Charities told using 'social enterprise' brand will help them win funding

Charities told using 'social enterprise' brand will help them win funding

Charities told using 'social enterprise' brand will help them win funding 4

Finance | Vibeka Mair | 17 May 2013

St Andrew’s Healthcare, one of the largest charities in the UK, has been told by commissioners that calling itself a social enterprise will help it win contracts.

And some charities simply call themselves a ‘social enterprise’ as it is a condition for winning funding.

The strength of the social enterprise brand within commissioning was highlighted at yesterday’s Charity Law Conference during a panel debate on social enterprise.

The debate, which asked whether social enterprise enhanced, confused or devalued the charity brand, included speeches from Caroline Mason, chief operating officer at Big Society Capital; Stephen Lloyd, partner and senior counsel at Bates Wells and Braithwaite (BWB); Luke Fletcher, a partner at BWB and Debra Allcock Tyler, chief executive of the Directory of Social Change.

A delegate at the conference, who worked for St Andrew’s Healthcare, said that social enterprise was devaluing the charity brand: “It causes confusion in the marketplace,” she said. “We’ve been told by commissioners that if we call ourselves a social enterprise we will win contracts. But we are a professional organisation and provide a good quality service. We shouldn’t need the social enterprise rebrand.

“Social enterprise also opens the door for rogues who want to pretend to be doing good and take advantage," she added.

A delegate at the conference also said she knew of a charity that called itself a social enterprise simply as it was a condition for applying for grant funding.

Debra Allcock Tyler, said her organisation, the Directory of Social Change, would not call itself a social enterprise, although it had a high proportion of earned income.

She also warned about the sub-text around social enterprise: that it was "innovative, fresh, new, efficient and successful", while charity was "fuddy-duddy, bad, dependent and money-grabbing".

"I have no issue with businesses that do good. My issue is when social enterprise uses the charity brand to make themselves look better.

"There are some awesome social enteprises, like there are awesome charities. But there must also be some awful social enterprises too," she said

Social enterprise enhances charities

On the concerns that the social enterprise brand was open to exploitation from rogue organisations, Mason of Big Society Capital argued that there was evidence of distortion of structures in the charity sector: “I don’t think Eton is a very good example of a charity,” she said.

She went on to say that social enterprise enhanced the charity sector: “I believe there is huge value in the combined for the social sector,” she said. “Social enterprise is another weapon in a charity’s armoury to become sustainable.”

Stephen Lloyd of BWB added that there were enough social problems for both the charity sector and social enterprise sector to tackle: “It’s not a zero-sum game,” he said. “Social enterprise enhances the charity brand.”

Lloyd also warned that some in the charity sector were worried about the tax reliefs for social investment announced in this year’s Budget: “There is a view that charities don’t want social enterprise to hollow out charity gifts. But it’s not a competition. I hope the charity sector does not oppose the tax reliefs for social enterprise.”

During the debate, the issue of confusion around what a social enterprise is was also brought up, with one delegate saying some were getting social enterprise confused with corporate social responsibility.

Luke Fletcher, a partner at BWB, said it was hard to think that in five years time there would be no legal definition for social enterprise: “There have been lots of attempts for a definition, but there is currently no single one agreed. There have been a few warning shots with A4e’s recent attempt to call itself a social business and Salesforce’s trademark application. A legal definition will come eventually. There is interest in Parliament around it.”

Lloyd added that a definition could come from Europe as part of its Social Business Initiative.



Colin Martin
Managing Director
The Ark
27 May 2013

If it looks like a duck, walks like a duck and quacks like a duck, does it really matter whether it's labelled as a duck or re-branded as an aquatic avian?

Last year The Ark generated £48,500 from trade and £47,500 from grants, so can we call ourselves a Social Enterprise? If the figures were the other way around, would we really be a different organisation?

Every organisation, be it a private business, charity, community group, or local council, faces the same pressures:
- what would be in the best interests of our customers / service users?
- how should we deliver this service and how much should it cost?
- how do we balance customer value with staff pay and working conditions?
- who will fund what we do and how much will they be prepared to pay?
- how much of our time and money should we take away from front-line delivery to put into fundraising? (be that organising sponsored events, running a charity shop, writing grant applications, mailing donors, advertising to customers, lobbying commissioners or writing tenders)
- where do we face a conflict between "ticking the box" to maximise income or improve statistics vs doing what has the biggest social impact.

Anyone who thinks that a simple label of "charity" or "social enterprise" means that an organisation has the right answer to all these questions is as naive as anyone who thinks that the label of "business" or "council" denotes an organisation which automatically gets the wrong answer to them all.

Customers, donors, funders, volunteers and commissioners need to learn how to ask all of the tricky questions above and to recognise that anyone who gives a simple answer probably hasn't really thought about the question.

Giving someone a label just because they pass an arbitrary set of standards is dangerous because it encourages people not to look beneath the surface.

If A4e say they are a social enterprise, don't simply say they aren't because they have shareholders. Ask them to talk about how their Work Programme contract creates an incentive to focus on "low hanging fruit" and give up on customers who have greater barriers to employment.

If a council department says it is a social enterprise, don't simply say it can't be because it's state-run. Ask the senior managers to tell you about how they can reward staff who generate extra income if they're stuck with a council pay scale.

If a charity says it's "better" than a social enterprise because it doesn't get involved in commercial activities which "compromise" its ethos, ask it to talk about how much it spends each year on grant-writers, fundraising managers and mail-shots.

Anyone who is prepared to talk in public about how they balance these conflicts should be free to give themselves whatever label they like. Anyone who says that such conflicts don't exist in their organisation (or isn't prepared to discuss them openly) should be treated with great suspicion, regardless of what "official" labels or accreditations they may hold.

As professionals working across all these sectors, we should argue that "social enterprises" are those organisations who have honestly faced all of these questions and chosen to answer them by balancing social impact with financial sustainability.

Social enterprise is an attitude, not a legal structure.

Robert Ashton
21 May 2013

So if Wonga called themselves a social enterprise . . . . ?

Jeff Mowatt
People-Centered Economic Development
20 May 2013

"if you can bear to see the truths you've spoken,
Twisted by knaves to make a trap for fools"

Was there ever a better fit, for Kiplings verse than the dog eat dog world of social enterprise.

If the definition is to come from the EU, here's the one I introduced to them for the 2008 Citizens Consultation:

Jean Barclay
17 May 2013

This confusion has been the case for many years now, and I think Debra Alcock Tyler's point about social enterprise being perceived as "innovative, fresh, new, efficient and successful", while charity is "fuddy-duddy, bad, dependent and money-grabbing" is now a real "image" problem for the charity sector in the eyes of commissioners - who in my experience often have very limited understanding of either charities or social enterprises.

For example, recently a local commissioner proposed a qualification for bidders for delivery of local Healthwatch that they had to be "social enterprises" and charities would not qualify...when asked why, it became clear that they had no real idea what a social enterprise was...

Commissioners should place greater importance on relevant social impact and not be swayed by hype/fashions in sector branding.


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