an economic blip, when things will go ‘back to normal’ in ten years, when we can start relying on state hand-outs again. Society has fundamentally changed. It’s better not to deny it and attempt to operate outside of capitalism – but instead to exploit and change the market to do good business – the core of what social enterprise is and does.

It’s hard to disagree with the suggestion that few charities will be able to base future their long-term sustainability on operating outside of capitalism but that isn’t what traditional charities do – they seek the most effective ways to generate income (and non-financial resources) to achieve their social goals. Grants and donations are no less a part of capitalism than trading activities. In fact, free market libertarians are generally keener on (private) grants and donations than they are on state contracts.

While it’s true that the UK economy is doing badly and there’s less money around to be spent on delivering social goods, there’s no logical reason why that means it will be easier or more sustainable for most charities to generate income through trading than through other means.  It depends what you do, who you do it for and who you think is going to pay for it.

Public money carved up in different ways

There clearly is an area of activity where charities are – whether they like it or not – are moving from traditional grant-funded models to trading models. That’s in the area of delivering publicly-funded services. This shift has nothing whatsoever to do with charities choosing to adopt social enterprise models. It’s based on public sector agencies decided to move from grant-funded models to contract models. Charities have the option of falling in line or not (having a chance of) getting the money.

The latest NCVO Civil Society Almanac reports that while voluntary sector income from public sector grants dropped from £4.4Billion in 2000/01 to £3Billion in 2009/10, income from public sector contracts increased from £4.3Billion in 2000/01 to £10.9Billion in 2009/10. It’s, at best, optimistic to suggest that charities and social enterprises delivering public contracts are in a position ‘to exploit and change the market’ – either to do good business or to do anything else.

Public sector agencies dictate public service markets. Multi-£billion private oursourcing companies – having been enabled by government to build that economic clout – may now be well placed to apply pressure in terms of how these markets develop but even the largest trading charities and social enterprises aren’t. There are pros and cons in terms of the shift from (direct state provision) and grants to contracts – there’s plenty of situations where block provision hasn’t always delivered the goods for people who use services, either in terms of quality or choice – but this trend is not about socialising markets, it’s about marketising exist social sectors of the economy.

When it comes to markets beyond those controlled by the state, the voluntary sector’s trading income is not actually increasing in percentage terms, it’s dropping. The Civil Society Almanac reports that earned income from indviduals was 20% of voluntary sector income in 2000/2001 (£4.2Billion of a total income of £20.7Billion) but had dropped to 18% (£6.6Billion out of a total £36.7Billion) in 2009/10.

That drop isn’t because earned income individuals is decreasing – even adjusted for inflation, it’s increasing – but it’s nowhere near keeping pace with the increase in earned income from the state and it’s less than 0.5% of GDP.

Ultimately, though these percentage figures aren’t the most important issue that charities considering more socially enterprising approaches have to consider. The most important is how and whether they can either continue to deliver the social outcomes they were set up, deliver more and better social outcomes and/or deliver different social outcomes.

Markets and market failure

Social enterprising models that involve selling the goods or services to people who use those services (customers) have the clear advantage that they either succeed or fail based on whether or not they continue to useful (and affordable) to those customers. But that’s not the starting point for most charities (or most social enterprises) and, unsurprisingly, there’s no evidence that the ability or inclination of people in the UK to pay for goods or services that they previously didn’t pay for is increasing significantly in the current economic climate.

There are companies – mainly co-ops – in the broader social enterprise movement who do compete and help to shape mainstream consumer markets but, far from offering clearly defined answers that traditional charities should be expected to follow, the social enterprise movement faces equally significant challenges in finding scaleable and replicable models for providing services in response to market failure beyond securing some of cash carved up by the state (whether or not they’re calling that cash a contract or a grant).

We are at a point where charities need to think carefully about the services (and products) they provide and how they generate the income to provide them (and hopefully a bit more). Grants and donations will continue to be part of that. Not doing some stuff that costs lots of money and isn’t widely valued is part of that. And developing effective, socially just, commercial models is part of that, too but most social enterprises – and the social enterprise lobby – are partners on the journey rather than the people with the all the answers.

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