Tag Archives: social enterprises

Social investment and the eradication of poverty

The Social Metrics Commission recently issued the report on their work to measure poverty in a more meaningful way. They estimate that 14.2 million people in the UK live in poverty, including 4.5 million children. These stats are shocking and underline the vital role of so much of the charity sector and social economy, working in many ways to address the root causes or the effects of poverty.

Big Society Capital (BSC) believe that social investment (i.e. repayable finance used to create impact) can be (a small) part of the solution alongside the social economy sector’s other funding sources. Money provided upfront by social investors is used by social enterprises and charities to finance income-generating models so that they are able to make a greater difference in addressing poverty.

Continue reading Social investment and the eradication of poverty

Advertisements

Reflections on Social Enterprise: has it lost its way?

The role of a retired person is no longer to possess one. Simone de Beauvoir

I have been thinking about retiring but with the above quote in mind, I do not want to lose my ‘role’ in society.  I recognise that my role will change and, perhaps because of this, I have been reflecting on the changes that have happened within the social and community enterprise sector – an area I have worked in since 1988.  The essence of this ‘area’ is how organisations can trade in goods and service to maximise social and community benefit.

Mulling over the progress made by the sector in the last 30 years has got me wondering whether or not the world of social enterprise has lost its way.

Since the 1980s when I first started to work with community-owned businesses in Scotland, there have been huge and undoubtedly positive developments.  The idea of enterprises and trading businesses having a central social purpose has become much more acceptable – the proverbial person on the top of the No. 33 bus is now more aware of the term ‘social enterprise’.

Furthermore, governments now see the potential of enterprises delivering a care-bound service and are trying to support them with policies, strategies and the offer of funded contracts.  The prevailing infrastructure (sometimes called ‘eco-system’) within social enterprises is more developed than ever before, and encouragingly, more and more young people want to work within, and startup, companies that create a better and fairer society.

Many of the winds of change in the sector have been positive.  So, why am I left with a nagging negative feeling that the social enterprise ‘movement’, if that is what it is, has lost its way? There are three areas that cause concern.

Firstly, there is no widely agreed definition for a social enterprise.  Instead, there are many slightly different definitions – some are loosely defined and ‘broad church’; while others are very specific.

Without a widely acceptable and recognised definition, it is difficult to say what is a social enterprise and what is not.  This means that some private businesses can self-declare themselves as social enterprises while their trading surplus finds its way eventually into the pockets of its owners.  At the same time, there is a push to encourage organisations that are patently charitable and dependent on volunteer work to make money when there is little or no money to be made.

In my view, this lack of a clear definition has hampered the expansion of the social enterprise sector.

In Scotland, there has been an awareness of this problem and many social enterprises and support organisations have signed up to the Voluntary Code which provides a helpful definition. The Code recognises five basic criteria for social enterprise, and in a short appendix, identifies some less ‘defined’ values/behaviours/influences familiar to the social enterprise movement. Although this has helped, the Code is constantly coming under attack from those that want ‘social enterprise’ to include a wider range of companies – many of which are patently privately owned.

This tug o’ war over definitions is really a political battle – with those on the ‘right’ pushing for privatisation of services, and those on the ‘left’ wanting to retain the benefits from trading entirely for the wider social good.

Secondly, there is an issue about whether or not a social enterprise exists to primarily benefit the individual or the community.

Over the last 40 years or so, there has been a switch in thinking in society in a collective way where there is a concern for the common good, to one where the individual is paramount.  This focus on the individual is so pervasive that it is often considered it to be the norm.  It manifests itself in everything from commercial marketing with a focus on the individual needs of consumers, to psychological profiling of individual persons.

Society is now increasingly more structured these days on the individual and less on the relationships between people.

Mutuality, reciprocal working and looking out for the less fortunate has not disappeared – but it has been given less importance.  We are a society more obsessed with the Self; and less with the Group.

Thirdly, there is a danger that the social enterprise sector is losing its purpose and overall essence.  I think there are three sub-areas of concern here, namely:

  • adoption of neo-liberal economics: Funding is no longer trustingly given to organisations in the third sector.  They have to compete for it causing divisions between similar organisations which due to their often, precarious financial existence should be collaborating and working together for the common good. Added to this is an expectation that growing an organisation is the only way to survive – biggest is best.  This is often not the case as smaller, locally based organisations with strong collective bonds are often more effective as they understand, and work within, the local context.

 

  • overemphasis on management: In the 1980s there was a root and branch re-organisation of the public sector with the introduction of overt marketisation. This encouraged an emphasis on management, reflected in ambitious workers doing MBAs and learning how to manage departments and, indeed, voluntary organisations. The methods of traditional business were swallowed wholesale and not sufficiently adapted to the delivery of social needs. These days it has become entirely acceptable that numbers and finance became the currency of tracking qualitative social change.

 

  • focussing too much on ‘innovative’ technology: This is a tricky one as the technology itself is not a concern – but rather it is how it is applied. Computers have had a huge influence on how we work and how we organise what we do.  There has been, in my view, too much focus on how we deliver what we do and not enough emphasis on why we are doing it.  In effect, there is a danger that the technology dictates the delivery and our sense of caring is subsumed in overly concentrating on method.

I am not sure if I have any answers to any of these concerns about the future direction of social enterprise.

Social and community enterprises can try and keep a grip on what they do by building into their structure time for reflection.  Social Accounting and Audit (SAA) is an integral way of keeping track on what an organisation is doing, how it is doing what it does, who it works with, and most importantly why it is doing what it does.  SAA is not complex.  It is a process which reports on the approach of an organisation, its values and procedures, as well as expecting regular reporting on the positive (and negative) change that happens as a result of the organisation’s actions.

It is about being accountable – not just to a funder or to an owner, but to all the key stakeholders.  It is about helping to hold on to the essence of what they are as a social or community enterprise – and to keep focussed and not drift from their core mission.

Returning to the original quote at the start of this blog.  I think at every age we should build in time for reflection on what has worked and what has not.  The term ‘social enterprise’ is often overused, becoming more diluted and in danger of becoming a meaningless term. The social enterprise ‘movement’, behind the term, is, I think, beginning to lose its way.

But we still have time to address this… well, you do!   I am off to retire.

Alan Kay – Social Audit Network (SAN)
www.socialauditnetwork.org.uk

Social Impact and Inequality

“As long as poverty, injustice and gross inequality persist in our
world, 
none of us can truly rest.” 
Nelson Mandela

Inequality is a difficult topic to understand and tackle but it seems to be increasing in a relative sense and surely has to be addressed by all those working for a fairer society – that includes those pushing for a wider and more effective social economy.

According to the OECD, the average income of the richest 10% of the population is about nine times that of the poorest 10% across the OECD, up from seven times 25 years ago. (OECD).

There has always been income inequality but as the world becomes more and more interconnected, the divisions between those that ‘have’ and those that ‘have-not’ is increasingly widening.  And this has a knock-on effect where the disparities in income translate into disparities in wealth – raising the question, who owns our world?

Continue reading Social Impact and Inequality

Resurrecting a positive role for the much-maligned notion of ‘social capital’

‘Social capital describes the networks together with shared norms, values and understandings that facilitate cooperation within or among groups’ (OECD, 2001)

I want to put out a call for the rehabilitation of what we understand by ‘social capital’.

Recent criticism of the essential concept of social capital has caused people to cast it aside – considering it a redundant approach.  Several influential academics on the left of the political spectrum have written books and articles criticising social capital. Their criticism became particularly virulent at a time when the World Bank formed a social capital strategy in their assistance to developing countries.

In short, the main thrust of the criticism was that the notion of social capital was being used as a substitute for not materially helping populations.  Communities were being told that…we know you are poor, downtrodden and disadvantaged but you have ‘social capital’ and you should be using that more.

Continue reading Resurrecting a positive role for the much-maligned notion of ‘social capital’

Social impact and the argument against unqualified ‘growth’

In connection with business and the economy, we hear a lot about ‘growth’.

Economists argue that the economy has to grow year on year.  Investors claim that businesses have to continually grow as the alternative is for them to stagnate and get overtaken in an increasingly competitive market.  Even social enterprises are being pressed into ‘growing their business’ – usually in business terms such as increasing turnover, improving profits, increasing staff and, generally, expanding market share.  It would appear that the winners in the pervading and traditional economy are the enterprises that are growing and, if you are not growing, you join the losers.

I want to challenge that idea when it is applied to ‘social and community enterprises’.  I shall argue that social economy organisations are different from mainstream businesses as their core ‘business’ is achieving an essentially social or community goal.  Therefore, they should operate differently – making different decisions for different reasons – and ultimately judging their success or failure, not in terms of growth, but in terms of positive, qualitative social change.

I suppose what I want to say about ‘growth’ is not particularly new.  Barack Obama has said…

Trade has been a cornerstone of our growth and global development. But we will not be able to sustain this growth if it favors the few and not the many.
[Speech in Berlin, 24 July 2008.]

He was talking fundamentally about sustainability.  Interestingly, this contrasts significantly with Benjamin Franklin one of the Founders of the USA, who several centuries previously, stated…

Without continual growth and progress, such words as improvement, achievement, and success have no meaning.

Indeed, the context was quite different in Franklin’s time and the world was not hurtling towards climate change and potential environmental Armageddon.  Thus, the historical context matters in how we consider concepts such as ‘growth’.

In 2009 Tim Jackson wrote Prosperity Without Growth: the transition to a sustainable economy. The second edition, Prosperity Without Growth: foundations for the economy of tomorrow was published last year (2017).  In it, Jackson sees enterprise as a ‘form of social organisation’ with work representing participation in society where money should be used for the ‘social good’ – reducing inequality and supporting ecological stability.

This appears to me to be very close to what the pioneers in the social enterprise movement talked about.   There has to be an alternative way of looking at the economy which is inextricably linked to notions around creating zero waste through recycling and working towards a more ‘circular economy’.

I know of a number of social and community enterprises that responded to the urge to grow.  They have tended to assess their success in increased turnover, improved surplus or profit, and in recruiting more staff.  These are ways in which a traditional business measures their success and quantifies their achievements.   But what of improving the quality of the social change that happens as a result of what they do?  Is that to be sidelined in the drive for business success?

With community enterprises, in particular, growth can be difficult.  They are community-based, often operating within a particular locality, and with no intention of growing through domination or expanding into other areas.  They are often owned by the community to create community benefit on behalf of that very same community.  They want to get better at what they do and make a difference to local people by working closely with local residents.

The Scottish Government published its Social Enterprise Strategy earlier this year.  I was interested to see that it recognises the wide community-based nature of social enterprise in Scotland – often operating in financially perilous waters.  To its credit, it does not bang on about ‘growth’ and in terms of ‘scaling up’ social enterprises.  It states…

In increasingly competitive and uncertain markets, scale can be a weakness as well as a strength. For social enterprises, it may become increasingly preferable to scale capacity and impact through partnership rather than pursuing an organisational growth strategy. Collaboration, franchising, and replication will all come into sharper focus.

The last sentence of this quote is crucial.  It highlights the need for collaboration – implicitly in place of competition; and the role of looking to replicate practices in another place.

However, there lies a danger in both of these: collaboration is difficult to foster when funding and investment are usually distributed through highly competitive structures.  Similarly, replication is problematic due to varying contexts – what works in one place will not necessarily work in another, or certainly not in the same way.

Within the social economy, I believe, we should be doing enterprise differently and one example of this is that collaboration should be encouraged to replace overt competition.  Admittedly, this is a controversial notion and difficult to achieve but it is central to working together for the common good.

Another area where we should be doing things differently in the disputed arena of ‘social impact’.

Social and community enterprises trade in exchanging goods and services.  They do this to achieve a central aim of improving people’s lives; not adversely harming the environment; in changing behaviours or influencing cultural norms for the betterment and well-being of all.

So how do they know whether or not they are successful?

The Social Audit Network (SAN) has been working in this area of impact and subsequent accountability for a long time.  It believes that social enterprises should report on their social and community achievements on a regular basis.  At the same time, social enterprises should check on their internal aspects or social enterprise credentials.

In summary, these credentials are: being good to their staff and volunteers; being accountable through appropriate governance; not making individuals wealthy at the expense of the wider society; ‘washing their face’ financially; being environmentally responsible, and helping the local economy along…

SAN also believes that social reports should not be used primarily for marketing and that they should be subjected to some form of audit that checks facts and interpretations made in these reports.

Some form of social accounting and audit (SAA) is required urgently by the social enterprise movement.  SAA is an alternative way of doing things – recognising that working towards social change is a different aim, and cannot be measured in financial terms or in terms of business growth.

Social accounting is not about money.  It is, crucially, about how a social or community enterprise can be accountable – and importantly – held to account for what it is trying to do and what it is trying to be, in social, environmental and cultural terms.

In conclusion, I have always believed that in the end, the future of social and community enterprise will come down to how accurately they gauge their success and how they report this differently, but not entirely different, from traditional business.

We have to not only create a new way of seeing the world’s economy (as referenced in Prosperity Without Growth), by getting in place more appropriate mechanisms that suit an alternative way of doing business.  That includes social funding, social management, social accounting, social capital, social enterprise planning and so on…

So, ditch unqualified growth and get busy at doing things differently.  A possible New Year’s resolution?

Alan Kay
Social Audit Network (SAN)
www.socialauditnetwork.org.uk

Are we really creating ‘value’ and how do we know?

I attended two events recently and both got me thinking about the question in the title of this blog.

One was a seminar led by Stephen Osborne which examined the ‘value’ created by public services.  The other was the Social Audit Network (SAN) Annual Gathering.

Stephen Osborne is an esteemed and well-regarded academic at the University of Edinburgh Business School and has written extensively on public services.  He was speaking at Glasgow Caledonian University and three things struck me about his talk and the subsequent discussion.

The first was that delivering services in response to public needs requires a quite different approach from running a business that sells products. Apparently, legislation states that public sector organisations have a duty to respond to ‘need’ in the population. Some discharge this by delivering services, others commission or buy the services from others.

The key point is that the public sector must address ‘need’ which is evidenced in the population rather than creating demand for a service or product. In any case, the delivery of the service should use a ‘different business logic’ which is dependent on the co-operation and trust of citizens.  This working together and collusion is about adding value and positive change for citizens – in terms of meeting the needs, improving people’s quality of life, creating capacity within the community and generally making a better society.

The second was that public service delivery has fundamentally different values and a different end-game in comparison to running an enterprise.   The delivery can use business management methods to improve internal systems, but it is essentially quite a different animal with a different set of values.  This possibly has implications for social and community enterprises that also address social needs – they may need to look at their values as well as their financial bottom line.

The third relates to the discussion following the presentation, where there was a debate on accountability and the need to track, measure and report on whether or not the public service delivery was actually achieving its goals.  The verbal exchanges recognised that tangible and often measurable indicators can be used to explain what has been delivered and to what effect, however, the less tangible, outcomes in terms of happiness, confidence and self-esteem are harder to account for.

Osbourne said that these highly important factors require a more investigative approach and one that often is inevitably more time-consuming and more expensive.  It is interesting, in passing, that many local authorities have not re-instated previously abolished national performance measures – mainly due to cost.  There would seem to be an opportunity to set local and meaningful targets on ‘social impact’ which is happening in Salford and reportedly across Greater Manchester as part of the devolution agreement.

The SAN Gathering was held in Liverpool on 20th October and was in two parts.

The morning looked at the basis of social accounting and audit and a number of case studies were presented which examined things that had worked well and others that were more of a challenge.  There appeared to be a general consensus that regular reporting on the change that happens as a result of what a social or community enterprise does, is a good thing.

The afternoon concentrated on how we can believe what is contained in social reports.

An increasing number of annual social reports are being written by a wide range of organisations – from the small community-based enterprises running lunch clubs to the mega-corporate bodies providing a range of social services – both often under contract to, or at least working alongside, the public sector.  With more and more organisations being contracted to deliver services for citizens in our society – how do we know they are doing a good job?

Looking at unsubstantiated and unverified social reports makes me concerned that self-reporting as advocated by approaches such as social accounting, may descend into purely marketing exercises.  There must be some kind of ‘audit’ of social reporting to ensure faith in, and the rounded integrity of, social reports.

Over many years SAN has worked with social, voluntary and community organisations in developing a ‘social audit process’ where qualified SAN social auditors chair a Panel meeting which is a learning and supportive process as well as providing rigorous and robust scrutiny of an organisation’s social report.

The afternoon session at the Gathering also considered standards for audit processes and in particular, the forthcoming BSI standards for social value assessment reports were mentioned.  This has to be welcomed as a way of ensuring that social organisations are not pedalling ‘fake news’.

A nagging concern, however, is that standards will be created by umbrella bodies without the active involvement of organisations on the ground – things will be done to people and grassroots organisations rather than with them.  In applying national standards across the board, there is a significant danger of turning the ‘social audit’ into yet another tick-box compliance exercise, especially if it is controlled by a national standards institute.

In conclusion, I want to tie these two events together as in my mind there would appear to be common threads.

  • ‘Value’ for society is being created, but as a society, we need to be able to track it and in doing so, we need to see the degree of value created and how to improve on it, thus being as effective as possible.
  • Self-reporting is the only practical way of tracking change created by the expanding plethora of different organisations that soon will be delivering all sorts of public services – either off their own bat or on contract to the public sector.
  • We, the public, need to have faith in the social reports and one way of creating this is to insist on some form of ‘social audit’.
  • Standards have to be established for the ‘social audit’ to ensure a procedural uniformity – but those standards should not be created in a vacuum but in some form of co-creation with social and community organisations. Thus, ensuring that they are understandable, transparent and trustworthy – and perhaps there is an opportunity to recognise the context with local measures.

Finally, there would appear to be a considerable degree of consensus within the public and social sectors on the need for social reporting – not only of the tangible but also the intangible.

There is wide recognition that there has to be some form of check or audit to ensure that reality is reflected in the reporting.

My plea is that in setting social audit standards they are not too complicated but are understandable and accessible (in all its meanings).  Only that way will they become accepted and adopted by all.

Alan Kay – Social Audit Network (SAN) www.socialauditnetwork.org.uk