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| Enterprising
solutions |
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| Government
is increasing the attention – and funding – it
gives to social enterprise, but will this be at the expense
of charities in the long-run? Probably not, finds David Adams,
and there are lessons to be learned from those enterprises
meeting with success |
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The
rise of the social enterprise from relative obscurity to prominence
has been one of the sector’s most notable developments
over the past decade. In the last couple of years, led by
high profile successes like Jamie Oliver’s restaurant
15 in east London, various voices in the media and
politicians of all shades have been queuing up to praise social
enterprises for their work towards community renewal and public
service delivery (PSD).
In November, the government launched its Social Enterprise
Action Plan, which will provide more than £18 million
of investment, with the Minister for the Third Sector Ed Miliband
describing social enterprise as “a movement that is
at the vanguard of social change”.
All of this is, unquestionably, good news for social enterprises.
But is it good news for the voluntary and charity sector as
a whole? In some parts of the charity world it has engendered
a slight, but nagging, concern that all this emphasis on sustainability,
coupled with a drive from government to persuade many charities
to seek funding for contract-based PSD, could undermine the
principles on which the sector was founded: philanthropy and
fundraising.
So could the growth of social enterprise, and the political
focus on its achievements and potential for social change,
really end up putting the profile and income of charities
at risk?
Mike Swain, chief executive of the All Saints Action Network
(ASAN), a community-based charitable company in the West Midlands,
thinks not. “I suspect that many social enterprises
are working in different fields from charities, so I’m
not sure there’s going to be competition,” he
says. “Our organisation is a charity, and we use the
benefits of being a charity for our community – but
we’re also quite proud to be an enterprise.”
As Swain points out, the first mistake being made by anyone
who thinks social enterprises might constitute some sort of
threat to charities would be to draw such a clear distinction
between the two. “There are quite a few charities I
would put in the social enterprise category, and quite a few
social enterprises that started off as charities,” he
says.
It’s also just as foolhardy to generalise about social
enterprises as it would be to do so about charities. At one
end of the social enterprise spectrum one might find community-minded
businesses that wouldn’t actually regard themselves
as part of the voluntary sector, while at the other you would
find parts of charities engaged in sustainable activity.
Allison Ogden-Newton, chief executive of Social Enterprise
London (SEL), says she can understand that social enterprise
could be viewed as some sort of threat by the charitable sector,
and sympathises with charity trustees and management who have
no intention of trying to adopt any aspect of the social enterprise
business model. “Large swathes of the voluntary sector
will find that social enterprise does not work for them, which
is absolutely fine,” she says.
On the other hand, she notes, many charities now involved
in social enterprise ventures are seeing benefits as a result.
“The biggest group of consultancy clients SEL now works
with are charities interested in knowing more about social
enterprise
and finding out what it could do for them,” she adds.
There is an argument that those charities least likely to
be interested in adopting social enterprise methods are also
those least likely to benefit from them. “Charities
are very good at what they do, and there will always be an
element of work that needs charitable donations,” says
Lucy Findlay, chief executive at RISE, a membership organisation
dedicated to the development of a sustainable social enterprise
sector in south-west England. “Not everything is going
to be solved by saying ‘well, generate income from it’.”
Few things irritate the charity sector more than politicians
sticking their oars in, and it’s possible to see how
politicians in government and opposition praising social enterprises
to the skies could be galling for those working for charities,
already irritated by the fact that when their own organisations
are mentioned by politicians it is most frequently with reference
to PSD, rather than other aspects of the sector’s work.
Ann Blackmore, head of policy at the NCVO, isn’t worried.
She points out that pressure from sector bodies including
the NCVO does seem to have an effect on some of the language
used by politicians when talking about the sector. “If
you look at things I wrote 18 months ago you’ll see
that we were expressing concern that government tended to
think in terms of the sector just as a public services provider,”
she says. “And now if you look at the Interim Report
that came out in November [on consultation with the sector
prior to next year’s spending review, and published
as part of the Pre Budget Report] it does talk about the sector’s
varied roles.”
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But SEL’s Ogden-Newton believes the government and the
public sector both need to develop a better understanding
of where charities and social enterprises could contribute
most effectively to PSD. “[Part of] SEL’s role
is to enable government to understand where there is a fit
between new methods of public service delivery and social
enterprise,” she says. “Support agencies for the
charity and voluntary sector should be doing the same. As
someone who works with and for social enterprises, I am also
well aware of circumstances where social enterprise is not
appropriate, and the solutions offered by the VCS are.”
At present, suggests Findlay, government is not working with
charities or social enterprises on PSD as effectively as it
could because of a mismatch between the drive to involve the
sector and instructions to procurement officers to keep costs
as low as possible, and a widespread misunderstanding of what
the sector can or should bring to PSD.
“There is an awful lot of talk about the voluntary sector
as a deliverer of services, but it’s not delivering
existing services that charities and social enterprises are
good at,” she says. “They’re good at identifying
the gaps in the system, and the people that fall through,
then delivering inventive solutions to those problems. The
sector’s almost seen as a cheap way of delivering public
services, and that’s exactly what it’s not.”
The Office of the Third Sector is stung by the suggestion
that it is focusing too much attention on social enterprise,
and does not believe there is a case to answer as regards
serious concern among charities.
“Officials in OTS are not reporting any feedback from
colleagues in the sector that they feel threatened by the
profile of social enterprises,” says a spokesperson
for the OTS. He points to the continued growth of the charity
sector, to the results of the NCVO and CAF’s UK
Giving Survey 2005/2006 – which show that donations
to charity remain steady at a high level – and the tax
relief schemes put in place for charities and individual donors.
He also lists government actions during the last year, including
the creation of the OTS, appointment of the Minister for the
Third Sector, consultation with the sector ahead of the forthcoming
Treasury spending review, the Charities Act, and financial
commitments to volunteering.
“In this context,” he concludes, “it seems
hard to sustain an argument that suggests that the government
is somehow being remiss in the degree of attention it is giving
the wider third sector, including charities. It is worth being
very clear that the government’s support for social
enterprise is not at the expense of other parts of the sector.
Indeed, we have made very clear since it was set up that the
OTS respects and responds to the diverse needs of different
parts of the whole third sector.”
Back in the sector itself, it’s also clear that charities
and social enterprises can derive much mutual benefit from
greater cooperation. “I think there’s a lot that
could be shared,” says RISE’s Findlay. “There’s
a lot social enterprises can learn from charities about trying
to achieve social aims, and about governance. What social
enterprises can teach charities about is the enterprise culture.”
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She highlights the strange phenomenon of the well-meaning
charity trustee who is a successful entrepreneur when outside
the organisation, yet “tends to leave their entrepreneur
hat by the door when they go in. It’s about taking some
risk, and applying the enterprise ethic to some aspects of
the organisation,” she says.
One organisation in a unique position to comment on the relationship
between charity and social enterprise is Traidcraft. Run originally
as a social enterprise, the organisation launched a linked
but independent charity in 1981 called the Traidcraft Educational
Foundation (now the Traidcraft Exchange).
“That we felt we had to set up a charity is indicative
of the fact that the two have complementary features,”
says Paul Chandler, chief executive of both. “We need
both. Being a trading company is important to our operations,
because if we are going to achieve our aims in a sustainable
way we need to have the culture and efficiency of a business.
“On the other hand, we felt that we had to set up a
charity, to carry out activities that a social enterprise
couldn’t do,” he continues. “In the social
enterprise sector you’re aiming to be self-sustaining.
So for additional innovation we needed a charity – to
raise money and make more speculative investments, and to
carry out campaigning and advocacy work, from which there
are great long-term benefits, but as a social enterprise you
can’t normally do.”
Chandler believes the organisation has reaped enormous benefits
from its dual nature. “The social enterprise has helped
make the charity more efficient, helping it gauge its effectiveness
and actions; but the charity has helped us improve the impact
of our trading model in ways that a more pure commercial culture
wouldn’t have lead us to,” he explains. “We
value having two necessarily different cultures, even though
that can lead to some conflict.”
And, he notes, the trading company is the perfect vehicle
to raise awareness of the charity.
Rather than having any negative or distorting effects on the
charity sector, Chandler wonders if the real long-term significance
of social enterprise will be the effects it has on the corporate
sector in furthering the cause of CSR.
“If that’s taken as seriously as some companies
are talking about it then that will start to blur the difference
between some companies and social enterprises,” he says.
“Clearly, companies like M&S that have been talking
a lot about this are bound above all by their obligations
to their shareholders, and that will put a limit on what they
do; but they do seem to be taking it extremely seriously.
It’s going to be interesting to see how that pans out.”
So, all in all, there seems to be no good reason for charities
to fear social enterprise – so long as they take account
of the reasons behind its success. “Charities are missing
a trick if they don’t recognise the importance of enterprise
in the world we’re living in,” says ASAN’s
Swain. If some in the sector are not happy about such a business-oriented
idea getting anywhere near charities’ mission statements,
he wonders if that might be because they work in long-established,
financially-secure organisations.
“Some of those older school charities will already have
had the benefit of having a fairly secure asset base, and
may feel more comfortable because of that,” he suggests.
“ASAN is still a very new organisation and we’re
fighting to create a long-term future, so we’re approaching
things in a different way. In a changing world with changing
needs, all of us should seek to adapt, and to adopt new ways
of working.”
Traidcraft’s Chandler believes that in the end, social
enterprise can only change the sector in positive ways. “It
may be that if social enterprise is taking away some areas
being handled by charities, it might be that they are better
suited to those purposes, but that doesn’t mean they
will take everything away,” he suggests. “It might
lead to some redefinitions of what social enterprises and
charities are. We found the two are mutually supportive and
very complementary.”
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