social enterprise

There are a huge number of routes into social enterprise and many agencies able to help you on the way.

The journey of the social entrepreneur who are individuals who have a passion to solve a social problem is the one most commonly promoted in the media, I used to deal with these great and visionary people when I worked at UnLtd. Some of the big names are people like Tim Smit from the Eden Project and Penny Newman from 15 Foundation and formally of Cafe Direct, but we have amazing social entrepreneurs from Yorkshire too, last year at our awards we had 4 great social entrepreneurs shortlisted. Celia Lowden and Jo Barnes of Care Trust Plus, Sharyn Morley of Fresh Pastures CIC, Simon Hills of North Yorkshire Youth Limited and Morgan Killick of ESP who look after our website and IT.

Public Sector bodies convert to Social Enterprises as part of commissioning processes, sometimes with the public sector body retaining a stake. Some of these expand and provide their services entrepreneurially well beyond the original geography. A good example is Greenwich Leisure which was the old Greenwich Council Leisure Centres and now runs Leisure Centres all over London. Currently there is a lot of exciting talk about converting public sector bodies into social enterprises especially the proposals by Neal Lawson of Compass to convert Royal Mail into a Social Enterprise, his pamphlet can be downloaded here
http://www.compassonline.org.uk/publications/item.asp?d=996

Traditional voluntary and community sector organisations moving into social enterprise is one of the most common routes and provides the sector with a great breadth of organisations. This can take a variety of forms from voluntary sector organisations moving into trading and contracting activity, charities setting up trading arms and spin-off projects. With the economic situation causing many charitable trusts to reduce grants due to the shrinking of share values and the forecasted reduction in public sector spending, this may less be a choice than necessity for many organisations.

However this trend is expanding at pace, for instance I was in West Leeds last week and found a flyer from Bramley Elderly Action who had setup a CIC called UpBEAT delivering variety of trading services including a shop, independent living aids and a gardening service.

Let's not forget the way the granddaddy of all Social Enterprises was setup by the Rochdale Pioneers. They were a group of 28 weavers and Artisans who were forced into poverty by the industrialisation of their craft, they could not afford to buy many common provisions and they decided to band together and open a store based on co-operative principles in 1844. The store grew from strength to strength and although the original society underwent many mergers it is still alive today over 150 years later as one of the societies merged into the Co-operative Group of which I am a proud member. The Rochdale Principles are still worth reading and are:

1. Open membership.
2. Democratic control (one man, one vote).
3. Distribution of surplus in proportion to trade.
4. Payment of limited interest on capital.
5. Political and religious neutrality.
6. Cash trading (no credit extended).
7. Promotion of education

I am going to be writing regular blog entries on issues which I feel are important to the sector and use the SEYH blog as an opportunity for discussion in the sector.

The first entry is something we probably think is basic and take for granted, that is what is a social enterprise and where do the limits lie. Most of us accept the old DTI definition which is posted on the homepage of this website:

“A social enterprise is 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 still leaves a huge amount of room for debate and it is a discussion that infrastructure organisations have all the time.

The 2 major issues are:

Where does the traditional voluntary and community (VCS) sector end and where does social enterprise start and on the other side what is the dividing line between social and private enterprise.

The traditional VCS are always accused of being too grant reliant and that they need to meet a minimum threshold of income generation before they can be recognised. Some people talk about 30% or 50% income generation as a threshold. There is a big push for conversion to social enterprise for VCS organisations with grant funding being squeezed.

I am personally fairly relaxed about traditional VCS organisations re-defining or co-defining themsleves as social enterprise as long as they have an element of income generation and the intention is to increase that element of their organisation.

The private sector has started to develop sister or subsidiary social enterprises through a CIC or social entrepeneurs are setting up traditional private limited companies alongside social enterprise structures. The dividing line is where is profit reinvested, if its dissapearing off to a parent or sister company or there are issues around governance which lack transparency maybe we should define those companies as private sector. Although who polices this is another interesting question. I am not sure that it is SEYH's role to be the social enterprise judiciary!

A number of other questions arise from this including - What are the routes into social enterprise? This will be the subject of my next blogpost so come back next week and check out the next post. We are working on a comments feature for logged in users.

Alex Sobel - General Manager SEYH