Many will have heard the subject of social enterprises buying conventional businesses and turning them into not-for-personal-profit models discussed at numerous conferences and events, but the real-life examples of this remain relatively rare. The ability to capitalise deals, carry out due diligence and the associated risks make acquisitions in the social sector a distinctly minority sport.
All the more extraordinary, then, to learn in this piece in yesterday’s Guardian that the Salvation Army is doing precisely this and is buying Kettering Textiles, the recycling business which currently holds the contract to collect donated clothing from the Salvation Army’s clothing-banks.
Making this purchase will enable the charity to accrue the significant profits from the recycling business and apply them to its own charitable work rather than — as is currently the case — seeing them stripped out by highly paid directors in the business. In the three years to 2010, according to the Guardian’s report, Kettering directors earned a total of almost £10m in salaries and pensions.
There has been criticism regarding a lack of transparency in dealings between the charity and its private contractor, although an investigation by the Charities Commission and the Fundraising Standards Board found no irregularities in the relationship.
However, there can have been few who would have forecast the charity taking such a bold step in order to maximise the ‘social’ earnings from its donated clothing activities.