The Secret Millionaire: Social enterprise in action

As regular readers of my website BusinessZone.co.uk 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.

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.

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 Cafédirect, 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!

Striding out for success

It's always great to discover something new especially when that something is making a real difference. Last night, I was introduced to Striding Out, the community interest company which supports young entrepreneurs.

The organisation has been around for a few years and I really wish I'd discovered them earlier! The people behind it are a truly inspiring bunch, no-one more so than Heather Wilkinson, the founder and managing director. I managed to grab a few words with Heather over a beer at London's new Club4Climate, Britain's first eco-nightclub.

Heather has been involved in social enterprise for eight years so is well qualified for all the services Striding Out provides. She has some interesting views on the sector and unfortunately we didn't get a chance to debate them in depth but it's something I hope to do in the future.

Heather works with many of the UK's social enterprise ambassadors and one of them, Liam Black, who founded Fifteen with Jamie Oliver, gives her a glowing reference: "Passionate. Sharp. Highly professional. We need more like her!" Here, here!

I met a couple of Striding Out's coaches who exude the same energy as the organisation's boss. I come across a lot of business advisors, coaches and mentors in my line of work - both from the public and private sector - but those I met last night appeared so much more committed, so much more passionate and so much more determined to boost enterprise in all its forms. It says something about traditional business support services I think. When entrepreneurs support entrepreneurs, the best results are achieved.

I've got my own ideas for businesses but I was disappointed to spot that at 32 I am too old to use Striding Out's services. Fortunately, Branching Out, a spin off group for us over 30s exists. I'll certainly be taking advantage of that one!

Unrepresented? Become a social entrepreneur

Government and opposition ministers alike continually bark on about supporting unrepresented groups such as women and ethnic minorities in getting involved in enterprise but often their actions don't seem to back up their words. Alistair Darling for instance in his budget earlier this year focused on boosting female entrepreneurship - great - but announced the governnment is investing a paltry £10m to do it. A tiny amount in the scheme of things.

As a result, it seems these unrepresented groups are taking their backs on the authorities' limited efforts and doing it for themselves. Happily, given the subject of this blog, it's social entrepreneurship they are turning to.

New research from the excellent Social Enterprise Coalition shows black, Asian and minority ethnic communities have higher levels of social entrepreneurship than their white companies. In addition, while women are only half as likely as men to be mainstream entrepreneurs, they are equally or more likely than men to be social entrepreneurs, the report revealed.

The findings demonstrate the power of social enterprise and its ability to allow individuals who have struggled to get on the business ladder using traditional methods are able to do so by setting up a company which benefits society.

It is this which ministers should be focusing on. If they really want to promote entrepreneurship among all, boost the way social enterprise is supported and developed. As Jonathan Bland, chief executive of the Social Enterprise Coalition, said: "This data shows the prevalence of social entrepreneurship across the population and re-affirms that social enterprise is a sustainable business model essential not only for positive social change, but for the UK's economy."

A billion reasons to listen

Ok, I know this post is a couple of few months late but good things come to those who wait! Since my last blog, life in my day job running BusinessZone.co.uk has been pretty hectic. We got involved in the Bristol Design Festival and ended up running a hugely successful Dragons' Den-style competition called The Pitch. More about that another time.

In this post I fulfil my promise of outlining my experiences at Good Deals, the UK's first conference focusing on financial investment in social enterprises.

The highlight by far was the keynote address by entrepreneur Sir Tom Hunter. It's not often I'm in the presence of someone who's worth £1.05bn so I made sure I paid attention!

Listening to his speech, I was struck that the 47-year-old Scot doesn't look like someone who's worth an amount of money I can't even imagine; he's wasn't dripping in bling, he didn't ooze arrogance and he wasn't tracked by a string of staff tending to his every need.

That's not saying he's not hugely confident and he must have a strong element of ruthlessness to reach the sort of heights that he has but despite all that his main passion in life is clear; he wants to give his money away.

He is already well on the way to doing it. Among the millions donated through the Hunter Foundation he set up with his wife in 1998 are £6m to Band Aid, £1m to Make Poverty History and £1m to Children in Need.

All very impressive but that's easy to do you may say for a man who founded the Sports Division chain and sold it on for £290m. However, entrepreneurs running businesses of all sizes have a lot to learn from Sir Tom.

He believes that those who make money have a duty to give something back. The words of Vartan Gregorian, president of the Carnegie Corporation of New York and a trustee of the Hunter Foundation, were key in sparking him into action. "If you're lucky enough to amass a great wealth, to die with it is a great waste," he told him.

Philantrophy in some circles is a dirty word - it's seen as the super rich writing cheques which while they benefit the causes are really aimed at boosting the public profile of the donor.
Sir Tom is different. He views his giving like a business transaction.

"Treat every philantrophic investment as you would a business investment", he explains. In business you want a return on investment so why should the same not be true for charitable donations?

If your only contact with a cause, campaign or scheme is handing over a cheque how do you know whether it has done any good? How do you know whether the cash has been used wisely and invested where it should be?

Leverage your money, Sir Tom advises. He explains that he takes the flack if an initiative he sets up fails but if it works, it's up to local authorities to take it on. "We are no substitute to the taxpayer," he proclaims.

Sir Tom also believes that it's vitally important key performance indicators are set for any community giving an entrepreneur undertakes. If it's not working, stop, he stresses; there are plenty of other good places where your money could be going.

Finally, one of the billionaire's biggest bugbears is there is not enough collaboration going on. "In the third sector, there are lots of people doing the same thing. In the traditional business world, if that was happening, we'd consolidate it and make sure everyone who should be is benefiting."

A hugely inspirational speech from an hugely inspirational man. Yes, he can afford to say it, of course he can, but put that out of your mind. There are immense problems in local communities all around the UK that aren't being solved using traditional charitable or public sector techniques.

Entrepreneurs hold the answer by approaching the issues with a business-like attitude. Being ruthless enough to halt projects when they're not working, setting people difficult targets and investing money where it should be invested will go a long way to overcoming society's ills.

So next time you write a cheque for the local church appeal or to fund a Scout group's new minibus, think about how you could actually do more. How could you get involved directly so you know exactly where the money's going and who it's helping. If it's not finance you provide, what about giving your time, your contacts, your experience?

You may not have billions to give away like Sir Tom but if every entrepreneur gave something, the world would certainly be a better place.

Deals that make a difference

I'm off to Good Deals tomorrow. The conference, organised by the Office of the Third Sector in partnership with NESTA, is the first to focus on financial investment in social enterprise. About time too!

Like social entrepreneurs themselves who are using previously unexplored ways to solve social and environmental problems, investors are recognising that they too can make a difference by structuring investment platforms in such a way that society will benefit.

The event features some interesting speakers particularly Sir Tom Hunter, who will be giving the keynote address, and Liam Black, board advisor to Jamie Oliver's Fifteen Foundation and the conference chair. Real life pitches are also planned with social entrepreneurs including Divine Chocolate's Sophie Tranchell set to face the 'dragons' live on stage.

The conference is set to show that the main ambition for thousands of entrepreneurs is not making millions to fund their retirement in the south of France; it's doing good to benefit local, national and global communities.

There have been several high profile social enterprise conferences over recent years which demonstrate the rising interest in the sector. But we need more to show these type of firms are the future of business. Good Deals goes a huge way to putting that right.

I'll post my experiences on the conference later in the week.