Thursday, 28 August 2008

The Secret Millionaire: Social enterprise in action

As regular readers of my website will know I've a big fan of business reality television. So much of a fan in fact that I've started a blog on the subject!

The posts so far have been dominated by Dragons' Den, which I love watching although the amount it teaches entrepreneurs about the realities of business is diminishing by the episode as the desire for Simon Cowell-style entertainment takes over.

But one show which entertains as well as teaches is Channel 4's The Secret Millionaire. For those who don't know, each week the programme features a rich entrepreneur who is sent undercover into a deprived area of the UK where he or see interacts with community projects and local people before handing over financial support.

The show has it critics with many find it uncomfortable viewing. I disagree. It's an hugely inspiring show and it demonstrates just how many social entrepreneurs - although many may not call themselves such - exist in the UK.

This week's episode was a case in point. Marketing millionaire Carl Hopkins was sent into the former thriving mining village of Easington which has been in steady decline since its pits closed in the 1980s leaving thousands unemployed and destroying a way of life which had existed for generations.

During his stay, Hopkins met Jimmy Egan and if Jimmy can't be called a social entrepreneur I don't know who can. The former miner bought a piece of land and developed it into a city farm. Encouraging kids off the streets and onto the land to take responsibility for rearing livestock and tending vegetables, he has transformed the area.

Like the very best social entrepreneurs Jimmy has thought out of the box. When his livelihood disappeared after the mines closed he didn't sit back and feel sorry for himself; he got out and did something. And rather than traditional public sector ways, he has taken a business like approach which has worked wonders.

Carl Hopkins, a man who has made millions getting people to buy stuff they don't really need, recognised his business acumen. "This is a man who knows his audience", he said. Exactly.

The UK is full of people like Jimmy but they just don't receive the plaudits like should. Things like The Secret Millionaire and this blog are aimed at putting that right but it's not enough. Embracing and recognising the people in our community who maybe don't even know they're are social entrepreneurs needs to happen. It will benefit us all.

Friday, 8 August 2008

Social enterprise and the Olympics

Well, the Chinese certainly know how to put on a good show. Today's opening ceremony of the 29th Olympic Games in Beijing was spectular as China pulled out all the stops and staged an impressive event. The attention now moves to the sport and after what will no doubt be a memorable 16 days of achievements, the focus will then be on London which will stage the Olympics in 2012. But what role will social enterprises play?

Organisers keep going on about the Olympic legacy but it is vital that social enterprise is a big part of it. Some work is being done as the government has funded a national social enterprise Olympics partnership for 2012 led by Social Enterprise London.

The group has recognised that London has been handed the perfect opportunity to stage the most socially, environmentally and community beneficial Games ever. But it’s not just about busing in some school children to watch the fencing for free or recycling rubbish left behind behind by spectators; it is so much more than that.

London 2012 mustn’t be seen as big business money-making machines like Atlanta 1996 which was dubbed ‘The Coca-Cola Games’. Organisers have pledged to avoid it but as ever the proof will be in the pudding.

Key to the whole thing is the supplier tendering process. I’ve spoken to a lot of experts about what’s involved in securing a contract and many fear it is unfairly weighted in favour of large corporates which will come out the true winners. But it is vital this doesn't put social entrepreneurs off.

The Games give them the opportunity to take social enterprise into the mainstream. The sector suffers from a common misperception that it’s full of grant dependent charitable tree-huggers. But if hundreds, even thousands, of social enterprises can win Olympic contracts and be seen to not only be highly efficient, value for money business operations but also providing social and environmental benefits, than the sector will be hugely boosted.

So how social enterprises get involved?

When I heard Sir Tom Hunter speak earlier this year he said he was disappointed that more social enterprises don’t come together and form partnerships. Ten voices working towards are a cause are so much better than one and the Olympics provides the perfect opportunity to make Sir Tom happy.

Too often, entrepreneurs – even the social ones – are scared of partnering up with what they perceive as competitors but why? Afterall, we’re all in it for the same reasons so why not group together and pitch for a huge contract which on your own you couldn’t fulfil but together you can?

A report by SEL claims that appetite exists among big corporate businesses to collaborate with social enterprises. These firms have the muscle to win the big Olympic deals so social entrepreneurs should be offering their services. Of course, a major motivator for the big boys for going down such a route is making them look good in the eyes of customers but this shouldn’t stop social firms approaching them.

I’ll be following up with the London organisers to find out how many social enterprises have already won Games tenders and will report back. But whatever happens, let’s ensure social enterprise goes for gold and wins it in 2012.

Monday, 4 August 2008

Social enterprise defined

Ask a group of people to define 'social enterprise' and you're likely to get different answers. I've experienced it myself on several ocassions. There's no one definition with social businesses meaning different things to different people.

The problem with that however means some individuals may set up what they call a social enterprise but might not been seen as so by others. Most importantly, investors may get confused which of course is bad for the sector as a whole, while at the same time entrepreneurs running organisations which actually could be classed as social enterprises may not see themselves as such and fail to attract relevant investment.

With all this in mind, I was pleased to spot an attempt at clarity. A report by Venturesome, the social investment fund established by the Charities Aid Foundation, puts forward what it says are three models for social enterprises:

Model 1: Enterprises operating a profit making trading activity that has no direct social impact, but they give some or all of their profit to a charity. Examples: trading subsidiaries of charities like Save The Children’s Christmas card business and companies which promise to give a percentage of their profits to charitable projects such as Belu water.

Model 2: Enterprises operating trading activities that have a direct social impact but manage a trade-off between producing a financial return and social impact. Examples: fair trade businesses like Caf├ędirect, microfinance funds, such as The Grameen Bank. Test question: can you increase the social impact of the firm by decreasing financial returns? If the answer is ‘yes’, then the organisation is a model 2 organisation.

Model 3: Enterprises engaging in a trading activity that has a direct social impact but also generates a financial return in direct correlation to the social impact created. Examples: Windfarms, FareShare 1st, farmers’ markets. Test question: Can you increase the social impact of the firm by decreasing the financial returns? If the answer is ‘no’ then the organisation is a model 3.

Venturesome also calls for a rethink about how social investors chose to invest. Many, it says, are beginning to recognise that economic forces can shape social problems such as market forces, misalignment of price incentives etc. As a result, the report claims, they should use a calculation of risk and reward which is different to purely commercial investors.

As Venturesome says the report should be used to provoke a debate in the sector. The issue wasn't so important a few years ago but with new social enterprises being set up every day as new social entrepreneurs enter the market it is important to nail exactly what they are doing and what they want to achieve.

It should also provoke government ministers into better supporting the sector. In particular, in my view, the Community Interest Company initiative needs to be reviewed. The excellent Nigel Kershaw of Big Issue Invest made a renewed plea this week for the kind of tax breaks enjoyed by traditional investors to be made available to those backing social enterprises. I couldn't agree more. At the same time, the dividend cap on CICs needs to be reviewed because, as I've heard from several social entrepreneurs, it is proving a dis-incentive to investors.

Let the debate begin!