Tuesday round-up: Shirky, Scotland, Shoreditch

Much linkage to get involved with this morning….a bit of a mish-mash, but hopefully of some use:

Voice 2009 will be in Birmingham; for the flagship social enterprise event, another big venue: the Birmingham ICC. See picture left (CEOs of SEC and Advantage West Mids)

– Couple of interesting pieces about fairtrade (coffee) and online debates; see Ugandan coffee trade and Fairer than Fairtrade

Campbell Robb on the third sector and public service delivery in the Times, on removing the barrier to allow third sector orgs to deliver etc.

– Less enthusiastically, a piece in today’s Times Public Agenda discusses how devolution is still an ideal, not a practical reality, something which chimes with SSE Fellows’ experiences of local authorities (though it is a varied and patchy picture)

– What is citizen philanthropy? Perhaps not a question that’s keeping you awake at night, but this article is an interesting read: This Is What Philanthropy Looks Like

Matt Stevenson-Dodd posts on his fellow Ambassador Daniel Heery’s great work in Cumbria

Scottish social enterprise support is "fragmented, complex, uneven and inconsistent"; apart from that, all is well. More seriously, the report is worth reading, particularly in its call for support providers to talk to each other and work in a more joined-up (hate that phrase) manner. Lessons for England as well as Scotland, methinks.

– Clay Shirky is author of Here Comes Everybody, which is about ‘organising without organisations’: groups, networks and the effects of new technology. "Group action just got easier" is his five word thesis. Anyway, he spoke at Demos the other day, and you can download the hour-long podcast to listen in….

– Bilumi: stands for Buy It Like You Mean It, "an online community of people reviewing and rating the socially
responsible business practices of companies and their supply chains"; interesting Shirky-esque stuff

– The Shoreditch Grand Prix involves kids bicycles, leg-power, and fundraising for social entrepreneurs

– Finally, while I mostly turn to Bubb’s Blog for a smile in the morning (I will be picking out an appropriate tie and bottle of wine for my next meeting at ACEVO), Jeff Trexler’s reaction to the SEC video of social enterprise is pretty entertaining.

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Social technology awards: SSE Fellows meet Gordon Brown

The winners of the UK Catalyst Awards were announced this morning on 24/7 (see what they did there?), for the best uses of technology for social benefit. Check out the full list here. Congratulations in particular to two SSE Fellows:

– Nathalie McDermott (of OnRoadMedia), who was heavily involved in the successful SavvyChavvy project

– Andy Gibson, co-founder of School Of Everything, which also won an award

Gordon Brown turned up to give a speech, and was on good form: he made self-deprecating reference to this exciting area "which you all know more about than me", and made passing reference to the campaigner who glued his arm to the Prime Minister earlier this week ("supporting campaigners…even when they campaign against the government"; the sticky incident happened at the Sheila McKechnie awards, which our CEO Alastair was in attendance to see). And a few decent soundbites as well: "there’s nothing in the worst of Britain which can’t be solved and tackled by the best of Britain" (or something like that).

Despite needing a couple of cups of coffee to get going for such a breakfast event, I managed to engage a few people in (hopefully worthwhile) conversation; sadly couldn’t stay for the focused networking after 10am, but an interesting event and, most of all, was good to see that this was technology as a tool to deliver social impact on the ground, not as an end in itself. Congrats to all.

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A CIC in the teeth?

Interesting to note that Jonathan Bland has come out to say that there hasn’t been enough marketing of the Community Interest Company model. Interesting because, currently, the CIC model is all over the sector press and the blogs because of ECT (see Social Enterprise Magazine‘s front cover this month: HAS ECT SOLD OUT?; the article isn’t online but it’s a helpful, if not full, explanation of what’s happened…combined with the Guardian article I posted about recently). Interesting, also, because of what he said was "absolutely shameful":

"All that work, all that money spent on the regulation – and now they
don’t have a marketing budget…When we brought together some
of the CICs that have been created, they said the biggest issue they
have is that nobody knows what they are and they have to spend all their
time explaining what they do."

But isn’t the ‘shameful’ aspect, if any, that "all that work" and "all that money" went on a legal structure that doesn’t appear to be producing any lasting changes to the sector. And that this is the case is as much a structural issue (i.e. how it was set up: the details of the structure) and a choice issue (i.e. there were lots of options anyway) as it is a marketing one. And that all that work and money could have gone into something that might have had a game-changing effect on the movement.

What has become evident is that there are critics of the structure for different reasons: on the one hand, those that feel the regulation around the structure is not sufficiently strong, nor the community interest test sufficiently rigorous, to ensure democratic accountabillity in the governance of the CIC. On the other, there are those who feel that the dividend cap prevents a decent level of equity investment. Finally, there are none of the benefits that a charity might receive (rate relief, tax relief, gift aid etc).

Some good introductions to CICs are here (written) and here (2 x podcasts). What surprises me, as a certified non-legal expert, is the simplicity by which the asset (held in the community interest: hence the name) can be transferred under these circumstances. Whilst my memory is sometimes faulty, I do remember the launch being all about how the asset lock would ensure these assets are used solely for the benefit of the community. This was to reassure investors, funders and other stakeholders in the structure (no.1 benefit of the CIC, according to them: "The Community Interest Company brand provides: Reassurance to stakeholders, as the asset lock and community purpose are regulated"). But actually those assets can be sold / transferred as long as they get market value for them.

Equally, few CICs have managed to gain inward equity investment, as drawn attention to by several of the venture investors / financiers in the sector. It’s interesting to note that ECT’s problems were exacerbated by this: as Steve Sears says in the interview in Soc Ent Mag:

"It was financed through debt and we were going to have a problem continuing to grow. The problem was lack of equity, lack of money, and it was getting harder to borrow because of the credit crisis"

So there wasn’t enough of a capital base to scale up and support further growth. As Rod Scwartz (who’s been passionate and perceptive on this issue) writes: "by structuring as a CIC, ECT and others forgo the ability to raise
genuine equity. Investors are unwilling to accept equity-like risk
(which is associated with many of these CICs) for what are (lower)
debt-like returns. Who could blame them? This is a fundamental flaw of
the system, especially for fast-growing companies like ECT which
require the cushion normally provided by equity."

And this is why so many have been writing about this story, and about the CIC structure: at a start-up level, CICs have difficulty (or simply can’t) in accessing start-up grants, and don’t have any of the benefits associated with a charitable structure. If they are trying to achieve inward investment once established, that is also proving very difficult. In a sense, as someone jokingly said to me, it’s "classic third way"….

Which leaves the main positive remaining USP feature as the "badge" or "reputation" of the structure as a social enterprise model. Clearly, though, in the wake of the above, this too may suffer. Will putting more marketing budget behind an unproven structure bringing few benefits and raising many challenges be the best use of resources in difficult times ahead? An investment in people, in skills, in knowledge, in peer-networks, in support….must surely bring more benefit, regardless of what structure they choose.

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News barrage: ECT, added value, the future of enterprise

One of the (few) benefits of the lengthy commute in to work for me is to do some reading / listening of relevant information on the way in. Inevitably, on Wednesdays this means Society Guardian. Sometimes, there’s little of direct relevance, and then sometimes the whole thing feels like it’s waving at me. Like this morning:

Big article on ECT; I think it’s a very good article. Though it doesn’t clear up the precise details of the CIC stuff, it does give some reasoning behind what has happened and, rightly, emphasises the most important outcome: jobs secured for those in the company. I spoke to the journalist writing this, and am pleased that he interviewed Steve Sears directly and told it this way. Still unanswered questions about CICs (nothing from the regulator, and the legal person behind it could only say that it made being taken over much easier….as if that was a positive?), but the story is clearer.

– An editorial on the the lack of evidence / proof that the third sector is any better (or provides any significant added value). I’d agree with much of this, and the need to measure and demonstrate social impact….but am disappointed at the emphasis on cost ("The third sector says it offers "something extra". But extra will cost
extra. Buying services from the third sector requires an uneven playing
field or, as the MPs diplomatically put it, "intelligent
commissioning", which could well raise unit prices"
) without a similar emphasis on the benefits. For example, a place on the SSE programme has a higher unit cost than, say, 4 Business Link advice sessions….but the benefits are of a completely different order (and there is proof). Also what about the savings in other areas (benefits system, health service, social care, crime etc) that result from the (minimally) greater investment?

– The third thing was Peter Grigg’s piece promoting the new report from Make Your Mark and Demos called The Future Face of Enterprise. There’s some interesting stuff here, though I confess the commute isn’t long enough to have read all 157 pages yet. It ALL seems relevant, in different ways, though much won’t be new to regular readers of this blog, namely:

  • people (especially young people) are seeking more meaning / purpose from their work
  • people (esp. young people) are seeking outlets for their innovation and creativity
  • money still motivates, but (increasingly) so do other things: frustration, personal mission, inequality
  • self-employment can be a route out of frustrations (and flexibility / work-life balance)
  • unlocking entrepreneurial talent, regardless of sector / organisation, can be key to success
  • there are significant problems in society that need addressing that government can’t do (alone)

All of which leads to a growth in those interested in, engaging with and involved in social entrepreneurship and social enterprise. I’ll try and get to read it all in the near future…

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Empowerment and confidence

A couple of things stood out in the social entrepreneurship field in the past week or so. the first was the launching of the Empowerment White Paper from Department of Communities and Local Government, expertly chronicled and tracked by their secondee Simon Berry (check out the EWP Pageflake for example). Two relevant funding streams in this: a £70m Community Builders fund, which seems to be an amended, reduced version of the previously proposed ‘community anchors’ fund (a large proportion is capital). There is also a £7.5m which is a reworked version of the withdrawn Strategic Partners fund. Particularly pleased to see the emphasis here on the individual, and on practical action (one of the principles of the paper is "within the third sector, we recognise and celebrate the role of individual active citizens, social entrepreneurs, campaigners, volunteers and political activists…these people deserve the support and recognition of government").

Alongside that launch, there was the release of the new Social Entrepreneurship Monitor (as was), now simply called Social Entrepreneurship in the UK. (pdf download available from this page). In the past, the SEM has been a largely finger-in-the-air exercise in how it comes to its figures, but this report seems really well-thought through and researched. Includes case studies for the first time, and some interesting (and helpful) delineations of various terms. As with previous reports, it emphasises that "social entrepreneurs are not as confident as their mainstream counterparts….and do appear to be less confident as their activity becomes more established". This has always been something SSE has focused on (88% of SSE Fellows have an increase in skills and confidence to lead; 60% say this continues after the programme has finished), and it’s important that this is recognised from independent sources elsewhere. Also worth noting that the report underlines that "mentoring and coaching as well as access to finance through the growth process are important". Again, it’s good to see endorsement of our call for specialist support, without which all the good work on financial instruments, measurement tools and legal structures is lost.

What connects these two reports, I think, is that they both draw attention to the need to a) support and develop individuals and b) that this is not, primarily, about level 2 box-ticking audits, but about more intangible and "softer" (though harder to pin down) things like empowerment and confidence. Whilst many social entrepreneurs are driven by frustration with the status quo, or powered by personal experience, this can also become disillusioning if they are not supported on a long-term basis through the journey and if they are not genuinely able to achieve ’empowerment’. By which I mean not only in the sense of " To equip or supply with an ability" but also in the direct sense of "To invest with power", either via organisational forms they’ve established, or via genuinely representative roles within (and outwith) the political system.

If this research and this white paper can help make the case for and deliver that kind of work, then last week will have been an important one for social entrepreneurs across the UK.

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