Tuesday, May 17, 2011

Why Social Enterprise needs to throw open its doors

Clients actually never ask me the social business question. They either assume that Stepping Out is - or don't really care about our structure.

The truth of the matter is that Stepping Out isn't, by UK legal definition a social business. There is no asset lock. The Directors own 80% of the company and can do as they please with 80% of the profits. The other 20% - of both the company and the net profit will go to invest in early stage social entrepreneurs working at community level. That is when there is a profit to distribute - a moot point for many in the social sector.

While I can't contest the social enterprise legal definition, I will say now why I think enterprises like mine should be allowed Guest Passes to the fold. Firstly, our commitment to redistribute profit goes well beyond minimalist CSR. Secondly, our time - the other key asset of any company - is given away generously to in-need clients. Thirdly, we are not profit-maximising and seek a variety of returns from this business.

I have said this before - there are thousands, possibly tens of thousands of firms in the UK just like ours which are, in essence, privately held but which subscribe to a broader view of their existence and indeed have the track-record to demonstrate this. Capitalism as a whole is, with many risible exceptions, slowly walking in this direction. At the moment, these companies have nowhere to go. CSR is largely working at the margins. For companies making substantial social contributions - but without the means or capital structure to go the full hog to social enterprise - there is very little formally there.

I believe that, in time, the Social Enterprise movement will see this gap and ride into it. It is not only a great opportunity for them but a chance to create real and productive alliances between progressive firms currently separated by the somewhat arbitrary lines set out the legal definitions of social enterprise.


Martin said...

The CBI isn't really 'the voice of business' it is 'the voice of a particular group of businesses' and i've often thought that social enterprise (or SEC) could better represent many small businesses interests than the CBI.

Dave Dawes said...

A privately-owned non-asset locked business can be a social enterprise as long as it does not distribute it's profits to the private owners. If it does it is simply a private sector business with a Corporate Social Responsibility arm.

Bev Garside said...

I applaud Craig's postion and feel that the comment by Dave Dawes 'it is simply a business with a social responsibility arm' belies this perceived hierachy of good. I run a business and can in principle pocket all the profits. I also stand to loose everything if it goes under. Empower Support for the Voluntary Sector works hard to break down these labels. Everyone should have the opportunity and the desire to work for the good of the community. Take Rio Tinto Zinc ( Bopal) Shell ( Ken Sarawewa) and we see business at its worse. I have also seen small entrepreneurs myself included work 70 and 80 hour weeks without taking a salary to make sure my staff get paid. I have seen amazing social entrepreneurs using their skills to grow fantastic social businesses, but I have also witnessed organisations in the charity sector squander phenominal amounts of money; buying £300 phones for staff; and running charities into the ground.It is not businesses that are ethical, it is people and I have witnessed the good the bad and the ugly in all sectors. We shouldseek to identify our commonalitynotour differences

James Fallan said...

I find it baffling sometimes that in some quarters unless you're wearing a sack cloth and living on a diet of gruel, you can't really be a social enterprise. My business - Chorus Partners is built around a similar model to yours Craig so I fully support your efforts in knocking down doors!