Social Enterprise WorkshopWiltshire CouncilJulie HarrisRISE31st January, 2011
Overview RISE – what we are and what we do What is social enterprise Social enterprise in the public sector Social objectives and standards Examples of social enterprises Governance Opportunities and further support
RISE RISE supports the development of sustainable social enterprise Membership BAN Newsletter Projects – marketing, leadership, food, housing, health and social care Business support and Training
The Big Picture Private Sector Third Sector/Civil SectorSocial EconomyMutuals/Co-operatives/Charities Public Sector
Social enterprise in the UK At least 62,000 social enterprises in the UK (SEC, Summer 2009) Represents 5% of all businesses with employees Combined turnover of about £27 billion Previous research (SEU, July 05) found that the South West was the 3rd largest region for social enterprise in the UK
Social Enterprise SW
Around 6,000 social enterprises and growing
Social Enterprise Mark
Examples from local authorities –
Sandwell Community Caring Trust Tone Leisure Pluss Selwood Housing Community Foster Care
What do they do? There are social enterprises working across all sectors of the economy, from healthcare to hospitality, retail to recycling. Some of the most high profile include Fifteen (pictured), Divine Chocolate, The Big Issue and more locally Eden Project If you want to change the world and make a profit while you’re at it, then social enterprise is the smart choice.
Social enterprises – the driving force!
Community-owned assets – the community centre
Social enterprises have 2 primary aims: They trade They apply profits to social purpose
What are they? Some definitions: A business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners (BIS) Businesses that aim not only to make money, but also to have a positive effect on the communities they serve, the people with whom they work and their own employees (Co-active) Social enterprises are businesses that trade in order to pursue a social aim (Business Link)
Explicit social ethical values including a commitment to local capacity building. They are accountable to their members/stakeholders and the wider community for their social, environmental and economic impact
Values Not just to make a profit – having social purpose To make a difference: In the way they are managed, owned and accountable In the way they deliver goods and services In the way they work with their community and stakeholders In the way they do business
Characteristics of a successful social enterprise Gaining independence and autonomy through trading Entrepreneurial, innovative, risk-taking behaviour Flexible and adaptable practices Customer and community focus Stakeholder engagement
What do they do? Offer social or environmental goods and services e.g. recycling or childcare Trading to provide (or cross-subsidise) social or environmental goods or services Trading arms of some charities Use processes or ways of working that have significant social benefit Care workers organise themselves as a co-operative in order to take control of their work environment
Example 1 Carfax Health Enterprise Formed in 2009 through the merger of the Daniel Gooch Practice and Swindon Walk In Centre is a Community Interest Company run by the staff, for the benefit of the patients reinvests profits for the benefit of patients and improving services Works out of the Swindon Health Centre
Example 2Selwood Housing, Trowbridge Founded in 1989 by West Wiltshire District An independent housing association & registered social landlord 5200 properties across Wiltshire & Somerset & 150 staff Selwood was the first housing association in UK to get the SE Mark
Social objectives What would your social objectives be? Share and discuss
Social Enterprise Mark National programme 352 holders (and growing) Marketing www.socialenterprisemark.org.uk
Consumers Demand New Ethical Logo – Research carried out by RISE in 2009 75% would prefer to buy from firms who put their profits back into the community 81% believe a lot of companies pretend to be ethical to sell more products 86% perceive some benefit from the Social Enterprise Mark 74% would rather buy from a company that makes decisions based on concern for society and the environment
Social Enterprise Mark
How are they different? How are social enterprises different from ‘traditional business’? voluntary and community organisations? public sector? Clear focus on social objectives Trading and generating profits – financial, social, environmental
How are they different? Measures of success Traditional business Operates in the interest of the owner or shareholders To make profit A social enterprise has broader measures Profits are invested in social purpose Local good-quality employment Spending money in the local economy Providing an alternative business model
How are they different? Social Enterprise / VCOs & Charities Profit-driven trading Public service, non-trading
Discussion & feedback In small groups discuss these questions Why might you chose social enterprise? What might be the social objectives for your community (however you define it)?
Why choose social enterprise? Founders of social enterprises are motivated by A desire to improve their community Values that motivate partnership working Member involvement Concern for local services
Where do they come from? Local residents are offered a community facility if a sustainable business plan can be written A crèche is becoming large and parents would like to develop to a full-time nursery Local residents in partnership with the local council develop a disused site as business units to improve employment opportunities Community recycling project develops into sustainable business with local employment Voluntary group wishes to expand its activities and become more commercial A group of workers buys a business from their retiring manager
Where do they come from? A community centre offers training and skills development through accredited courses A group of workers creates a co-operative catering business A funded project coming to the end of its funding package wants to continue by charging for services and delivering under contract Regeneration activity has inspired a community to set up a development trust to continue managing community assets Community composting through volunteers has grown and needs to become a community business
Example - COSMIC Providing ICT support and services Turnover £500k, 16 employees > 50% income from trading Membership Focus on rural ICT, skills, employment Digital Inclusion …and now .. leadership
Employment and Skills
Public Sector to Social Enterprise
Where do Social Enterprises fit? Public services – changes to their delivery and support Health and social care Local authority business units Community Land Trusts Probation and offender schemes Free schools Supply chains
Public sector to social enterprise The big issues include: Culture change Business structures Business planning Staff engagement (including trade unions) Accountability (funding bodies - stakeholders) The workforce can be a mix of staff and volunteers
What are barriers for social enterprises working with local authorities? New, small and less experience Higher costs – not cheap alternative (triple bottom line) Lack of understanding of social enterprise model Possible changes to staff contracts Lack of time and resource Size of contract Time investment and opportunity costs - capacity Lack of relationships and ‘dialogue mechanisms’ Mission drift? Protection of intellectual property rights
Forms of social enterprise Community Interest Companies (run by and for a particular community) www.cicregulator.gov.uk Co-operatives (businesses owned and run by a group of people for the benefit of their members) www.coop.co.uk Development Trusts (community based and owned regeneration enterprises) www.dta.org.uk
Forms of social enterprise Social Firms (businesses that have a significant number of employees with a disability) www.socialfirms.co.uk Trading arms of some charities Charitable company with a community business that transfers surplus to the charity Industrial and Provident Societies Credit Unions, community owns shares in a shop or centre
Setting up a social enterprise – the issues Defining your mission and attracting others Agreeing business and social purpose Planning business viability How to handle profits and assets Democracy and accountability
Opportunities and risks What social enterprise opportunities are there for you? What are the risks?
Incorporation A social enterprise is usually an incorporated body (a company) Protects individuals from personal liability Winding up – debt Something going wrong Needs to be seen to be accountable and open Difficulties of engaging people if no safeguards Own legal identity Limits of protection
Forms of Incorporation Private sector company options Company limited by guarantee Company limited by shares (private or public) Social enterprise sector company options Company limited by guarantee Community Interest Company Industrial and Provident Society (IPS) Charitable or not charitable?
Forms of Incorporation One member one vote Clear membership terms supporting the objectives Surplus distribution for social purpose Community assets to be safeguarded (asset lock) Distribution of assets or bonuses evenly among the members (in a co-operative)
Models of social enterprise Co-operatives – IPS Workers own the business – worker co-operatives Co-operative Consortium – self-employed people or other businesses combining in marketing etc Community Business – CIC, Company Ltd by Guarantee Owned and run by a community Representation from the workforce, the locality, other organisations Development Trusts Asset-based development with community ownership Often a range of projects under one umbrella organisation
Sources of start-up capital Membership subscriptions or share capital Start-up grants and loans Borrowing from financial institutions Community Development Finance Leasing and hire purchase Personal funds Fundraising Volunteer labour Asset transfer
Sources of start-up capital Commercial Loan Community Development Finance Institutions: www.cdfa.org.uk Bridges Community Ventures Ltd Charity Bank Cooperative and Community Finance South West Investment Group Triodos Bank Wessex Reinvestment Trust Group
Trading Income Consider: Reinvestment in the social enterprise Keeping adequate reserves Looking beyond grants Making use of tax incentives
Trading income Robust financial management is needed Why?
Communication between board and operational management
Trading income, managing cash flows, reporting on grant targets
A mix of trading income and other income
Impacts on profit/loss, health of the business
Support for social enterprise What support and other resources are already available to you What other support might you need?
Support systems National Mutuals Information – www.mutuals.org.uk Co-operatives UK www.cooperatives-uk.coop Social Firms UK www.socialfirms.co.uk Social Enterprise Coalition www.socialenterprise.org.uk Development Trust Association www.dta.org.uk
Support systems RISE – Business Advisors Network (BAN) Newsletter Business Link Look up your local support organisations. The RISE website gives a list of these in the South West. www.rise-sw.co.uk