Social Enterprise Workshop

Wiltshire Council

Julie Harris

RISE31st 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!

• Local needs– Village shop– Nursery– Business units

• Local opportunities– Regeneration programmes – Community-owned assets – the community centre– Recycling

• Voluntary sector– Sustainability issues

• 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)

Social objectives

• 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 objectivesTrading 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

Rural ICT

Digital Inclusion

Employment and Skills

Leadership Development

• 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?- Accountability- 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 systemsRISE – 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

Questions and Discussions

• Contact details –

• Julie Harris• 01392 435775

• julieharris@rise-sw.co.uk• www.rise-sw.co.uk