Due Diligence of Social Enterprises

Our Journey working with the SE Sector

Andy Hobart, MD Wates Living Space

Who are Wates Living Space

• One of largest family owned construction & services company

• Key Service provider in the Affordable Housing Market o More Homes; Better Homes; Energy

• Turnover of around £400m • National Footprint • Reshaping Tomorrows Communities at heart of our

strategy

Wates Journey working with SEs

Our Vision Every Wates

project to employ one SE

Initiative presented by Young

Talent

SE Strategy developed

and launched

£3m traded with SEs

Partnership with SEUK

Launch of Social

Enterprise Brokerage

November 2011

March 2012

January 2013

June 2013

September 2013

Winner of Buy Social

Award

November 2013

March 2014

£4.4m traded with

SE’s

Benefits of working with SEs

COMMERCIAL

• Supports our work winning and demonstrates commitment to the Social Value Act

• Creates differentiation and an ability to sell the difference

• Boosts reputation and brand

• Reinforces the Wates CR Commitments

• Allows Wates to align its community activities with key clients

SOCIAL

• Fits with Wates’ values

• Provides staff to transfer skills and expertise

• Clear social value to the local communities through employment & training opportunities

• Demonstrates commitment to SMEs & also local procurement

Our Engagement

PRO BONO & SUPPORT Support to SEs through

Wates leadership programmes

CAPACITY BUILDING SEs

THROUGH WATES GIVING

INFLUENCE, OR PARTNER WITH

CLIENTS TO USE SEs Housing clients in

particular are keen on involving SEs

EMPLOY SEs AS SUPPLIERS

Using the Social Enterprise Brokerage

Our Success

Over £4m

Over 200 Part Time Jobs

Over £250,000

30 plus

Traded with social enterprises since 2012 Predominantly in service provision

Repeat Social Enterprises we use in our business

Created through our trading. SEUK estimate for every £25,000 traded – 1 part time position is created

Given by Wates Giving to Social Enterprises for capacity building

Our Success

Improving our success further

Simple one stop shop for sourcing Social Enterprise suppliers

The Benefits

Developed in partnership with SEUK

Simple & Easy to Use Database

All the SEs listed are approved to work with us

National coverage

Finder service provided by SEUK

Social Enterprise Brokerage

What we have learnt

• COMPETITIVENESS Social Enterprises must be competitive

• LOCAL V NATIONAL Flexible offers which suit different needs / businesses

• MARKETING Sourcing SEs should be really simple. It’s a big challenge for us!

• PROCUREMENT REQUIREMENTS SEs must still deliver against our

validation systems

• OPPORTUNITIES EXIST The private sector is open for business and more

companies recognise the value of trading with SEs.

• PARTNERSHIPS Key to success! Without SEUK we would not have achieved

our aspirations

Our Vision

An SE of our own in partnership or consortium with others?

Some SEs with scale support

Wates nationally, or regionally on multiple sites

Wates identify

Community mini-projects

and involve SEs

One SE Supplier on every project

T I M E

Working with

Social Enterprise and Housing Conference and Exhibition

26th March 2014

David Leeves Assistant Director – Employment & Partnerships

Tel: 020 8821 4493

Mob: 07825 853 892

Email: dleeves@onehousinggroup.co.uk

S5. Due Diligence and Social Enterprise

Do they deliver – how can we tell?

Scope of the session

Brief overview of due diligence process

• basic checklist

Application to this work area

• proportionality and practicality

Lessons learned

• Experience to date

Who we are - context

One Housing Group

• Established in 2007 following 3-way merger

• Nearly 16000 homes across 26 London

Boroughs and surrounding counties

• 7000 homes in development programme (2019)

• Own and manage Arlington in Camden as a

mixed use facility with 6 social enterprises,

training & conference centre

Where we work

Arlington – 220 Arlington Road, Camden

• Opened in 1905 - a long and rich history as a homeless hostel

• Transformed by OHG into mixed use facility 2010

• 95 bed spaces for homeless

• 34 rented apartments

• Training facilities & offices

• Conference centre for 250

• 6 social enterprise partners offering catering, construction, media, cleaning and arts programmes

Due diligence: Q. Is it appropriate?

• Use of corporate sector process and language with the purpose of understanding

• Full picture = no surprises

• Understanding commercial activities – financial – legal

• Why do these principles apply to working with Social Enterprises?

• Structure to the process

• Risk management

• Cost control

• Performance management

• Customer service

• Reputation

A. …yes

Basic SE DD checklist

• How is it set up?

• Who is behind it?

• How is it funded?

• Who else do they work with?

• What is their social mission?

• Community Interest Company (CIC), Charity, Limited Company?

• What experience do they have? Board members / Directors?

• Charitable funds, donations, contracts, proportions, published accounts, AGM minutes

• Check your networks, known history, ask for / get references. Do they deliver?

• Does it have one? Synergy, what’s their track record, sector knowledge?

Ask obvious questions

Follow up checklist

• Identify

• Verify

• What is their business?

• Specific business with you?

• Watch out…

• Know who you are dealing with

• Where risks are high verify identities

• Appropriate activities and outcomes

• Can they deliver exactly what you want? What is their capacity?

• Take a cautious approach, don’t get carried away, beware of suspicious activities or requests

Keep a sense of proportion

• Assess the risk • £ values – how much would you lose?

• What would the impact be? • Service delivery, customer exposure

• organisational / personal reputation

• Accountability • Customers, Boss, Board, Banks

• Partnership approach • Offering reasonable support, making allowances

depending on scale

• Think long term & making it succeed.

Putting safeguards in place

• Business footing – how can we tell?

• Service Level Agreement, Partnership, Contract • signed documentation, own pro-forma

• Key deliverables and timescales • Outcomes, targets, milestones, payment dates - cash flow

is king.

• Performance management • KPI’s, regular reporting and monitoring, agreeing changes,

communication, clear termination process

• Social Value / SROI • Agree methodology and values, useful dynamic,

added value

Lessons learnt…

• Start with a clear understanding from all parties • Write it down but be flexible…and patient.

• Don’t imagine it’s going to be easy

• Long term relationship – ups / downs – parting of the ways

• Use your business nous and experience

• Mostly well meaning people – but be strong

‘If it looks like a duck…make sure it quacks like a duck.’

Thank you…any questions?

David Leeves Assistant Director – Employment & Partnerships

One Housing Group

Tel: 020 8821 4493

Mob: 07825 853 892

Email: dleeves@onehousinggroup.co.uk