What’s so Social about Social Enterprise?

I’m increasingly unconvinced by the “social enterprise” label as a distinct business model. Of the legal forms of incorporation only one has distinct “social features” (the CIC) but that’s not suitable for everyone. There are certainly many businesses trading for social improvement or with a strong social ethic running through them, just as there are businesses with strong design ethic, or engineering excellence, or any number of coherent passionate shared values.

As a branding mechanism I can see a value in being recognised as a “social enterprise”. It catches a very strong Zeitgeist and clearly flags your tribe, enabling people to make purchasing decisions.

Anyhow, on with the day. This was part of the ESRC‘s Festival of Science.

Session 1

The first session was with Katie Alcott (Frank Water), a great example of a social enterprise, and based in Bristol. It was refreshing that despite the obvious social aims and largely philanthropic ambitions, Katie had been quite level headed in starting Frank. She’d pulled together a team of 5 to launch the product, identified different legal forms of incorporation and decided that a trading company was the best way to achieve her aims.

Unfortunately there was still a bit of confusion between a Limited Company and Social Enterprise. Katie seemed to be suggesting that they were somehow different, when its actually down to the purpose and operation of the business. There are specific legal forms of incorporation that you can use (such as the CIC which was talked about in the break out session) but Frank are a Ltd with a Charitable arm.

What set them apart was their ethic and business focus. The main alternative Katie and Tom looked at was a charity but felt that this was akin to “begging” for money. Yes everyone got a warm fuzzy feeling at helping the less well off, but it wasn’t as sustainable as a business receiving revenue for a valued product or service.

Having launched the business, Katie has demonstrated very acute business development initative with their 1:200 campaign (something the other bottle water companies are following, always a good sign). They obviously have a good sense of marketing, a great design, a solid and building a tribe of followers, and are increasingly delivering the social change projects Katie wanted to.

Break Out

The break out session was to discuss what a Social Enterprise was. There isn’t a ‘template’ presented to us, we were given some examples from the Ashoka Foundation and asked to consider them. We felt that there had to be a business, rather than a charity or volunteer group, and that the principle purpose had to be some social benefit. But beyond that we struggled to come up with a binding definition, which was a recurring theme.

Session 2

The second sessions tried to ask “How do we know, as consumers & citizens, that we a dealing with a social enterprise?” and was led by June Burrough (Pierian Centre). June was very proud of her Social Enterprise Mark as it represented a line in the sand, a recognition but didn’t require her to change what she was doing. The Pierian Centre provide training & conference space in the middle of St Pauls. When she set up the centre, June was advised to take St Pauls off her address as “no on would go there for training”.

That was just buying into the prevailing social attitudes to the St Pauls area. June stuck to her guns and now has a thriving centre with executive training, homoeopathy and counselling (and a whole load more) all making use of her building. A large part of the social in her enterprise is the use of local providers for catering, training, etc. She also runs a sliding price scale so that those will less resource to pay make a smaller contribution.

The Centre is set up as a CIC so that the assets (the Grade 1 listed building) are returned to the community should the company cease trading.

Break Out

We came up with a long list of things you might want to know about in deciding if the company you were dealing with was a ‘social enteprise’ but were hampered by know really knowing enough about the Social Enterprise Mark. It also became clear that while some companies (like Frank Water) are happy to have their photos on the web and to be very ‘out there’, some other very valid social enterprises were less comfortable with that.

Session 3

Last up was Sam Robinson (eaga) asking about “What might we want to know about the human side of the benefits & changes that social enterprise promises to bring?”. eaga is quite an interesting business story outside any social enterprise context. Set up to disburse Government grants to improve home heating efficiency they quickly grew to be a large business, set up as a partnership (a la John Lewis Partnership) then floated retaining a controlling share within the Partnership Trust. With over 4,000 employees across half a dozen countries they’re not your usual little social.

It might have been Sam’s title (CSR Manager) that struck a slight discord but to me it was the disconnect between the core purpose of eaga, managing grants and installing energy efficiency systems, and the social aspects being discussed which were mainly in the sub-continent and around sanitation and education.

The far stronger story was the simple operation of eaga in efficiently using Government funds to implement energy efficiency and heating insulation in the less well of parts of the UK.

Sam acknowledged that they were using their muscle to encourage their supply chain to be more charitable. He also recognised the challeneges of just being a ‘CSR Ticket’ and integrating social enterprise into ethic of business. Whether you can do that as a plc I’m not sure. Interestingly they floated in June 2007 at a share price of 227.75 and steadily fell to 94.75 almost exactly a year later, they’re now back up around 130-140. There must be a lot of pressure on the senior management team to make up that loss in value.

Wrap up

There wasn’t really a wrap up session or final discussion. This is clearly an ongoing series of discussions and debates.

The evolving Social Enterprise Mark piloted in the South West by RISE seems like a clear encapsulation of “social enterprise” in an easy to present format that most people will agree with. The challenge will be to communicate this quickly enough, to a large enough audience that it gains currency, without exceeding expectations on what social enterprises can do.