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Social enterprise & philanthropy: their role in the new Big Society


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Presentation by Eleanor Shaw to the Institute for Small Business and Entrepreneurship Special Interest Group Debate on the Big Society and Social Entrepreneruship & Philanthropy

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Social enterprise & philanthropy: their role in the new Big Society

  1. 1. Social enterprise &philanthropy: theirrole in the new BigSocietyEleanor ShawResearch team: Jillian Gordon,.Professor Charles Harvey &Professor Mairi Maclean
  2. 2. Big Society?No accepted definition• Give communities more power (planning reforms; transport implications).• Devolution, smaller central government & public sector reform (education, policing, health service).• Social action: from passive to localised, collective citizenship & volunteering.• Support for coops, mutuals, charities & social enterprise: Big Society bank.• Publish government-held data statistics (focus on crime).
  3. 3. Specific focus on encouraging giving & philanthropy.On “empowering millions of public sector workers to become their own boss” (Cameron, 2010)
  4. 4. CriticismsBS is about saving money: budget cuts coupled with focus onvolunteering & incentives based on results.How can the 3rd sector & VCOs contribute more with less?Clash with non-Conservative social & political traditions of 3rd sectororganisation?BS Bank launched in April 2011 with just £60million.Currently only 200 employee-owned organisations.
  5. 5. Observations Entrepreneurs, entrepreneurship & social innovation are largely absent from the BS discourse. In fact surprising little discussion of the role of individuals. Concentration on implications for public & 3rd sectors. English context & implications?
  6. 6. Implications forentrepreneurship &philanthropy Budget cuts Rising public More with less sector unemploymentBig Market Big Government Big SocietyGaps: creativity, individual, community, public sector & social entrepreneurship. Social innovation.From funding to financing & social investment: entrepreneurial philanthropists?
  7. 7. About our research project &implications of this within the context of the Big Society.
  8. 8. ObjectivesDevelop theoretical understanding of contemporary entrepreneurialphilanthropy: motivations; processes (how); where; with what impact (onvarious stakeholders).Critical consideration of the emerging phenomenon of entrepreneurialphilanthropy.Consider the relevance of capital, agency & embeddedness for exploringentrepreneurs’ entry into the field of philanthropy.Analysis of the various forms of capital possessed by 100 entrepreneurialphilanthropists.Contribute to discourse regarding the nature of entrepreneurship.
  9. 9. Why Entrepreneurial Philanthropy? Changing socio-economic & political environments combined with the emergence of a global economy and technological advances may have encouraged emerging (new?) approaches to philanthropy. Growing phenomena of:  high net worth individuals, typically entrepreneurs, engaging in the active re-distribution of their wealth: 1st time ever more money given philanthropically while still alive.  organisations with a strong commitment to CSR are investing in increasingly sophisticated mechanisms & structures to support this commitment & the redistribution of organisational wealth.
  10. 10. Facts about Philanthropy & Giving UK giving amounts to around £16.3 billion per year & stems from 3 key sources: individuals, charities & organisations. Boosted by the contribution of large gifts by wealthy individual donors (typically entrepreneurs). Multiple stakeholders have vested interests in supporting, encouraging and engaging with philanthropy including entrepreneurial philanthropy: charities, third sector, government, (BS), intermediary organisations, wealth
  11. 11. Wealth Creation, Entrepreneurs &PhilanthropyMany contemporary high net worth individuals are entrepreneurs.Studies of wealthy households typically find a “tight relationship between being an‘entrepreneur’ and being rich” (Cagetti and De Nardi, 2006:838).The wealthiest households are more likely to comprise entrepreneurs than employees:over 80% of the top 1% wealthiest households are classified as entrepreneurs.Entrepreneurs tend to be richer than non-entrepreneurs (Cagetti and De Nardi, 2006).69% of the UK’s 100 biggest givers are self made millionaires.Research has shown that the wealthy are more likely than the non-wealthy to becomeentrepreneurs (Quadrini, 2000; Nanda, 2008).
  12. 12. Entrepreneurial Philanthropists & WealthGreater wealth of entrepreneurs is a result of different patterns ofaccumulation & higher levels of savings (Quadrini, 2000; Bradford, 2003;Cagetti and De Nardi, 2006).Lump sum payments, e.g. annual shareholder dividends, are more likely tooccur within entrepreneurial households.Thus, successful entrepreneurs may have access to potentially large lumpsums on a reasonably regular basis.Contemporary high net worth entrepreneurs possess significant amounts ofpersonal wealth; most of which is self made: see Forbes and Sunday TimesRich and Giving Lists.
  13. 13. Nature of (new) Entrepreneurial Philanthropy Involves more than large gifts. Active investment of economic, social, human & symbolic capital for social change. Active redistribution of their wealth. Use of variety of vehicles: foundations, venture funds, pooling of resources. Stipulation of performance indicators (double or triple bottom line?) Identifiable exit strategy (money no longer needed); desire for sustainability. Involves risk taking. ‘Productivity revolution’ in philanthropy: by applying their knowledge and skills from business to create sustainable change within traditionally non profit sectors (Bishop, 2006) Shapes social and government agendas?
  14. 14. Observations on existing researchLargely US based (Schervish)Little empirical UK evidence.Much anecdotal & media interest encouraged by high net worthcelebrities and entrepreneurs with celebrity-like status.Concentration on motivations, influences, typologies & decisionmaking processes have received most attention (Supphellenand Nelson, 2001; Brady et al., 2002 Lloyd, 2004; Gordonforthcoming).
  15. 15. Observations...Recognition of link between families, family firms and entrepreneurialphilanthropy (Lloyd, 2004; Pharaoh, 2009; Breeze, 2009).Little theoretical development or contextualisation of research.Problems with access, samples and methodologies.Few critical considerations: impact on entrepreneur? Impact on socialchange agenda? Impact on recipients, beneficiaries, clients?Very typical of an area at an embryonic stage of academic research.
  16. 16. Research GapsMultiple influences on entrepreneurial giving: wealth accumulation, patterns ofsaving, vast quantities of personal wealth, family, gender, faith & householdinfluences & considerations, wealth advisors etc.Critical consideration of the impact of entrepreneurial philanthropy on:entrepreneurs, social change agendas, social change agents, those in receipt oftheir investment, government policy (domestic & international).Entrepreneurial philanthropists, social entrepreneurs, social enterprises & socialinnovation.Theory development.Robust methodologies to uncover motivations and decision making processes e.g. story interviewing, rep grid.
  17. 17. TheoreticalFrameworkEntrepreneurship Philanthropy Symbolic Entrepreneurial Symbolic Capital Philanthropic Capital Social Capital Social Capital Human/ Economic Human/ Cultural Economic Capital Cultural Capital Capital Capital
  18. 18. Research Phases1. Developing a comprehensive database of secondary information regarding high net worth entrepreneurial philanthropists engaged in entrepreneurial philanthropy 2008-11 having redistributed £1mn min + min personal wealth of £10 million2. Collect detailed data regarding all aspects of their entrepreneurial capital, wealth accumulation and wealth redistribution.3. Analysis of data to explore patterns, clusters, similarities, differences and outliers in entrepreneurial philanthropy in the UK.
  19. 19. 6% inherited wealth; average wealth, High levels £268million institutional 88% men cultural capital Concentration of political & philanthropicRedistribution contacts ; highconcentrated levels of symbolic 39% in young capital serial/portfolio people & entrepreneurs children 59% have philanthropy 10% < 45; vehicle; 16 57% 46- established 65; 23% prior to 2000 65+ (new? evolving?)
  20. 20. Implications Entrepreneurial philanthropists may be able to play a key role in the BS:• Providing social investment• Providing significant human, social & symbolic capital. But, implications of a government-led approach to economic and social prosperity? Desire to shape rather than implement policy. Implications of global agendas for sustainable economic development through social innovation & change?