Friday, October 13, 2006

Social Enterprise

Well it's been a long hop but finally I'm doing something vaguely computer-based that allows me a few moments on the old blog. One segment of my wonderfully whimsical graduate lifestyle is an internship for the Scottish Green Party and Edinburgh Cyrenians, looking into social enterprise and how charities can make the transition to social enterprise.

For the uninitiated - which I was until most recently - a social enterprise is a company which exists for the benefit of the community and not for its shareholders. By using socially excluded groups as employees or volunteers, SE's exist to benefit the community by their normal operation. It would be wrong to call them 'not-for-profit' because profit making is very much part of their brief, it's just that these profits are reinvested in the SE itself or skimmed off to fund a parent charitable organisation. More exactly SE's exist to maximise what Iain Gordon of Bethany Christian Trust calls a Triple Bottom Line of monetary profit, social improvement and environmental concern.

The profit motive, therefore, is not a guiding aim, but the desire to be self-sufficient ensures some degree of efficiency. Moreover because social enterprises offer their services on the market they cannot expect to guilt trip people into buying their goods just because a homeless person made them. The more successful SEs have realised that their products first of all have to be worthy of the market, ensuring a quality of business practice hitherto anathemaic to the charitable sector. BCT, for example, uses internal markets to monitor and control costs, something, I gather, UK business has adopted only recently.

The beauty of social enterprise exists so that their goals are achieved by their day-to-day operation, appreciating the Marxist idea of the social dimension of work. SEs recognise that the problems of the socially excluded cannot be dealt with by dealing with the presenting symptoms of that exclusion but by dealing with exclusion itself. SEs, often supported by wider charitable activities, allow service users to again become functioning members of a community. This can only be done by participating in the community itself and the forgiving environment of the enterprise allows those with low self-esteem to do this at their own pace.

There is a second aspect that this embrace of the market that is worth mentioning. The business activities of social enterprise mean that service users not only develop self-esteem within a community but do it in relation to mainstream society. Thus, the needs of homeless and mentally ill are not catered for in an idyllic forest getway only to have their new-found inner power crushed at the first sign of a bastard on the street.

It may seem strange to hear FE wax lyrical about the benefit of market mechanisms but I have never doubted the power of markets to relay information, but was dismayed their ability to uproot social structures in the name of allocative effieciency. My problem was that latter is unduly predominant in the world today (oh and the fact that 'market forces' are often a smokescreen for obscene breaches of corporate power - e.g.). Polanyi - who recognised that pre-capitalism, economic actions were subordinated to social ones - described this process as a disembedding of the economy from society. As 'all that is solid melts to air' most people cope, the disadvantaged get hammered. Social enterprise acts as a way to re-embed the economy in society, whilst not losing the benefit that market mechanisms undoubtedly bring. Hopefully that should give my feelings something of a whiff of intellectual consistency.

Of course there are down sides. Being subject to market forces gives SEs an instability not encountered by their charitable brethren. However, because SEs exist for the benefit of those that work for them, there exists a feeling of ownership amongst volunteers and employees that in the words of one 'simply won't allow the organisation to under'. Others may point to the perceived injustice of using volunteers to carry out business activities*. Superficially, this smacks of exploitation, but from what I gather so far, this is mainly due to an unforgiving benefit climate (the New Deal is uttered like a curse round here). One volunteer I spoke to, simply did not want to return to paid work, another said that his voluntary work gave him enough self-satisfaction without a wage. Conservatives may baulk at this lack of self-reliance, but these attitudes should be recognised as an important step in the building of self-respect that allows them to engage in the workplace once more. Evidence of this can be found at BCT where many managers and regular employees are ex-service users.

I'll be writing a little more on SEs over the coming months, filling in detail on legislation and giving a bit more of a view from the ground. In brief, SEs seem an effective approach to coping with social ills, especially once we drop anti-market dogma for its own sake. That they require minimal government intervention should attract people of any stripe

DISCLAIMER: All opinions expressed in this article, whilst perhaps coinciding with those of Edinburgh Cyrenians and the Scottish Green Party, are entirely my own and should not be attributed to these same organisations. Thought I'd better add that in.


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Accidental Economist (Glenn Athey) said...

Interesting work. Good luck.

The big challenge for Social Enterprises is to be financially sustainable without relying on revenue financing - e.g. government grants.

I am not anti Social Enterprise, but there's been a growth in them due to increased government regeneration cash and european cash, and as this total amount is shrinking enormously, I think the social enteprise sector is in for a squeeze.

Another big challenge for Social Enterprises competing for government contracts to deliver services is that the government agency often expects the social enterprise to deliver these services on the cheap, whereas the USP of many social enterprises is that they can get better results, understand client groups and neighbourhoods better, and have closer relationships to individuals than a govt agency can.

I think its important to remember, that like a commercial enterprise, a social enterprise can go bust, see its market change, or merge or acquire. Can't expect the world to stand still, can't expect social enterprises to stand still.

Sometimes I think that all social enterprises think they are entitled to survive, whereas if they are no good I'd rather see them close, and another more successful one arise instead or out of the ashes of the closed one.

PS some very successful social enterprises - e.g. Hackney Community Transport, Greenwich Leisure, The Wise Group.

Is John Lewis Partnership a social enterprise?! please tell me - I shop there.

Matt B said...


Can you change my quote? "Hardly talks about anything at all."

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