A typical question...

Here's a question I received in an e-mail last week:

I'm going to the SE conference in Cardiff next week. On their registration form they have Charities and Social Enterprises listed in different delegate fee categories. I thought that Charities (or more specifically their trading arms) are SEs? Am I easily confused?

I get a lot of questions like this at workshops and seminars, and you can read my own attempt to cut through the definitions confusion here: What's all this about social enterprise?

But this particular asking of the question did make me think a bit harder - because it came from a lady who has worked for years at a high level in social enterprise - actually for one of the employee ownership apex bodies - and who is currently researching her Masters in Ethical & Responsible Tourism.

Do we just have a definitions mess - or is there a bigger tragedy going on here? Have we actually succeeded in taking our wonderfully clear and simple and popular message - that you can do business to do good - and muddying it up so thoroughly that hardly anybody can now understand it?

Social Enterprises and Charities

As many who read Geof's blog will know, I have been meddling in Social Firms, other social enterprises and charities for more than 20 years. I set them up, manage them (or fail to manage them, some would say), and now I spend a lot of time teaching other people about the lack of clarity as to what labels like social enterprise might mean.

On a practical level, I enjoyed running a Social Firm (Reclaim) for a dozen years that was a company limited by guarantee and also a registered charity. Its objects were to create employment for people who were severely disadvantaged in the labour market, and when trade dipped I was able to top up the income through charitable donations.

In the mid 90s, I set up IMBY as a Social Firm Development Agency - again a company limited by guarantee and a registered charity. I used charitable income for ten years to support the objects of the business - employment creation - and when Social Firms were ready to become independent - like Buster's and Viewpoint - I helped them set up as non-charitable companies in their own right.

Now that IMBY (In My Back Yard) has metamorphosed into BROOMBY (Built Right Out of My Back Yard)CIC it is no longer a registered charity, but a share CIC. Has this helped me to achieve the same old objectives I've had for 20 years?

No, it hasn't yet - but it will! I don't have that nice safety cushion of being baled out of trading failure by charity, and I'm struggling. But if I, and the thousands of other people who set up social enterprises, are not able to make business work then we should give up rather than slide into subsidised inefficiency. We should run charities instead, which by definition are governed by people who are not employed in them (what sort of business nonsense is that?)and only pretend to be enterprising in a business sense (not paying living wages to disadvantaged people, for example). There will be good works and a feel good factor in doing this, and plenty of cardboard charity cheques and awards to go for, and no great need to make trading ends meet - but it's not social enterprise.

What I feel I have to do is to run businesses as businesses - the financial bottom line is king - and maintain my prime objectives by showing those who I need to convince - that this is Business Plus. It's the 'Plus' bit that needs funding from outside of the business, because that is the extra cost of meeting social (not charitable) objectives that cannot be passed on to the customer. The end result will be that £1 of support given to a viable Social Firm (a form of social enterprise) will often allow it to achieve greater benefits for a disabled or otherwise disadvantaged individual than £5 given to a charity that keeps the same individual in a day centre or a sheltered workshop or on an earnings disregard payment.

Now it's one thing pontificating about it, and quite another thing doing it! The world out there understands why it should support charity but it doesn't remotely understand the nuance of supporting the Plus bit of business to enable it to achieve social as well as commercial objectives. Until we find a way of making the Business Plus message click with government and the public, then it will be a hard road to fitness for Social Firms and a lot easier to stay flabby in the charity sector. It's not so much a matter of confusion about terminology as a lack of know-how about how to achieve social objectives through running businesses rather than charities.

For my part, I've chosen to make the move from charity to social enterprise and I'm not going back. It's much harder, but it makes social and economic sense to me, and my task is to make it make sense to other people as well. What do you think?

Business Plus

This is a very clear description of the role of social enterprise, I think Business Plus is a very useful term. You are right about the lack of know-how. I, for one, am passionate about charitable work but in need of a lesson or two about achieving that through business. And, like you say, business is hard work. Not the safe option :o)