There’s an interesting article in Social Enterprise Magazine this month about the Community Action Network (who incidentally have a new logo…with a new website to come?). It’s snappily titled "From pear-shaped to peachy" and details how Adele Blakeborough and her team have successfuly turned CAN around from an ailing membership organisation with a myriad of projects on the go (and which apparently came close to collapse), to a focused and growing social enterprise. CAN now focuses on its Mezzanines (a new London centre is just opening), and its Breakthrough investment fund (we blogged about the launch) here, seeking to both provide co-location facilities for social enterprises, and to allow a few select enterprises to scale up with appropriate finance and support.

Interestingly, with respect to the latter, the article discusses the fact that Permira (who fund the fund) have come under fire from unions et al recently for asset-stripping, blanket redundancies, lack of accountability and so forth. Indeed, a question about private equity was put to Ed Miliband at the launch of the Edge Upstarts (see previous post, and listen to the podcast) by Paul Myners.

The article raises it thus:

"However, Roger Cowe (sector specialist) says he understands why some social entrepreneurs have
also sounded a note of caution. In May last year, for example, the GMB
Union led a picket outside Damon Buffini’s local church in protest at
job losses suffered by the AA motoring organisation after it was taken
over by Permira and fellow venture capitalist CVC. More than 50 MPs
signed a parliamentary motion accusing the private equity firms of
‘greed’ and ‘blatant asset stripping’.

Cowe says: ‘I can
understand that some social entrepreneurs might be nervous. The great
advantage of social enterprise is that it’s grounded and near to the
people it wants to help – and there is a danger with expansion that you
can lose that closeness. Personally, though, I’m sure the organisations
working with Permira and CAN are well aware of this and will keep the
proximity to their customers.’ "

Not a bad point, but the issue about proximity to customers is one pertinent to scaling generally, rather than just when being assisted to do it by private equity money/support. Obviously, the structures of social enterprises would pretty much prevent "asset-stripping" (indeed the CIC has an asset lock…), so perhaps people’s issue is more a kind of ‘should we take money from organisations acting like this’ type of one. Perhaps there is something about the philanthropy supply chain here (in the same way that grant-making trusts are being ‘encouraged’ to invest more ethically), but I would tend to fall on the pragmatic side here: this money and support gives significant opportunity to this handful of select organisations.

It also got me thinking about how, back in 1997, when CAN and SSE were established, they were virtually the only players in this field of support, and the different approaches taken to growth and business development (CAN diversified substantially into many areas and has then refocused, SSE delivers virtually the same product/programme today, if refined, and have replicated gradually through franchise). No judgement there, apart from to say that the wider social enterprise movement in the UK has been the winner.

Indeed, there is another article in this month’s Soc Ent Mag (sadly not online) by Barbara Philips which makes the case for how a rich, diverse and well-populated social entrepreneurship movement is exactly what the third sector needs. Amen to that.