intro to social enterprise
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TRANSCRIPT
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INTRODUCTION TO SOCIAL ENTERPRISE
UDAY THAKKAR & ROBERT FOSTER
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INTRODUCTION
What is Social Enterprise?
No legal definition
Anyone can call themselves a social enterprise – and many do
Organisations that have been practising social enterprise have been around for a long time though the term itself is new
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GENERAL CHARECTERISTICS - 1
Social Enterprises are businesses that trade in order to fulfil social aims
They bring together people and communities for economic development and social gain
There are usually 4 defining characteristics, two of which are controversial
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GENERAL CHARECTERISTICS - 2
Non-controversial
Enterprise oriented
Social aims
Controversial
Social ownership
Restricted profit distribution
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GENERAL CHARECTERISTICS - 3
Enterprise means some form of trading or service delivery
Social aims means profits generated are used for the benefit of the community
This could be that surpluses/profits are used directly for the community
Or
Reinvested in the business to grow it
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GENERAL CHARECTERISTICS - 4
Community ownership requires stakeholder participation in the ownership or indeed there is no ownership, but control of the business is under the Stewardship of individuals or organisations as representatives of the wider community
Restricted profit distribution means that shareholders are not rewarded through dividend distribution
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OFFICIAL DEFINITIONS
The DtI defined social enterprise as being: “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.”
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PROFIT DISTRIBUTION
Profit distribution causes a problem when defining social enterprise
Generally accepted that there should not be any profit distribution to the owners, unless the owner is a charity/voluntary/community body
However many recognised social enterprises distribute profits
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PROFIT DISTRIBUTION - 2
Co-operatives claim to be the earliest form of Social Enterprise, yet they exist for the benefit of their members and they distribute profits to members. (Too big? Too powerful?)
Recently introduced legal structure, a Community Interest Company which is a company limited by shares, is allowed limited profit distribution
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COMMERCIAL TRANSACTION
COMMERCIAL ORGANISATION OWNERS
CUSTOMER
£
£
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S E TRANSACTION FLOW
SOCIAL ENTERPRISE
COMMUNITY
CUSTOMER £
£
BIGGERSOCIAL
ENTERPRISE
CHARITY£
£
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CONFUSION ISSUES - 1
Community
What is the “Community”, for Co-Ops it is their members, what about the John Lewis “Partnership”?
Legal Structure
Able & Cole are a partnership – distribute organic produce through schools and contribute 25% of the turnover to the school. Are they a Social Enterprise?
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CONFUSION ISSUES - 2
Activity
Is the Day Chocolate Company/Divine Chocolate a social enterprise?
Is Body Shop?
Is Innocent?
Grant funded charities vaguely playing at enterprise?
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CONFUSION ISSUES - 3
Funding
Sari UK, sales to public, profits used for employment, training and recycling. High risk/High personal responsibility
Powers that be are suspicious of enterprises that have not originated from the voluntary/ statutory sectors
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ORGANISATIONAL TRANSITION
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DIFFERENCES
In USA social enterprises tend to be Value Driven Businesses
They do not get Government support on the whole
Have to be financially sustainable
Have to fund themselves by means other than grants
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TYPES OF BUSINESSES
Charities Trading Arms
Employee - owned businesses
Credit Unions
Co-Operatives
Development Trusts
Social Firms
Intermediate Labour Market Companies
Community Businesses
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TYPES OF BUSINESSES - 2
Employee - owned businesses
They range in size such that Greenwich Leisure employs over 1,000 people
Eaga partnership aims to get up to 10,000 with a turnover of £1 billion, and is also looking to get a stock exchange listing.
Don’t forget John Lewis Partnership
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TYPES OF BUSINESSES - 3
Community Businesses – trading organisation which is set up, owned and controlled by the local community. The aim is to be a focus for local development and to create self-supporting jobs for local people
The community defines itself through either
Geography
Socially, i.e. ethnicity, marginalised groups
Shared interest
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Social Enterprise Organisations
Organisation Service Customer
Ealing Community Transport transport and recycling Local government
Pecan Project Training, manufacture, retail, recycling, employment creation
Business, public, other charities
NewCo Kitchen units, door and window frames manufacture
Local government, business, public
Green-Works Recycling office furniture Big business
The Phone Co-Op Telephone and communication services
Businesses, public
Day Chocolate Company Marketing ethically produced chocolate
public
Oxfam Shops Retailing donated books, clothes, CD’s, DVD’s etc.
public
Able & Cole Delivery of organic fruit and vegetables
public
Sari UK Fashion and retail public
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OFFERING
Ethical values
Environmental values
Commitment to the community
Skills retention
Multiple outputs
Work on the margins – excluded or marginal communities, unattractive markets, market trailblazers
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MARKETING AND NETWORKING - 1
Use your ethical/social perspective to your advantage
General public, commercial and statutory support for this mode of operation
Specific interest from public sector in provision of public services
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MARKETING AND NETWORKING - 2
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MARKETING AND NETWORKING - 3
Use social enterprise value addition, meaning
Relevant services due to closeness to beneficiaries and users
More responsive, dynamic and pro-active than traditional business models
Innovative service delivery models due to wider stakeholder engagement (similar to open source development model)
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MARKETING AND NETWORKING - 4
Use your status as a social entrepreneur to market your organisation, yourself and your vision
Martin Luther King said “I have a …”
Believe in the power of dreams, and others will follow
Heads, Hands and Hearts
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MARKETING AND NETWORKING - 5
Heads: Back up your idea with solid figures
Demonstrate the need
Hearts: Appeal to the emotions
Use stories and case studies to affect changes in attitude
Hands: Be specific when you ask help
It does not have to be financial, it could be a contract, access, speaking opportunity etc.
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POLITICAL IMPERATIVE
Government push towards social enterprise as a delivery mechanism
Government push for voluntary and community organisations to reduce grant dependency
Grant making trusts also looking for “Exit” strategies
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FUNDING BENEFITS
Having even a partial self generated income stream tends to make it easier to get funding
Retain greater control over the projects
Ruralnet is a charity that set up a social enterprise. The SE now generates more in grant income than the charity.
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LONG TERM
Currently a lot of free support
Many people jumping on the band wagon
Will have to learn to pay for support
Will have to work hard at being competitive – not only commercial organisations but large charities and indifference poor knowledge from procurement officers
BECOME SUSTAINABLE
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Contact details
Red Ochre 020-7785-6295
Uday Thakkar [email protected]
Robert Foster [email protected]