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iSE — spreading the gospel of social marketing

iSE recently held a staff team building day with the help of Ignite Creative. We donned our creative hats to produce a short film reflecting the values and services of iSE. The day was intended not just to bring everyone together but also to help us embrace the kind of social marketing techniques that are increasingly available and offer really cost-effective tools for social enterprises.

And here is the result of our creative efforts!

Do take a look — we really enjoyed making it and want to explore the use of self-created videos much more in our marketing.

“The State has a terrible potency to kill the thing it loves…”

I like and admire Matthew Parris. He writes wonderfully, is genuinely self-deprecating and modest, and has a marvellous broadcasting voice. It’s a shame he’s a Tory, really.

Anyway, he has a very interesting piece in the Times Online about Cameron’s declaration for voluntary action and social enterprise as alternatives to the ‘big state’.

In just a few hundred words Parris manages to set this new philosophy in its wider context of Conservatism, Darwinism, social philanthropy, and Christianity.

It presents some practical difficulties, Parris acknowledges, “not least [that] of delivering state-sponsored help via non-state agencies” and goes on to warn: “The State has a terrible potency to kill the thing it loves: just look at the arts.”

I disagree with virtually everything else in the piece but he’s dead right on that point about the arts.

Ethical spending triples in past decade, says Co-op Bank

The Co-op Bank has just published its ninth Ethical Consumerism Report. This story in yesterday’s Guardian also covers the key facts and figures.

Despite the economic downturn, ethical spending by consumers continues to rise, according to the report, with overall ethical spending rising from £13.5bn in 1995 to almost £35.5bn at the end of 2007. In 2008, on average, every household in the UK spent £707 in line with their ethical values. Are social enterprises that operate in the consumer marketplace doing everything they can to capture a bigger share of this spending?

While ethical spending remains a small part of overall consumer spending (over £600bn), the report reveals that generally speaking ethical markets have proven more resilient throughout the recession.

The greatest growth in ethical spending between 2006 and 2007 has been in:

  • Free range & ‘freedom’ foods, up from £18m to £28m (+56%).
  • Energy-efficient lightbulbs, up from £26m to £41m (+58%).
  • Fairtrade, up from £285m in 2006 to £458m in 2007 (+61%).
  • Ethical clothing, up from £52m to £89m (+71%).
  • Green cars, up from £96m to £223m (+132%).

Farmers’ markets and charity shops have been amongst the few ethical sectors to see a downturn.

The resilience of ethical markets, especially Fairtrade, should come as good news to social enterprises — if only the sector could find a successful way of building up the kind of goodwill and ‘brand identity’ the Fairtrade movement has.

But I wonder why the report includes no figures at all for spending with social enterprises? True, many social enterprises, perhaps the majority, are providing business-to-business and institutional services rather than consumer products, but this is by no means universally the case. Certainly, these figures would look dramatically different if social enterprise turnover was included.

As this is the last post for 2009, it’s time to wish our friends, colleagues and readers everywhere a happy, prosperous and peaceful New Year.

iSE — first business support specialist in WM to gain Social Enterprise Mark

iSE has become the first business support specialist in the region to have its application for the Social Enterprise Mark approved.

SEs seeking to gain the kitemark scheme are assessed by an independent panel using strict qualifying criteria. Applicants must show through their Constitution that a sufficient proportion of the profit made by the business is spent on socially beneficial purposes. They must also show by their activities and their accounts that trading is a key driver and that profit generated is used for social or community benefit. The Mark is intended to enable social enterprises to promote their values-driven business and demonstrate their social outcomes

iSE will be formally awarded the kitemark on 2nd February at the Voice10 social enterprise conference when the SE Mark — originally begun by RISE in the south-west — is officially relaunched as a national scheme.

iSE is only the second social enterprise in Birmingham to acquire the Mark. The first, Gateway Family Services (CIC), received theirs on Social Enterprise Day.

Sarah Crawley, iSE’s CEO, says, “It’s still relatively rare for a business support organisation to be itself an independent social enterprise as iSE is and the SE Mark will really help us get across the message that we practise what we preach. Andy Beaton has done a fantastic job of steering us through the assessment process and I can’t think of a better way of ending our tenth anniversary year.

Smarter, cheaper government?

In a major speech prior to the budget Gordon Brown has outlined plans for a ‘third generation’ of public services tailored to and informed by their users, with the third sector and wider civic society playing a crucial role in shaping and delivering services, reports Third Sector Online.

The PM’s speech marks the publication of a major policy document for radical government reform, Putting the frontline first: smarter Government.

As well as a major cull of quangos and other cost-saving measures to reduce the cost of public borrowing, the action plan means “a bigger role for groups of residents, parents and patients, and third sector providers in shaping services in their local communities”.

Amongst the specific actions identified for strengthening civic society and third sector involvement are:

  • Production of a regularly updated Civic Health Index from early 2010 to enable people to assess how well civic society is faring and how it can be enabled to thrive.
  • Piloting Social Impact Bonds as a new way of funding the third sector to provide services. Social Impact Bonds will reward social investors for work which reduces future social costs.
  • Finalising the model for the Investment Wholesale Bank, which has been subject to discussion/consultation for over a year now.
  • Strengthening support for community asset transfer and ownership by promoting wider use of community shares from early 2010.
  • Develop criteria on social assets by Budget 2010, to determine whether alternative delivery structures such as co-operatives or third sector entities would offer the greatest value for public assets.
  • Provide financial support to innovative programmes that bring public services together with civic society — this includes the Young Foundation pilot programme of social entrepreneurs in residence in PCTs and an ‘innovation exchange’ to help the most innovative third sector organisations work more closely with public service commissioners.

More on Call Britannia — when is a social enterprise not a social enterprise?

I wouldn’t normally single out readers’ comments for specific mention, but Sebastien, in commenting on the post on Call Britannia here has raised a really important issue.

He says in his comment:

Sorry to rain on the parade but from what I know about this venture, this isn’t a social enterprise at all. Yes, it is great that an “enterprise” is being set up in an area of deprivation. But merely setting up a business in an area of deprivation should not, and does not make a social enterprise.

I think we have to be clear here – while this organisation may want to do “good” by employing people, the fact that it employs people does not automatically make it a social enterprise.

Essentially Karen is setting up a similar business that she sold off to the Daily Mail a number of years ago called Simply Switch – which employed people in Croydon. Perhaps using the social enterprise tag makes business sense for her now….

I wish this private enterprise well, but please use the correct labels…

So, when is a social enterprise not a social enterprise? Sebastien is probably right to be at least sceptical in this instance — but on the other hand, is it a bit too easy (or a bit too categorical) to simply say “this isn’t a social enterprise at all”? It has a social mission. A proportion of profits are gifted to a foundation to provide employment support to those who need it. It focuses its activities in areas of greatest deprivation. It has received investment from two specialist investment funds targeting businesses that make a financial and social return — Big Invest and Bridges Ventures.

Yet on the other hand, a Companies House search confirms that Call Britannia is indeed a Private Limited Company, and Big Invest’s Nigel Kershaw, quoted in an article in the Guardian recently said, “We spent time with Karen thinking what do we have to commit to, to make this a proper social enterprise, rather than just a business with some other stuff tagged on,” which seems to suggest that at least one of the investors recognises that Call Britannia is a hybrid form…

Of course, one might take the line that what would determine the real social enterprise nature of the business beyond doubt is whether it is operated on a non-profit distributing basis — i.e. is “not for personal profit”. This doesn’t appear to be the case.

But does that prevent it being a form of social enterprise? Or is there only one true form — not-for-personal-profit? Personally, I feel quite ambivalent about this. I know plenty of people in the sector who hold the latter view — that the only true form of social enterprise is not-for-personal-profit. But equally I know others who say “what matters is the social impact the enterprise achieves”.

One thing I am sure of — partly because policy and investment models are driving things in this direction — is that we will see more of these kind of private/social hybrids.

To my mind this strengthens the argument that social enterprise is a way of doing business rather than a specific, single ‘model’. But it would also suggest that some social enterprises may be “more social” than others….or, to put it another way, that some social enterprises are “more commercial” than others. Perhaps we need a new category — “private business with a social mission”?

While it might be more comfortable to simply say “this isn’t a social enterprise at all” this is to close one’s eyes to a distinct trend emerging in the social business sector. Denying the social enterprise status of such ventures doesn’t make them go away — and nor does it help us understand an increasingly grey area in the sector.

Sebastien has started a debate I hope others will join.

New social enterprise call centre aims to create 10,000 jobs

Thanks to Deanne at iSE for this snippet. Call Britannia, a new UK social enterprise call centre has become the first business to secure funding from the Bridges Social Entrepreneurs Fund, according to Social Enterprise magazine.

The new business, which is headed by Karen Darby, the founder of price comparison site Simply Switch, has secured a total of almost £1.3m in investment and funding to help it set up work training call centres in some of the most deprived neighbourhoods.

The Bridges Social Entrepreneurs Fund has invested £500,000, Big Issue Invest has invested £350,000 and the management team of Call Britannia has itself invested £150,000.

Call Britannia’s strapline says “talking jobs for Britain” and its Mission — with equal, elegant simplicity, reads: “Our aim is simple: To create 10,000 jobs.”

I love the clarity of those messages. Watch with interest!

Gateway Family Services becomes first Birmingham SE to be awarded Social Enterprise Mark

At a drinks reception last night to celebrate Social Enterprise Day, Gateway Family Services (GFS) announced that it has become the first Birmingham-based winner of the Social Enterprise Mark, an independently evaluated ‘kitemark’ scheme  which started in the south-west and has now gone national.

GFS, a Community Interest Company, was  born out of a Primary Care Trust just over three years ago and is one of the fastest growing social enterprises in the region, currently employing over 140 staff.

It is a new kind of community health business and believes in putting health to work in local communities in order to address inequalities and deliver employment opportunities. By recruiting, training and accrediting people from disadvantaged communities to take up local employment opportunities in community health, GFS delivers health benefits as well as creating social and economic opportunities.

Cllr Sue Anderson, Cabinet Member for Adults & Communities, spoke glowingly about GFS’s work and said the award was a “fantastic achievement”.

Gateway CEO Vicki Fitzgerald said the award recognised the shared values and efforts of the whole GFS team.  “It will give Gateway a competitive edge but we will also use the Mark to help promote the social enterprise movement in general,” she added.

The award is great news for Gateway, great news for Birmingham and great news for the  sector and congratulations are due to Vicki, to Liz Carroll her deputy, and to the whole team at GFS. It will be fascinating to see how they utilise the Mark in their marketing and key messages in the coming months.

Social Enterprise in Action

Action for Blind People is set to work with social enterprises throughout England to offer work experience placements to blind and partially sighted people looking for employment.

Thanks to funding by the National Lottery through Big Lottery Fund, Action for Blind People has developed a Social Enterprise and Employment Development (SEED) Project dedicated to finding work experience placements for blind and partially sighted people within social enterprises.

‘Host’ social enterprises will be offered a full package of support tailored to their needs, including advice on Health and Safety issues, access to specialist adapted equipment and Visual Awareness training. The majority of work placements will last between one day and two weeks and could provide a perfect lead-in ‘working interview’ for the DWP’s Future Jobs Fund six month placements.

The aim of the SEED project is to open the eyes of employers to the abilities of blind and partially sighted people within the workplace. 81% of employers rated the performance of disabled employees as ‘the same or higher’ than non disabled people. If this is the case then why is it estimated that 66% of blind and partially sighted people of working age in the UK remain unemployed. Through the SEED Project, with the support of social enterprises, blind and partially sighted people can develop the skills and confidence they need to progress into employment.

Yorkshire based social firm, Viewpoint employs a team of blind and partially sighted research assistants and has also offered work experience placements, in partnership with Action for Blind People.

Alistair Ponton, Managing Director of Viewpoint said: “The team we have recruited through Action have been enormously beneficial to Viewpoint. Their customer service and IT skills have pushed the boundaries of what services our business can offer and their attitude to helping Viewpoint succeed has reinvigorated our entire staff team.”

If you are interested in becoming a ‘Host’ organisation for the SEED Project or you would just like some more information, please contact the SEED team on 0113 386 2800.

SEC publishes first “state of the sector” survey on Social Enterprise Day

Social Enterprise Day greetings! The Social Enterprise Coalition has just announced publication of its first ever ‘state of the sector’ survey (opens PDF in new window).

Sponsored by the Office of the Third Sector, its findings make encouraging reading. Almost a  thousand SEs were sampled and the survey found that:

  • Social enterprises are twice as confident of future growth as  typical small to medium enterprises (SMEs), with 48% of social enterprises responding positively as opposed to just 24% of SMEs.
  • Over half (56%) have increased their turnover from the previous year while less than 20% have seen it go down. This is a considerably better performance than SMEs in the UK, where only 28% increased their turnover and 43% saw it go down.
  • Two-thirds of those polled are making a profit, and around 20% are breaking even.

This suggests that SEs are performing better during the current economic downturn than conventional SMEs.

I’ve only skimmed the report but it looks as if it contains just the kind of national-level sector intelligence we can all make use of. Well done, SEC!

Loaf — a new social enterprise in Brum

Loaf is a new social enterprise in Birmingham — and appropriately enough is the brainchild of…Tom Baker (no, you couldn’t make it up), NHS dietician, cook, baker, advocate of real food, artisan produce, local produce etc.

As well as knowing how to build and fire a traditional wood-burning oven in which he bakes traditional sourdough breads, Tom also clearly knows how to use the media — Loaf is all over the Birmingham Post.

Paul Hanna is going to an event at Loaf HQ next week so we’ll get him to blog more for us.

You can read more about Loaf’s services here.

Crisis pioneers SROI-based ‘share offer’ in new Skylight Centres — a model for others pursuing philanthropic investment?

Crisis, the homelessness charity, is currently promoting accredited education, training and employment centres called Crisis Skylight Services. The charity already has Skylight Centres in London and Newcastle and is planning a new Skylight development in Birmingham, where it has already been consulting with other providers and investigating potential sites.

What’s interesting about this story — covered recently in Third Sector Online and elsewhere — is the investment and fund-raising model that Crisis has adopted for these centres.

In partnership with the Financial Times, Crisis has issued a SROI-based investment prospectus, similar to a company share offering — the first such prospectus ever issued by a UK charity. This follows research carried out for the charity by independent specialists Oxford Economics, whose report and SROI formula are available here.

This is not, of course, the first time that UK not-for-personal-profit organisations have sought to use SROI to encourage ‘philanthropic investment’ — but the Crisis offer has an additional innovative angle. Because it revolves around similar Skylight centres, it offers comparability and thus enables investors to base their investment decisions not just on location but on the comparable levels of social return these locations generate.

Being a major, national charity ‘brand’ has clearly been of immense assistance to Crisis in this, as has its undoubted media savvy and ability to strike powerful national partnerships, but I reckon many other smaller organisations will also be watching closely to see how this works and whether it offers a model that they too might capitalise on.

Social enterprise slot machines?

There’s a fascinating and thought-provoking article in today’s Guardian Society about a social business that has turned to gaming and bars to offer jobs to the hard to employ in great Yarmouth.

Hospitality and Grow is a partnership venture between Towering Leisure — Great Yarmouth-based leisure and gaming company — and the award-winning training and employment social enterprise, the Grow Organisation.

At first glance it seems that the ‘products’ offered by Hospitality and Grow – gaming arcades and slots – could not be more at variance with its mission… But as Daryn Ferguson, the former croupier and casino manager  brought in to run the project, says in the piece,  this is “Yarmouth’s relevant employment” and the hardest to employ — ex-offenders, those with mental health problems and recovering drug  and alcohol addicts — “shouldn’t be excluded from that”.

Live from the Social Enterprise World Forum — Day 3

Another excellent day! I am never sure about study tours – over the years I seem to have visited many social enterprises which are in reality projects and bear little resemblance to anything enterprising! Top of my list of things to do was to visit the Bonsai Social Firm – famous because it began a series of development work in Scotland on acquisitions which is now spreading southwards.

‘Bonsai – the imagination tree’ became a social firm 3 years ago, bought from a family looking to retire – last month it merged with another garden centre [this I hadn’t known] and the new garden centre provides paid employment both for people with learning disabilities and people with mental ill health. What really was interesting was that this is a business of scale, it owns its own land and doesn’t receive payments from the government. What interested me more was that the merged company has been operating a garden centre for 20 years and originally financed the move from day activities to business start up by borrowing the money from a bank against some property they had. I thought it was a great business and didn’t disappoint!

The second visit was to Prahran Mission – a well established agency for homeless, long term unemployed and those with mental ill health. They have just opened a ‘vintage clothes shop’ – not especially exciting but what was interesting was the decision-making process that has led them down the road of social enterprise and how they plan to manage 2 staff teams, one providing traditional support/care and the other operating a social firm.

The final visit was to Tjanabi [Boonwurrung Foundation] – a fantastic restaurant in the heart of Melbourne serving food based on the native food of the reflecting the six seasons of the area. They took this approach so not to over hunt, fish or pick food and to respect it. We met Auntie Carolyn the elder of the tribe who has a considerable reputation as a social entrepreneur. She established the restaurant to resource her work with her community. She has played a significant role in the struggle for recognition and rights for the Boonwurrung people – which ended up with the first indigenous land use agreement for the Melbourne area.

The other elder I met was from the Woiwurrung Tribe [at the opening of the conference] and these two tribes share the land of Melbourne. I have met some amazing and very strong women on this trip! It’s unusual for women to be leaders but apparently many of the men die young and there are real problems with alcoholism.

By the way – the menu today had crocodile and kangaroo – guess what I had – and the plates were dressed with local berries and herbal leaves – it was superb! One of the leaves made my mouth go numb and then when I drank water there was sweetness in my mouth – explain that one if you can!

Tomorrow an eco centre!

Live from the Social Enterprise World Forum — Day 2

Let me tell you a joke I heard today: How many social entrepreneurs does it take to change a light bulb? 15: 2 for feasibility; 5 board members; 3 bid/tender writing; 3 delivering services; 2 to evaluate. I thought this was quite funny!

The themes for today were ‘pathways to success’ and ‘investment’ both key themes for the UK.

The first session was a debate on whether ‘there’s no business like social business’ – a comment made by Liam Black. The session was thought provoking with the 6 debaters taking opposing views. One of the speakers against was Andy Cooper CEO from LeapFrog Investments – the world’s first micro-insurance fund – honoured recently by former-President Clinton. It was really interesting because Andy was clearly struggling being against! The calibre of the speakers has been amazing and as usual you meet up with Brits you haven’t met before but who have wonderful ideas and practices.

Needless to say the debate was draw – It must have been fixed! It was a good way, though, to get some of the contentious issues out in the open like definition, like what’s the difference between private business doing social good and social enterprise? And you’re having no impact because you can’t prove it!

I went to a good session of the SE market place and how can we grow it internationally and I thought the following were really good pointers for development:

  • Developing a shared identity – using similar language, working with similar objectives
  • Knowledge and information development ie research and information base
  • Development of leadership and grassroots support
  • Investment
  • Creation of markets

Kris Prendergast called these ‘field’ building frameworks! She is the co-ordinator of the Social Enterprise Alliance in the States – I was rather pleased that her analysis rather matched up to our own thinking!

The second workshop was pathways for women social entrepreneurs – a truly inspirational session with presentations from the USA [Women’s bean project], UK [Sunderland Homecare] and South Africa [a SE development agency for women and excluded young people].

Other sessions today included a world café visiting 3 SEs in forty five minutes, a session on learning from inspirational social entrepreneurs and a closing session on shaping the sector for the next ten years.

Its been very good!

Next year the conference is in San Francisco on the 28th-30th April – all are welcome!

For the next 2 days I am visiting local social enterprises around Melbourne – so there’s more to come!

Live from the Social Enterprise World Forum — Day 1

Well what can I say – what an amazing day!

The key themes to start the conference were ‘new markets, employment and sustainability’ three absolutely key issues for the growth of the sector. The first session kicked off with a well known TV presenter interviewing a panel collected from Australia, New Zealand and Tasmania exploring ‘the world is a village’ and the usefulness of social enterprise from a range of perspectives. These included young indigenous people without work and women who now have fewer places in Parliament, on boards of directors and as CEOs.

We explored how ‘profit’ can be thought of as the dark side if you don’t look at sustainability and consider the need to take a long term view not just a financial return. They asked people to watch money moving around communities to understand how money keeps communities alive and how the health of communities depends on enterprise to generate money. Therefore money = social capital!

We were asked to understand that the indigenous communities in Australia and New Zealand respect the past, the present and the future and therefore have 60-100 year plans that consider long term sustainability. They are preparing the world for their children, their children’s children and their children’s children’s children – we seem to have forgotten about this in the northern hemisphere and we need to redress it!

I attended a workshop on market making for the indigenous community in Australia and was one of only two international guests attending – I learnt much about enterprise and culture and ownership – and how very few enterprises there are owned by the Aborigines [0.17%] !!!! The other workshop was on guerrilla marketing – good fun!

I was very privileged this evening to hear the only indigenous opera singer – very famous internationally – she opened the Olympic Games in 2000. She told her very moving life story which was that she was one of the lost children who was taken from her aborigine mother at 3 weeks old and given to a white family to be brought up and then her subsequent journey to discover her roots. It was very moving and her singing was awesome!

Can’t wait for day 2!

Live from the Social Enterprise World Forum — Melbourne 2009

I’m writing from the Social Enterprise World Forum (SEWF) 2009 in Melbourne right after the opening ceremony on Tuesday 6th October.

I arrived late Monday evening (5th Oct) having travelled for about 24 hours via Heathrow and Bangkok.

I was very lucky to meet Gerry Higgins (CEO of CEiS) at the airport, along with his party of 20 people on a study tour of Australia, part-funded by the Scottish Government. I am impressed by the vision of these study trips which Gerry has been running for the past 3 years. He brings together key individuals from social enterprises, trading VCOs, infrastructure organisations, banking and the public sector for two weeks and of course they are experiencing new and exciting social enterprises, cultures and travelling together. The great by-product being real understanding of how one another’s sectors work and superb networking. It’s a great aspiration of mine to get together a similar trip from the West Midlands — it can only be good — maybe we can get AWM to fund this?

SEWF is the first event of its kind to take place in the pacific region and it will build on the success of the inaugural conference held in Scotland last year. Leaders and champions from the USA, Asia, Europe, Canada, Africa, New Zealand, UK and Australia are all attending.

In Australia they aim for the conference to act as a catalyst raising awareness of social enterprise and for growing the sector there. There are about 400 people here, from all countries – it’s sold out!

The opening ceremony was amazing — we were inviting to a ‘smoking ceremony’ at the Parliament House of Victoria which was led by Aunty Joy Wandid Murphy the leader of the indigenous population whose land Melbourne is built on. The smoking part involved burning damp leaves and it is symbolic of starting afresh and rebirth. There was dancing and music from the didgeridoo and face painting with traditional markings. I was lucky enough to get yellow paint smeared down my face – I felt very honoured. The aboriginal people were charming and very welcoming.

The session was opened by a whole range of speeches from dignitaries including a minister and a local politician and of course words from the host agencies (Social Traders and Social Ventures Australia).

The programme looks great and I now can’t wait for today when the input starts!

Lessons from ‘the end of journalism’

The following may seem an awful long way off-topic, but I don’t think it is. The adaptation, evolution and sometimes the demise of business models is central to social enterprise and indeed to all kinds of enterprise.

I have been following a fascinating discussion on the Digital Journalist website about the death of journalism and especially photojournalism. The discussion ranges from technical solutions, such as paywalls, to ‘social’ solutions, such as philanthropic investment in journalism (as a means of promoting and supporting public good), to business solutions, such as strategies to consolidate news/information sources, thus offering users single, convenient content-accounts, and offering advertisers larger, consolidated audiences.

The trail then went here, Revolutions in the media economy, four long and closely argued posts on a blog by David Campbell.

And then here, The end of journalism?, a post on Robert J Picard’s blog, The Media  Business. Picard — who is Hamrin Professor of Media Economics at Jönköping University, Sweden — argues that current attempts to save  ‘news’ (i.e. to ‘monetise’ it) confuses ‘product’ and ‘practise’. Journalism, he argues, has never been primarily a product: rather, it is a “body of practices”, and will be saved when we work out and understand “what manifestation it will take next”.

How is all this relevant to social enterprise, I hear you ask. Well, differentiating between ‘practise’ and ‘product’ can be extremely important to social enterprises. Social enterprises ‘practise’ a social mission — but they do this by trading in ‘products’. That’s where their revenue comes from. In some cases they may even find that their customers have little or no interest in purchasing what the business ‘practises’ (its social mission), focusing almost solely on the quality, price and usefulness of the product on offer. There may in these instances be a necessary differentiation between ‘practise’ and ‘product’, even if only in marketing terms.

Differentiating between ‘practise’ and ‘product’ is certainly relevant to many conventional voluntary organisations, some of which are struggling precisely because they have only their ‘practise’ to offer, and for this there are a declining number of paying customers.

The idea that activities can be divided into two component parts — their practise, and their products — seems a useful tool in helping us to understand how (and why) some business models must evolve if they are to survive. And more than this, it also seems to offer some useful lessons in how social enterprises might be even more adventurous in ‘separating’ product from practice — and I don’t mean by marginalising their social mission, I mean by raising the profile, profitability and performance of their products. After all, the greater the earning power of the products, the more good we can practise.

Anyone for loan finance?

Having just prepared and delivered my twelfth annual report to ART members, I have been reflecting once again on how low the take up of our kind of finance continues to be from the social enterprise sector in Birmingham and the West Midlands.

ART (Aston Reinvestment Trust) is a social enterprise itself.  We were set up to alleviate poverty through enterprise, supporting job creation by offering loan finance to businesses, including social enterprises, unable to borrow the money they need from banks.

While the social enterprise business model has grown in popularity over the years and there is currently a particularly strong political drive to increase the Third Sector’s capacity to help tackle worklessness, we have seen the number of enquiries for loans from the sector diminish rather than grow.  In contrast, we have just reported to our members a record year for lending to the commercial sector.  This is hardly surprising, given that we are designed to help when the banks say no, but we do wonder why the social enterprise sector isn’t following suit.

In 1999-2000 we ran an EU-supported pilot, during which we lent over £400K to social enterprises.  It was heralded as a great success and we anticipated that demand would continue to grow.  But that has not proved to be the case.  ART has now lent over £8m since launch, including over £1m to social enterprises.  And we have supported some of the higher growth social enterprises in Birmingham – Future Health and Social Care, Jericho Foundation, ENTA and My Time to name but a few.

However, in the last two years our loan output to social enterprises and the wider Third sector has dwindled to almost nil – and we are not alone in the West Midlands in this: there is a much lower take-up of loan finance in this region than in other parts of the country.

As the proverbial pig flies across the keyboard, I might speculate that the reason for this is that the banks are freely lending to social enterprises in Birmingham and the West Midlands, so that there is no need for ART and other specialist social lenders.  But I don’t think that’s it.

Are the Boards of social enterprises too concerned about perceived risks associated with loans, preferring to chase grants – even though they are getting harder to find?  Are the managers of social enterprises in Birmingham more risk-averse than those in other areas of the country?  What effect will the introduction in Birmingham of the much-welcomed Social Enterprise Development Fund have, which encourages growth from trading?  Will there be an upsurge in demand for the combination of loan + grant + support lauded in the ACF evaluation reported in this blog in July?  Or just a mad scramble for the grants!

My belief is that reliance on grant finance can be a very precarious existence and that loan finance can offer stability, freedom to spend on what you want rather than what is prescribed, involves less cumbersome admin and can keep organisations afloat by overcoming short term cashflow problems.  Used wisely, they are a good thing.

But I would say that wouldn’t I?  I would be happy to debate the pros and cons with anyone interested!

‘Social enterprise’: does the definition need tweaking?

Third sector minister Angela Smith thinks so. Speaking at a Labour Party conference fringe event yesterday, she acknowledged that the current definition is “pretty broad” and in her view requires “a bit of tweaking” in order to address  some criticisms “on the left”.

In 2002, in its first social enterprise strategy, Social Enterprise: A Strategy for Success, the government defined social enterprise as:

“…a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.”

This definition has been reiterated in each subsequent social enterprise policy document, including 2006’s Social enterprise action plan: Scaling new heights.

Interestingly, however, the Office of the Third Sector now also adds:

This means organisations that trade goods and services and use the majority of their profits for social and environmental goals.

How we define social enterprise has a critical impact on shaping wider attitudes towards, and expectations of, the sector, and OTS’s addition puts a necessary emphasis on trading and earned income, which surely are at the heart of social enterprise. Our definition/s should reflect this.

But perhaps more importantly, I think that any meaningful redefinition of social enterprise will also eventually have to address the issue of  proportion of income earned from trading. Many in the movement have already adopted a sort of ‘unofficial’ benchmark of 50%-plus income from trading to explain the kind of social enterprises they wish to support.

While the desire for a more inclusive ‘broad church’ definition of social enterprise was well-intentioned, I think it is now evident that in some respects it has made it harder rather than easier for people to understand the sector.

Revisiting the definition seems a necessary part of the current debate about awareness, profile and understanding of the sector. After all, if we can’t agree on how we explain social enterprise to ourselves, how can we explain it with clarity to anyone else?