social enterprise

As it was my wife’s birthday the other week we decided to stay away in Merseyside for a few days. As you may imagine, she was delighted to learn that I intended to attend the meeting of Social Enterprise Network Chief Executives in Liverpool...

Spurred on by my ’30 days’ challenge I sought a social enterprise to stay in. I was delighted when I found Port Sunlight Village Trust. The trust runs a model village originally set up by WH Lever, founder of Lever Brothers (now Unilever), for those who worked in factories at Port Sunlight. Managing 250 properties, a museum, hotel, theatre, shop, and a maintenance service, the trust is certainly very impressive. Within the village also lies the Lady Lever Art Gallery, run by Liverpool Museum, containing an amazing collection of items bequeathed by WH Lever.

Our time in the village was spent in a 2 bedroom Victorian cottage, built by an industrial philanthropist whose successor company transferred ownership to a social enterprise. The village itself is architecturally fascinating with a mix of mock Tudor, Flemish and classical English country design. Whilst in the village we made full use of all that it had to offer- both social enterprise like the shop, and privately owned, like the pub!

Staying where we did got me thinking about the juxtaposition between various forms of ‘enterprise’ and enterprise orientation. On the one hand you have the model of running a social enterprise to generate income and bring about a social benefit; and on the other, the model of an individual making huge amounts of money and later in life ploughing previous profits into a trust or foundation- much like Bill Gates has recently done. Both bring about benefit to a community, but we’d, rightly, hesitate and stop short of saying both are the same. The way the social enterprise sector operates does not tend to exploit people or resources, create unfair monopolies or engage in corrupt practices while unfortunately these are charges that can be raised with those who make a large enough income to endow it later in life.

The need that created Port Sunlight Trust is perhaps not as great now as it once was with the state taking care of health care and education. However is this not an ideal social enterprise: decent housing, green space, employment opportunities, and recreational activities, all with a low carbon footprint? I suppose the question now is whether this type of social enterprise can be recreated, and if so, is it likely to be come about through the hard work of the many, or the private wealth of a modern day wealthy industrialist.
Whatever the answer, I’d nonetheless recommend spending time at Port Sunlight Village Trust!

With moves afoot to establish a Social Stock Exchange (SSE), I ask what this means for the social enterprise sector and explains why it may damage the very nature of our being.

The primary purpose of a stock exchange is to facilitate the trading of stocks- namely shares, bonds and derivatives. The markets concerned are: a primary market for Initial Public Offering (IPO); and a secondary market for subsequent trading of stocks.

Social Enterprises already undertake IPOs with notable cases being Traidcraft (of whom I am a shareholder) and the Ethical Property Company both undertake IPO using Brewin Dolphin who also undertake a matched share exchange for those wishing to sell on their shares. The SSE would create a secondary market for social enterprise- facilitating stock trading between investors, it would also look at the impact of those listed through bi-yearly impact reports to track impact as well as value. This, at face value, is of some merit.

The SSE would provide a vehicle for investors to make ethical investments. For instance, at present I invest in the ‘ethical’ fund within my pension- meaning the fund managers invest in the likes of Vodaphone and Barclays. Compared to investing in oil and arms, this investment is ethical. But for someone who is currently spending 30 days purchasing exclusively from social enterprises it is a far cry from what I would define ‘ethical’.  With a SSE pension fund managers would instead be able to easily invest in social enterprises.

There is also potential for a SSE to be of benefit to larger social enterprises. Attracting large scale equity investment can be difficult, doing so requires many hurdles to be cleared: building relationships with potential investors; clearing the Investment Readiness programme; and due diligence. The SSE could potentially remove these hurdles creating a clear path to investment.

However the benefits of a SSE are limited.

We’ve just been through a major economic downturn. Responsible in part is the culture of overly risky short –term investment. Short time success over long term sustainability. The stock market not only enabled that culture, it facilitated it.

 Stock markets encourage potential investors to speculate on the value of a company and its future profits based on whatever information they choose. We have even seen investors speculate to deliberately undervalue the company, otherwise known as ‘short-selling’.

Financial risk aside, the SSE could result in social enterprise changing their primary purpose to pander to private investors. When a reliance on private investors is created, their interests may come before those of the company. What happens when a 75% shareholder states he doesn’t share your mission, vision and values, and passes a resolution destroying the very essence of your being? It’s true you could limit the percentage of shares you sell, though the SSE would be destined to fail if businesses sold only a tiny proportion of their shares.

Whatever happened to a social purpose and triple-bottom-line reporting? Would these things become obsolete in larger social enterprises? Would the SSE itself become a conversion zone- in comes a social enterprise, out goes a private company? There is talk of limitations to stop situations like this taking place but what are their positions in law and how can they be defended.

However a bigger concern is the potential risk of divide amongst the social enterprise sector. The SSE could only really benefit those companies limited by shares. What about the rest of the sector: the co-operatives and companies limited by guarantee? A growing SSE could mark a step-change in social enterprise structures- forcing more to switch to a model limited by shares.

Before we embrace with open arms a SSE we need to have full and informed debate within the sector.

By Alex Sobel.

Reading a short biography of Robert Owen (by Stirling Smith, published by the Co-operative College) recently, a very short passage caught my attention:

‘...at this time great interest in the concept of exclusive trading, that is only shopping with retailers who supported progressive and democratic ideals. The chartists were particularly keen on this idea.’

This struck me as a great idea and one which could increase our own knowaledge of the sector; the products we buy; and consumerism in general. Could it catch on? Would it not need a more defined statement than simply ‘retailers who supported progressive and democratic ideals’?  Perhaps instead: ‘retailers who have social and environment ideals and a form of social ownership’- or in other words-a social enterprise (Marks and Spencer need not apply!).

This idea, forged in the very early days of our movement, is one that may just be about to make a comeback.  Would it be possible in today’s society to purchase exclusively from social enterprises?

This question tempts me to undertake an inverse Super-Size Me, a film in which Documentary Maker Morgan Spurlock just eats McDonald’s food for 30 days. Ian, our Information and Membership Officer, has put a poll together for the site. So here’s the challenge to you:  I need 100 people take part in the poll and if the majority vote ‘yes’ then for a whole month I will try and purchase everything exclusively from social enterprises!

So how will this work? If I need a computer peripheral I could buy it from Airedale Computers; office equipment from Re-Work Furniture; food from the Co-operative Group; clothes at Arkadash. This list goes on. Doesn’t sound too difficult does it...! I will give it a go and blog about the experience, keeping records of goods purchased.

Alex Sobel - General Manager, SEYH.