The School for Social Entrepreneurs

Is there a left-right divide in social enterprise?

The rumbling debate about ECT and its takeover and its CIC status (or lack of, now its recycling arm is privately-owned) has continued over on the Society Guardian's Joe Public blog, with Patrick Butler asking "Does it matter if a social enterprise is bought up by a big corporate?". It's a fair question, and a pretty decent summary of what the ECT Recycling takeover looks like from an 'outsider' point of view.

What's been interesting has been the comments that have followed from 'insiders' such as Craig Deardern-Phillips, Jim Brown and others (I'm SocEnt on there, btw). Beyond the calls for clarity on the detail of the situation, which I echo, it's been interesting to see how have been categorised (in some cases by themselves) as on the left or right of social enterprise. In summary, this seems to mean those who are concerned with community governance / ownership / democratic accountability are on the "left", while those who are (more) comfortable with influencing, partnering and being absorbed by the mainstream are on the "right". In the case of ECT, as this illuminating post by Rod Schwartz highlights, this means it could be viewed either as a cause for jubilation or concern

As Rod (somewhat provocatively!) writes: "Readers of our blog will know that we normally applaud when successful social entrepreneurs sell out"....before going on to state that ECT maybe didn't get as good a price as it could have: "Price is not everything but we cannot help but feel (and did ourselves believe) that ECTR would have been worth more. I do not know if this went to auction or not." Well, it would be nice to think that ECT was looking for a strategic partner to scale up, and that that is how this all came about. But the reality, which Rod hints at in his talk of ECT's bankers "not being very supportive" is that this was more of a short-term solution to an imminent problem. ECT already had a relationship with May Gurney, so to that degree the partnerships were being thought about. But this wasn't a planned auction.

This shareholder vs. stakeholder terrain is too simplistic to divide into left and right, though. Neither stance is easily applied to a political party currently....and social enterprise has always been viewed as being on that centre ground (third way territory) where economic progress meets social justice. What it might instead demonstrate are the different segments along a spectrum from voluntary and charitable through to for-profit. As we go along the spectrum (and as legal structures and investment streams / returns change), different people get more uncomfortable and draw a (personal) line. And people start on that spectrum at different ends (oh, hold on, maybe it is left and right ;0). This is why people like Rod and Nigel Kershaw have berated the CIC for not allowing large enough investment to scale up social enterprise-type organisations, whilst the 'other camp' have pointed to the CIC's lack of rigour around democratic and transparent ownership, and accountability to the community. Or, as one commenter puts it on the Joe Public post:

"I see the immersion of any not-for-private-profit social enterprise into the 'for profit' sector as a surrender to the very set of practices and values which cause ingrained poverty and exclusion in the first place"

Where do we stand? Well, SSE has never backed a "legal structure" as the solution, and believe that all sorts of different organisations (charities, social enterprises, for-profits) can have positive social impact. Our belief is that it is up to the social entrepreneur to choose the 'right' structure for them given their proposed activities, mission, financing, governance and so on. The vast majority choose a non-profit structure (regd. charity / co. ltd by guarantee / CIC etc), but some that have had the greatest social impact have had a for-profit structure. What is definitely needed is a push for all organisations in this field to measure their social impact and communicate and report transparently to their consumers / customers / beneficiaries / community / stakeholders / funders.........regardless of their structure.

A final point is that the ECT story should raise the debate about the fetishisation of scale, and the best (most sustainable and most consistent) routes to achieving that. If it's wanted / right / needed. Because there will be more organisations coming along the ECT route over the coming years.

Heavyweight week

Been quite a week here at SSE. Both London programmes are sharing a joint study session today: John Bird's voice is echoing through the courtyard into our office as I write. And this morning Colin Crooks of Green-Works was the expert witness. Colin's a great guy: he's built such an impressive organisation over the last eight years, and he had some interesting things to say over lunch about franchising (a topic we share!), about diversification, about boards and board management, and about growing office recycling in the years to come. And that was just lunch, so I'm assuming the session with the students was enlightening and informative.

Another thing Colin mentioned over lunch was their new(er) work overseas. In particular, they're doing some extraordinary work in Sierra Leone, where they are basically kitting out a whole town through re-using furniture from the UK: a library, a hospital and 37 schools. Humbling stuff.

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Yesterday we helped facilitate a day for the Social Enterprise Ambassadors which also had some big players in attendance: not only the ambassadors themselves, but also 25 high-ranking civil servants from across different government departments, two ministers (Ed Milband and Phil Hope) and Gus O'Donnell, head of the civil service (as someone said to me, he's taking time out from running the country). So quite a powerful and intimidating group to work with....but it went well. The programme has taken a while to bed down and to get going (though announced last June, the appointments/launch took place in October-time), and everyone's committed to making the most of the next two years.

In some ways, the ambassadors programme reminds me a bit of SSE, in that a group of entrepreneurs are, by their nature, not always the easiest group to lead and facilitate....and the group dynamics can take a while to settle (the old forming-storming-norming-performing stuff), particularly when the group doesn't meet very often, and it's difficult for all to attend each time. So still a bit of forming and storming yesterday (from some) and more norming (from others). And hopefully performing over the coming months. :0)

Ended the day at the Edge Upstarts Awards. Congratulations to all the winners (who will no doubt appear on the website soon) who included Lily Lapenna of MyBnk, Carmel McConnell of Magic Breakfast, and Forth Sector. And now we're off to address our sleep deprivation.............

Thursday round-up: Sunlight, shares, scale, SROI

Quick round-up, as there seems to be lots coming in and lots of interest:

- Peter Holbrook has written a blog post about David Cameron launching the Tory green paper at Sunlight Development Trust, and has some interesting initial thoughts from a practitioner's point of view on its recommendations; more reaction on Bubb's blog (who's on rare form of late), here, and here.

- Paul Miller of School of Everything has written an interesting post about why their organisation is a company limited by shares and how they balance the need for start-up investment (in a silicon valley web2.0 type way) with a social mission at their heart....

- Fall-out from the ECT news continues; apparently the recycling arm is keeping its CIC structure, despite (or as well as?) being taken over by a private sector operator....will be interesting to see how that turns out. In the meantime, here's a piece in New Start about it all; as I mentioned previously, this can be seen as a positive as much as a negative, but I do think that the issue of scale is at the heart of it all

- On which subject (scale), some food for thought: The Fetishization of Scaling Up (Small is beautiful versus Big is essential....and local+local+local = global...) and a magazine/event called De-Growth

- The SROI-UK conference has spawned a network: SROI-UK is chaired by the evaluation legend Jeremy Nicholls, who we'll be doing some work with in mid-June

- DEFRA announced a big £4.6 million deal for the various third sector waste and recycling networks who have come together to form a new organisation, REconomy. Huge kudos to (former SSE Director of Learning) Matthew Thomson for masterminding the deal: word on the street is that the celebrations were substantial.....but well-deserved.

- Interesting article by Matthew Taylor of the RSA on the (independence of the) third sector and the need for accountability and transparency

- How to set up a refugee community organisation; consult this guide?

- And a brief final thought: Word of mouth is not created, it is co-created

Two big stories: ECT takeover + Tory Green paper

BREAKING NEWS. Oh yes. Two big stories, both with a 'green' slant.

The first is that the Tories have just released their green paper on what they would do to/with/for the third sector if they were in government.Launched at Sunlight Development Trust, It's the first salvo in what is intended to be a constructive and consultative dialogue between the party and the sector. I've only just downloaded it and am yet to digest (95 pages over lunch was beyond me), but our friends at Third Sector online have helpfully done so and come up with the 20 headline pledges.

Of particular relevance to this world:

"•    Creating a network of social enterprise zones to provide incentives for social investment in deprived communities

•    Setting up a Social Investment Bank as a wholesaler of 'patient capital' to a wide range of social investment institutions

•    Creating a powerful 'Office for Civil Society' at the heart of government to fight for the interests of charities, social enterprises, co-operatives and community groups"

Looks interesting, pretty well-thought through and pretty sector-friendly, even if a fair bit of it has been announced one way or another in the past. The OCS replacing the OTS would seem to indicate that NCVO's advocacy of 'civil society' as a concept has fallen on receptive ears. More soon after several tube commute reads.

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Second big story is that ECT Group, widely viewed and lauded as one of the leading social enterprises in the movement (and certainly one of the largest) has had the recycling part of its business taken over by May Gurney, a private firm. Their press release includes the following:

"ECT Recycling - part of the ECT Group with 1,100 employees - has been acquired by May Gurney, one of the UK’s most successful maintenance and support services companies and listed on the London stock market (AIM).

First and foremost, it’s ‘business as usual’ at ECT Recycling - the current strong management team will remain in place, led by Stephen Sears, and the focus will remain on delivering service quality for its customers and its customers’ customers – members of the public.

For some time, ECT Recycling had been exploring ways to secure its future and to build upon its successful business formula in delivering municipal waste services to local authorities.

Stephen Sears, who has led the development of ECT since 1980 said: “ECT has been looking for a partner for our recycling and waste management business with a good reputation in the local authority market place and with the commercial muscle to help us to secure bigger contracts. This will allow us to deliver our social and environmental objectives as well as the financial results that are essential to continued success." 

Which leaves the ECT Group back to its original core business: the CT of community transport, having sold its various other businesses (railways, health care etc.). A few questions fall out of this, of course. Not least that ECT Recycling was a CIC, so is this the first CIC to be taken over? (and how does that work re. asset lock etc.?) Is this a strategic move separating out the two businesses, or in response to more fundamental problems? And if ECT generally needed to find a bigger partner (with "more commercial muscle") to secure bigger contracts, what does that mean for procurement/commissioning for all the other third sector / social enterprises out there? (many of whom are significantly smaller).

New Start magazine rang me this morning to comment, and I kept it largely generic (because I don't know enough about ECT's business / governance etc; see q's above) but did say that we shouldn't overreact as a sector or movement. More of this will happen over the coming years, hopefully in both directions, as mainstream business is influenced as well as threatened by ethical and mission-led competitors.

Research engine

Increasingly in my role here at SSE I am tracking bits of research and policy that are flowing from different outfits and areas (and countries). And, while I haven't had much time to pore over them of late, here are a couple that I thought were of particular interest:

- The Social Intrapreneur: A Field Guide for Corporate Changemakers (pdf at end of article); It's from Sustainability, whose stuff is usually leaning towards the corporate / US / big business version of social entrepreneurship, and I guess this report is a logical extension of this. Their stuff is always very good and thought-provoking though, so this makes it worth a read. We've often played round with the idea of social intrapreneurship here, although as much in a 'large non-profit' as a multinational....but, either way, entrepreneurial individuals within organisations setting up new initiatives and projects for social benefit. Different challenges to starting from scratch, different benefits....but also much that is shared. An area to revisit, I think.

- Hitting the Target, Missing the Point: How government regeneration targets fail deprived areas is from the New Economics Foundation, and seems incredibly timely to me. Indeed, no sooner had I written something like "DCLG should aim to learn from previous / current regeneration initiatives such as LEGI" in a policy document than this lands in my inbox. Looks very interesting, particularly as it is rooted in practical work in the St Helens area (which has LEGI money: the Local Enterprise Growth Initiative).

I've yet to read it in full, but the general message seems to be that concentrating on outputs like job nos., enterprises started etc doesn't capture the full benefits of such initiatives. It's not a surprise to hear NEF calling for more sophisticated, thought-through measurement...but this one could have a big influence at at time when DCLG is looking at its regeneration objectives and infrastructure closely. Certainly, SSE has found that its outcomes and impact range far and wide: yes, jobs created, organisations established...but also increased political engagement, decreased isolation, greater community cohesion, improved relationships (!) etc.....

Blair to be Third Sector envoy

Third Sector have reported that Tony Blair is to take on a more troublesome and problematic conflict than the Middle East: that between ACEVO, NCVO and DSC. Acting primarily as an intermediary between disputing factions, Blair will use his substantial experience...

...oh, ok, April Fool etc. Good effort from Third Sector, though. Up till "I feel the hand of Stuart Etherington on my shoulder", they almost had me... :0)

Kids Company: Sex Pistols or the Clash?

Last summer, maverick Kids Company founder Camilla Batmanghelidjh launched a media campaign to achieve further government funding for her organisation. My post at the time ended with the words "Ultimately, we'll see how it turns out; I'd imagine they will get another 3-year government funding package, particularly given their work hits one of the key priorities....But I wonder if the long-term effects of this move might not be wholly positive".

Sure enough, last week it was announced that Kids Company was going to receive £12m over the next three years; one organisation amongst five sharing £27m (44% to Kids Co.). Which is no doubt good news for Kids Co and the other four organisations (if not the other 85 who submitted an expression of interest), and signals a real investment in delivering appropriate services to young people across the board. (It also means that Camilla's threat to strip in Parliament won't happen).The reason I'd written that "the long-term effects might not be positive" was because I felt that this was not a sustainable way of working for the sector: as someone put it at the time, should we all enlist Max Clifford, rather than fill out applications?

Interestingly, Craig Dearden-Phillips of Speaking Up (one of the other funded organisations) has written a blog post which reflects what I imagine to be a wider view from the youth sector: it's titled "Why Kids Company Excite Me....But Scare Me Too", and gives a real insight into those views, so I'm going to quote a couple of chunks of it:

"While part of me rejoices at an exceptional character like Camilla facing down Government, part of me is a bit unsettled by it too. Should a talent for PR and platinum inside-connections get you this quite this much money? A lot of people are privately spitting feathers. Yeah, sure, some are jealous but others just feel this kind of largesse to a small organisation serving a few hundred kids across a few postcodes to be grossly unfair. And they do have a point: How, I wonder, does a community group on a council estate in Hull closing its doors in April feel when they see Camilla playing the government (and, indeed, the HM Opposition) like a salmon?"

Craig goes on to tackle their approach to impact measurement, replication, funding and, of course (and related to all of these), founder syndrome:

"My final point is about how KC needs to redefine the role of Camilla. KC is the creation of its brilliant founder who has unbounded commitment and energy. To get out of the starting-blocks, the drive and hands-on approach of someone like her is absolutely necessary. Beyond a particular point, however, it is damaging. Once out of the baby phase, leadership needs to be shared-out, the entrepreneur needs to step into an outward-facing role and the `grown ups' need to be allowed to get on with the serious business of running an operationally and financially sound organisation. Believe me on this point because I have got form! As a Recovering Founder, I know the pitfalls of `Founderism’. From the bits I have heard from people who have been at KC in the past, the organisation shows all the signs of Chronic Founderism. If KC is to grow and help more kids in more places, Camilla needs to start a Twelve Step Programme for Founders - now. I can recommend a good one…"

I won't add much to that, as I think it speaks strongly enough. We will see what happens in three years' time and whether, as Craig puts it in his conclusion, Kids Company "do a Sex Pistols - and crash and burn in a self-indulgent heap. Or, like the Clash, evolve into something incredibly special and lasting".

Superheroes and celebritisation

Have wanted to respond a bit more fully to the article in the Guardian about Social entrepreneurs are not superheroes, written by Rob Greenland....who's been doing some really great posts of late.Essentially, Rob's take is that using case studies to explain the effect of social entrepreneurs has a potential downside, namely that they can become almost comic-strip like in their portrayal of an 'ideal', rather than a reality. This is reinforced by the consistent use of a few big hitters by politicians, which often bear little resemblance to the vast majority of the movement. To quote the concluding paragraph from the piece:

"Away from the glamour at the top end of the market, there are loads of organisations that are working hard at changing internal cultures, working with customers to encourage them to pay for services, and battling with the public sector to get it to match its new-found enthusiasm for social enterprise with an acceptance that someone somewhere still has to pay for social benefits to be delivered. And many of these hardworking organisations, like me, are starting to get a bit distracted by some of the more exuberant cheerleading on the touchline."

You can read Rob's original post on his blog here, which also attracted a great number of comments. One expands on Rob's theme to talk about the 'celebritisation' of the sector, and its increasing corporatisation.

I find myself agreeing with large swathes of this. I don't want to repeat myself too much, so will refer to some previous posts that intersect with this subject as I go:

- The myth and truth of the heroic individual; see also here. Basically, our take is that successful social entrepreneurs create networks, build movements, inspire communities (and involve and engage them), establish teams and so forth: there are no superheroes who do it alone, and most social entrepreneurs you speak to will always emphasise their team and the many people who help(ed) make it happen.

But (and this is one thing I'm taking from Andrew Mawson's book, review to follow), individuals do drive and lead change. Someone brings the group together, someone has the casting vote at the meeting, someone keeps things ticking over, and someone initiates things. There are risks in promoting individuals as the solution, but there are equally risks in endless committees, muddled partnerships, well-meaning talking shops and so forth.

The celebritisation point is an interesting one. I did a post a while back about recognition and celebrating success where I said that

"Recognition and celebration are key for raising social entrepreneurs' confidence, their credibility as a leader of an effective organisation, and an understanding of their own value (and the value of their work). When this is recognised at our Fellowship events by politicians and stakeholders, by the praise of funders or investors, or by their own peers, the effects are substantial."

I think this is true, and I also think there is a need for aspiration (the Tim Smit big vision stuff). But there are some risks associated, it is true, with the VIP / celebrity social entrepreneur approach; namely, that a small, elite group of people get profile, support, resources, networks access and so on, but the vast majority don't. This is something I've explicitly criticised Ashoka for in the past, for example, in that their "everyone a changemaker" rhetoric is not always mirrored in their selection of a few hand-picked already-successful social entrepreneurs creating huge change that many cannot even think of attempting. Core to the SSE methodology, for example, are relevant role models who provide inspiration and information, not unattainable vision. Often in our recruitment, we have to puncture myths about what a social entrepreneur is (people will often say "that couldn't be me" until an example that hits home is put in front of them) to reach and engage those at the grassroots.

So why are we involved in things like the Social Enterprise Ambassadors programme, and the interviews for the first UK Ashoka Fellows? (to be announced end of March). It comes back to the long tail of social entrepreneurship argument: that we need to support and multiply the opportunities for social entrepreneurship at a local level to multiply the impact across a wide range of communities. But if we want those people to enter into the movement / sector, we need what are called 'familiar points of entry'. In social entrepreneurship terms, this is your Tim Smit or your Muhammad Yunus: people know the thing exists because of the big examples. It gives them a context and an initial understanding. The head needs the tail and the tail needs the head.

The second thing is that, through our involvement, we can widen the pool of people getting access to these opportunities. Gill Coupland, Ken Orchard, Saeeda Ahmed, Jean Jarvis, Trisha Lee, Kresse Wesling, Sam Conniff and so on: the Ambassadors group includes familiar names, but also many like these whom were little (or less well) known and run smaller, more local/regional enterprises. (Indeed, Rob  works with Gill in Leeds). Similarly, though the Ashoka Fellows will include at least one very familiar name, I would guess that people would be hard pushed to pick the other three (and none of the four are ambassadors, either). And that must be healthy: more examples reflecting the diversity of the movement, and how it delivers social change at all levels, and in manifold different ways.

Finally, the corporate side of things does carry risks. I worry when politicians talk of the 'independent sector' (which groups the third and private sectors) for public service delivery, and worry about the emphasis on scale of organisations, rather than movements and ideas (see the long tail piece again). But again we shouldn't dismiss all corporate involvement; this is a spectrum that runs from unconstituted voluntary groups through to for-profit businesses with strong social/environmental objectives. Should we be intoxicated by business and see it as the answer to the inefficiencies and lack of impact of this sector? No. Should we close off and learn nothing from them (and vice versa)? Also no, in my opinion. And people should judge organisations by their transparency, the quality of what they do, their stated governance and so forth.

As I wrote in a recent response to an article, "Social entrepreneurship should not be construed as something "exclusive", or something imposed. Indeed, it should provide an opportunity for people from all backgrounds in all areas to contribute to a wider change." This continues to underpin our work, our approach to franchising (to avoid London-centricity, amongst other reasons) and, most importantly, the programmes we deliver to social entrepreneurs. It's important to be reminded by Rob and others about this, to be challenged, and to keep it real, because we don't always get the balance right.

Continuity and VOICE 08

Having lectured the ambassadors recently about the need for continuity in blogging, this blog has been largely dormant for a week. Mostly because this blog has been hotfooting it around (Cumbria, Belfast, Cornwall and, today, Liverpool) and is therefore succeeding only in collecting information and not filtering it into digestible form.

Today we're off to Voice - will try and blog whilst there, or afterwards.....looks like it could be good. What with our Liverpool SSE in an inspirational igloo and all.

Intern-ment

Whilst reading about Derek Conway and the other MPs paying their own family for internships and work experience (even the Third Sector got briefly drawn in), I got thinking about how this related to the use of interns by third sector organisations, particularly in the fields of policy and research. As regular readers of this blog will know, SSE recently had an intern over from St Olaf College in Minnesota, which was pretty much an unqualified success. Using volunteers in this way can clearly make a substantial difference to an organisation like SSE whose capacity is still relatively small, if growing. And (I think) it can be a genuine win-win, with significant personal development, learning and contacts/networks for the intern in question.

The problem, which we have debated a fair bit internally, is how to ensure that this doesn’t run counter to our other principles: namely, the need for diversity in the third sector, the need for entrants and new leaders to come up from the grassroots as well as from the 'grad-routes'. For, inevitably, for someone to take a full-time three-month position at an organisation in (usually) London, unpaid with (possibly) some expenses, they have to have support from elsewhere. This is usually parental, either in the form of direct monetary support, or in the form of free rent & board. Or they are in university full-time and can afford not to work during some of their holidays. Generally (and this is a generalisation), these means of support skew the potential intake to those with a more privileged or well-off background.

So how can we ensure internships go to a real cross-section, to the best people regardless of background? Clearly, bursaries and sponsorship is one way: some universities arrange placements and support expenses, such as identifying cheaper accommodation or directly paying expenses. In Thor’s case, this meant that he could afford to not do his restaurant manager job for a month in the holidays, and come to SSE.

But how to also extend these opportunities further out? Our neighbours Operation Black Vote recently won an award for an interesting shadowing scheme which focuses on political internships / work experience, precisely to avoid the old-boy networks we see continuing in those establishments;  these might provide a useful model; or something along the lines of this scheme, Leaders Together. Maybe there is a case for something similar in the third sector: funded internships that take the burden off the organisation and the individual to find the money to make it possible, and allow for a broader, more diverse intern network. Happy to hear of any such initiatives or ideas: there could be a social enterprise in this....