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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?

Peter Holbrook might offer the new approach SEC needs

The Social Enterprise Coalition (SEC) announced yesterday that Peter Holbrook will become its new CEO when Jonathan Bland leaves next year.

I heard Holbrook speak at Voice 09. He’s currently CEO of Sunlight Development Trust in Gillingham, Kent. He was really good at Voice – quite challenging, but seemed like a good guy and Sunlight is remarkable.

As a social entrepreneur from outside London maybe he will help SEC move away from its obsession with Whitehall. Let’s face it, the government-can-make-social-enterprise-grow model has been given a pretty good airing over the last few years and is starting to look questionable. It’s time for a new approach and maybe he is the person to do it.

Mandy’s optics

Alright, I admit it in advance: this isn’t really about social enterprise. It was just irresistible. A piece in the Guardian yesterday reported that Peter Mandelson, secretary of state for business, gave an interview to The Economist in which he stated that the government’s new line on the need for public spending cuts did not constitute a U-turn; rather, it was a ‘change of optics’. The spirit of Sir Humphrey is not dead!

Of course, with so much of the market fuelled by public sector commissioning, spending cuts are likely to have a huge impact on social enterprise. But let’s leave that aside because there is a more important point. ‘We need to change the optic’ has unparalleled corporate cliche potential. It could become the new ‘big ask’, the new ‘going forward’. With some determined contributions it could even be the new ‘we are developing metrics for this’.

Rest assured, it will be coming soon to a meeting/conference/seminar by you.

The first person to report a sighting here will be rich in kudos if not cash prizes.

A bright future for Social Enterprise in Solihull

From its humble beginnings as a project within The Colebridge Trust, Solihull SUSTAiN has grown into a serious driver for change in Solihull in terms of Third Sector Support Services, Third Sector Development & Voice and Social Enterprise.

SUSTAiN is now the parent organisation leaving The Colebridge Trust free as its enterprise & community development arm to focus on what it does best. The Colebridge Trust is alive and well and thriving

The Colebridge Trust currently operates three Social Enterprises and two Community Projects.

The enterprises consist of:

Waterloo Woodwork which provides work experience and training for adults with learning disabilities and produces a wide range of quality timber products in the process.

Colebridge Communications is expanding to provide state of the art content managed websites at extremely competitive prices; a design to print service that covers everything from flyers to T-shirts; a mobile exhibition space in the form of a converted mobile library and a door to door distribution service in North Solihull.

Colebridge IT Services which can do anything from basic single PC maintenance to a fully integrated office IT network.

All of these enterprises have tremendous growth potential with highly skilled staff providing the very best products and services. Delivering excellence is key.

We are keen to talk to anyone who wants Wooden Products, Web, Print, IT and Communications services that offer high quality and excellent value for money. Contact Charles Rapson on 0121 770 8889 or email charlesr@solihull-sustain.org.uk to discuss.

The Community projects include:

Skills For Jobs – an already highly successful project, supported by the Learning Skills Council which supports long term unemployed people in North Solihull find employment. The projects success is attributed to the way it helps individuals remove the complex multiple barriers to finding employment through signposting to other services, focussed training and one to one support. Contact Sophia Nasreisfahany on 0121 717 5326 or email sophian@colebridge.org for more information

Community Health Trainers – a new projects supported by the Care Trust to help people in North Solihull develop healthier lifestyles by addressing diet, exercise, addiction and other lifestyle issues. Contact Harpreet Sohal on 07824 775 521 or email harpreets@solihull-sustain.org.uk

Recession will change voluntary sector for good – social enterprise will dominate, says third sector experts

Third Sector magazine’s recession watch panel says the third sector landscape will be permanently changed by the current economic downturn, according  to a story in the online mag today.

Changing patterns of giving, the rise of public sector commissioning and the need to generate greater levels of independent income are all having an impact on the way the sector operates, says the panel. Social enterprise will continue  to become an increasingly dominant business model in the wider sector, partly as a consequence of funders looking to invest their money for social good rather than simply donate it, and it is also likely that mergers amongst bigger charities and voluntary organisations will continue as they seek to scale-up  to compete for the largest public sector contracts.

In fact, these are trends that have been evident in the sector for four or five years. What is new is the accelerating pace of these changes.

Can charities & social enterprises run prisons?

Libby Brooks writing recently in the Guardian thinks not. The purpose of imprisonment, she says, is fundamentally punitive and cannot be reconciled with the third sector’s social mission — even (and perhaps especially, she seems to suggest) when this social purpose might be penal reform. The article revolves around the recent announcement by Turning Point and Catch 22 that they have been successful in bidding to build and manage prisons in partnership with private sector provider Serco in Liverpool and Manchester.

It’s an interesting piece and touches on some key issues to do with the role of the third sector in public service reform.

iSE celebrates 10th anniversary in style

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On Thursday 3rd September iSE celebrated its tenth anniversary, hosting a dinner for over 80 guests at the Botanical Gardens. Welcoming guests, Sarah Crawley, iSE’s CEO explained: “iSE began life in 1998 as a European project providing employment opportunities for people with disabilities. At the end of this project we saw the potential — and the need — for continuing this work in the longer-term and set about establishing iSE as a permanent provider.”

It has been a long journey. The organisation was was originally set up by Sarah and current director Tony Davis and was incorporated as a company in July 2000. It now employs 13 staff — including workers in Aquamacs, the social firm ‘franchise’ it established in 2006 — and in just the past few months has bought its own building at Avoca Court in Digbeth’s Irish quarter.

Guests listened to a fascinating question-and-answer session with a panel of special guests — Sally Reynolds, the chief executive of Social Firms UK; Cllr Paul Tilsley, deputy leader of Birmingham City Council and its champion for social enterprise; Mark Cook, a partner at Anthony Collins Solicitors; Steve Harding, chair of iSE’s Board; and Kevin Lynch, co-author of Mission, Inc.: The Practitioner’s Guide to Social Enterprise, who had flown over specially from the US to attend the International Social Enterprise Business Models Conference in Glasgow, present a master-class on social enterprise, and speak at iSE’s dinner.

Sarah also presented five ‘Social Enterprise Hero’ awards to mark what she said were “outstanding contributions to the sector”. Awards were made to:

  • Alison Lawson, of AWM, for her championing of social enterprise within and beyond the RDA — many are unaware of the key role Alison played in helping to bring the national social enterprise conference Voice09 to the ICC in February this year;
  • Mark Ellerby for his outstanding work in promoting the sector while also managing groundbreaking social firm Concept Conference Centre at RNIB’s Birmingham headquarters;
  • Sharon Annakie, deputy CEO of Future Health & Social Care, one of the fastest-growing social enterprises in the country and Inner City 100 winners (“We should be proud that they are in Birmingham!” Sarah Crawley added);
  • Richard Beard, CEO of The Jericho Foundation, for his achievements both at Jericho and his generous wider support for the sector.

And here I must declare an interest. The fifth award was to me – the first time anyone has awarded me anything! – to recognise the contribution BSSEC has made to keeping social enterprise on the agenda in Birmingham. I couldn’t have been prouder.

IMG_5403Those who know iSE will recognise it as one of the most entrepreneurial business support organisations around. Congratulations to Sarah and to all the staff and directors at iSE — here’s to the next ten years!

Community Sector Coalition says new Compact is a charter for third sector sub-contractors

Today’s Third Sector Online has a story about the new ‘refresh’ of the voluntary sector Compact, currently available as a consultation paper until 12th October 2009.

The Community Sector Coalition (CSC) has already written to third sector minister Angela Smith saying that the draft lacks sufficient focus on the community sector and claiming that the “bulk of it” reads like “a Compact for third sector sub-contractors”.

I think they’re over-stating their case. The draft does acknowledge the importance of community-based organisations. It notes that they are the most numerous groups making up the third sector (estimated at 500,000) and make a contribution to local services, community cohesion, and mobilising volunteer effort.

What the draft doesn’t do is commit Government to any specific actions or principles in its dealings with the community sector. And exactly the same is also true of the social enterprise sector. In fact, beyond generalities, there are many areas where this revised version of the Compact fails to commit its parties to specifics.

Many will be more concerned that the revised Compact no longer mentions the term ‘full cost recovery’ (FCR). Instead, it says that public procurement should recognise the inclusion of relevant “overheads” and “administrative costs” in the prices quoted for delivering services, and notes that “back office functions” are often as vital to achieving success as “other more visible activities” (p.33).

The disappearance of FCR could be attributable to the fact that in June 2007, the National Audit Office published Office of the Third Sector: Implementation of Full Cost Recovery – a report which concluded that FCR was “too difficult to pin down in any practical way”, “too blunt an instrument”, and useful only as “a code” for fairer funding but not as “an accounting treatment”. The report also noted – more ominously – that FCR misleads organisations into thinking “that all costs will be recovered in all situations”.

While NAO’s conclusions about full cost recovery seem difficult to disagree with, it’s nonetheless fascinating to see principles which just a few years ago were being touted as intrinsic to the sector’s future already being quietly airbrushed out of the picture.

Don’t forget to have your say on the draft Compact before the 12th October.


“Getting More for Less: Efficiency in the Public Sector”

In conjunction with the think-tank Demos, the Social Enterprise Coalition has just published Getting More for Less: Efficiency in the Public Sector by Jamie Bartlett. Continue Reading →

A new ‘three tier’ brand for social enterprise?

Social Enterprise Live has just carried an interesting story suggesting that a new ‘three-tier’ branding package for social enterprises is being considered. Last year the Central Office of Information published Is Social Enterprise at a Crossroads?, research which indicated that of those most likely to support social enterprise only around 20% knew anything about it.

The national committee that has been set up to ponder this branding problem (the so-called social enterprise identifier steering group) believes that a three-tier approach which builds on the existing social enterprise Mark will help customers understand whereabouts an enterprise is on its journey to becoming ‘social’.

Steve Wylie, chair of the identifier steering group, acknowledges that  the strategy has inherent risks of ‘socialwashing’ — as environmental consumerism has resulted in ‘greenwashing’ — but says this can be avoided by ensuring that the brand is backed by ‘a clear set of principles, values and criteria’.

That the sector needs dramatically higher public awareness and understanding is undeniable, but can a branding strategy achieve this? Would it ever achieve the kind of widespread usage necessary to fundamentally change levels of public awareness? I this the idea we’ve been waiting for…or is it an over-sophisticated marketing fantasy?

Maybe it can succeed — Fairtrade branding, for example, has been outstandingly unsuccessful successful (which is what I meant to say originally, of course! — apologies).

Anyway, watch this space — the new SE brand will be unveiled on the 19th November, Social Enterprise Day.

Govt response to Social Enterprise Summit says “peer-to-peer support” a key issue for social enterprise

The Office of the Third Sector has published an cross-departmental response to the recent Social Enterprise Summit. The report says that “peer-to-peer support and mentoring” is a key issue for SEs and that OTS and the Dept for Business Innovation & Skills (BIS) will build on existing work with Horsemouth, the informal mentoring website, to encourage more social entrepreneurs to engage in such support.

Beyond this, however, the report seems to offer only more of the same — pledges that government departments and agencies will work together “to ensure our promotion and support activities are inclusive of social enterprise…”

There’s gold in them thar NHS hills!

A Dept of Health tendering exercise to identify specialist contractors who can support the development of SEs emerging under the DoH right to request legislation has just been terminated part-way through – at an estimated cost to bidders of between £800,000-£1m. Some 70+ consortia had been narrowed down to 21 which were actively engaged in developing bids. Mind you, this lost investment in bid development has been calculated by participants (some of the top law and accountancy firms) at a day-rate of £2,000-£2,500.

Specialist expertise doesn’t come cheap, but this will look rich (no pun intended) to many SE business development organisations that have decades’ of experience but can’t finance their services – especially the kind of labour-intensive, long-term support grassroots organisations and local communities need to develop new social enterprise initiatives.

Personally, I think the NHS was right to pull the tender…

‘Building your cluster’

Developing clusters that enable SEs to combine for the provision of public services and larger contract bidding is currently an idea that is in much in vogue. But practical ‘how to’ resources about cluster development are relatively thin on the ground. ISE has just announced that Building Your Cluster, the booklet it has developed with backing from the Office of the Third Sector, is available for free download from the resources section of its website.

Leading or driven? Transforming the third sector…from the top

The signs are increasingly clear. Key (and especially national) players are positioning themselves to secure a transformative role in the third sector, focusing on the large structural changes that are needed in order to ‘marketise’ the sector.

Third Sector, for example, has just carried a fascinating piece about the Adventure Capital Fund’s bid to manage the government’s proposed ‘wholesale’ social investment bank. ACF (see earlier post) has launched a new company, Social Investment Business, as the brand for all ACF and Futurebuilders funds. ACF already administers over £400m and says it plans to be a billion-pound plus voluntary sector investor. Charity Bank and Triodos have claimed that ACF’s sustainability is threatened by this rapid growth.

We are now also beginning to see the growth of genuinely large-scale third sector partnersips as a means of achieving scale and securing contracts. The same Third Sector article notes that a newly established third sector consortium — Third Sector Consortia Management — is bidding for almost £32m of work from the DWP Future Jobs Fund.

The consortia — a social enterprise set up only this month — is the brain-child of Ian Wrigglesworth, enterprise director at Futurebuilders England. It already has 225 members and is inviting more (prospective members are invited to email Ian Charlesworth <ian dot charlesworth at futurebuilders hyphen england dot org dot uk> or ring 020 7842 7704).

Perhaps the Cabinet Office/OTS had this in mind when it published Working in a consortium: A guide for third sector organisations involved in public service delivery (Dec 2008)

These trends confirm what has been evident for a long time: that in future ‘investment’ will be the dominant funding model, and contracting/commissionning the dominant service model.

Is this a marketplace you are ready for? Is the sector leading or being driven by transformation? One thing we do know: demand for business advice/support is spiralling — especially from voluntary organisations trying to modify their business models or restructure operations to make them more ‘market ready’.

While having long argued that social enterprises need to operate as effectively in the marketplace as they can, is anyone else beginning to wonder whether the market is or should be the dominant economic and service model for the whole of the third sector?

A good read…

I’ve just finished reading Andrew Mawson’s 2008 book “The Social Entrepreneur: making communities work” which is based on his experiences in and around Bromley-by-Bow in London.

A very interesting read, and he sets down a number of challenges on the interaction between government policy and the best ways as he sees it of encouraging more social entrepreneurs.

So, if you want a view on the last 20 years of social enterprise, a bit of inspiration, or even a metaphorical slap round the face, I’d recommend this book.

The bitter wine of apartheid

Wine, fruit and other products were at the epicentre of  the 1980s boycott and disinvestment campaigns that helped bring down South Africa’s apartheid regime.

But the SA wine industry — which had an appalling labour record under apartheid, not just for the near-slave labour conditions it imposed on its black workforce, but also for the  ‘dop’ system which saw many workers paid partly in alcohol — is changing. The Guardian has just reported that one of the biggest exporters, Thandi, will shortly be both wholly worker-owned and Fairtrade — the first wine producer in the world to be both a Fairtrade producer and a black-owned collective. And the Co-operative is also sourcing wines from the Du Toitskloof community co-operative in Western Cape Province.

It also makes me want to start drinking again!

Health: ‘outsourcing’ or real, new social enterprises?

Reading Social Enterprise – Making a Difference: a guide to the Right to Request recently, the latest brochure from the Dept of Health Social Enterprise Investment Fund (SEIF), I was struck by the thin line that exists between ‘outsourcing’ of services and genuine, new social enterprise opportunity.

What I mean by this, is that looking at some of the examples cited, I struggled to see their social enterprise potential – a capacity to trade in the wider marketplace, innovate in delivery, and maximise income-generation Continue Reading →

Why haven’t we got more flagship social enterprises?

The Big issue, Jamie Oliver’s Fifteen, Divine chocolate – and just a handful of others. For many, these are the national social enterprise brands that come to mind when social enterprise is mentioned.

And even then, if we’re honest, it is probably quite unlikely that the average person in the street is thinking, “Ah, what great examples of social enterprise…” No, even now, they are far more likely to think, “Ah, great charities doing great work…”

This is just a personal view, but I’m increasingly convinced the term “social enterprise” is unsatisfactory. True, it’s a relatively new term that only really entered the lexicon ten years ago, but it’s vague and abstract; it isn’t synonymous with an activity. It doesn’t prompt the kind of understanding that Fairtrade does, for instance — which is ironic, because many fairtrade businesses are social enterprises. (Although not all, of course. Cadbury’s has just announced that biggest-selling brand Cadbury’s Dairy Milk will henceforth be fairtrade — adding 300m bars of Fairtrade chocolate a year at a stroke.)

Maybe this will change with time, but increasingly I believe that revisiting the language of social enterprise is a prerequisite for fostering greater public understanding.

Anyway, this post isn’t about definitions or language (although anyone with any better suggestions than “social enterprise” should please make urgent use of our comments facility!), it’s about flagship social enterprises.

Flagship social enterprises are important — (a) because there are so few of them, and (b) because they can help significantly raise the overall profile and understanding of the sector.

So it is good to see that as part of its Trading Know-How project Social Enterprise West Midlands has chosen five flagship social enterprises in the West Midlands region which will form part of a national PR campaign specifically intended to raise up another group of nationally recognised SE ‘brands’.

Birmingham’s own Gateway Family Services — one of the first Community Interest Companies to be ‘spun-out’ of a PCT (South Birmingham PCT) — is one of them.

Congratulations to Vicki Fitzgerald, the CEO at Gateway, and to all of her team.