Share

Conflicts of interest beset social enterprises

Conflicts of interest beset social enterprises
News

Conflicts of interest beset social enterprises

Finance | Vibeka Mair | 26 Feb 2008

Social enterprises are unlikely to achieve financial sustainability and it is unreasonable to expect them to do so, according to a new report from the Charities Aid Foundation (CAF).

The report, Social Enterprise in Practice, tracked the development of five new social enterprises over a five-year period. It found the organisations struggled with the added burden of economic outputs and financial returns, which came into conflict with their social concerns.

“Where social enterprise is intended to have both social and economic outputs, financial sustainability may not be feasible at all,” the report concluded.

It found organisations resented supporting new business initiatives at a cost to social activities.

Economic success was also particularly difficult to achieve for groups that employed disadvantaged or marginalised people. The report used the example of one social enterprise that earned its income supplying fruit and vegetables to franchised traders with difficult backgrounds.

While some traders' behaviour, such as using bad language, threatened the organisation’s sales income, it struggled to suspend the offending traders because doing so would have clashed with its social mission.

Duncan Scott, research fellow at Manchester University and co-author of the report, said: “Social enterprises must not be judged on whether or not they rely too heavily on one form of funding, but whether they fulfil the goals they were set up to achieve. The prospects for social enterprises are mixed and it is imperative they acknowledge the tensions between the social and financial and not simply assume they can be organised out.”

Other problems identified in the report included the struggle for employees from outside the sector to accept a new economic mindset within a voluntary or community agency and the effectiveness of training and support for new social enterprises.

To address these tensions, the report recommended that staff receive training to understand the aims and objectives of the new social business with re-evaluation of the new vision at regular intervals.

It also said the social enterprise sector needed an extensive support network of trustees, advisers and business mentors, and that regional development agencies and local authorities should deliver socially-relevant support packages.

Richard Harrison, director of research at CAF, praised the report for raising awareness: “This research highlights how challenging it can be to juggle social altruism and trading. Even social enterprises experience ups and downs, and raising awareness of this can only lead to growth of an even stronger social enterprise sector in the future.”

Comments

[Cancel] | Reply to:

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

  • Robust but respectful debate
  • Strongly held opinions
  • Intelligent relevant discussion
  • The sharing of relevant experiences
  • New participants

We will not publish:

  • Rude, threatening, offensive, obscene or abusive language, or links to such material
  • Links to commercial organisations or spam postings. The comments board is not an advertising platform
  • The posting of contact details for yourself or others
  • Comments intended for malicious purpose or mindless abuse
  • Comments purporting to be from another person or organisation under false pretences
  • Gratuitous criticism, commentary or self-promotion
  • Any material which breaches copyright or privacy laws, or could be considered libellous
  • The use of the comments board for the pursuit or extension of personal disputes

Be aware:

  • Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
  • Comments left by others may not be accurate, do not rely on them as fact
  • You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

  • Enjoy the opportunity to express your opinion and respect the right of others to express theirs
  • Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.

Free eNews

Charities could lose out on gift aid under devolution settlement, tax experts warn

27 Nov 2014

Proposals from the Smith Commission to give Scotland powers over the rate of income tax will have “significant...

More will-writers prompting clients to leave legacy gifts, research shows

27 Nov 2014

More solicitors and will-writers are telling their clients about leaving a legacy than at any time in...

ASA bans Health Lottery advert for encouraging gambling behaviour

26 Nov 2014

The Advertising Standards Agency has ruled that an advert from the Health Lottery promoting an online...

Joint registration between Charity Commission and HMRC delayed

27 Nov 2014

Plans for the Charity Commission and HM Revenue & Customs to set up a joint registration process for...

NCVO backs Commission's focus on regulation

26 Nov 2014

NCVO supports the Charity Commission’s decision to focus more on regulation, but is cautious about the...

MPs urged to retain amendments to judicial review bill to protect charities

26 Nov 2014

A group of legal bodies have written to MPs to urge them to protect judicial review from changes that...

'Be careful what you say and don't be boring on social media'

27 Nov 2014

Don’t be too serious on social media and be prepared to pay for premium services, delegates at yesterday’s...

'Focus on people as well as technology', IT experts told

27 Nov 2014

IT directors need to learn when to step back and allow others in their organisation to experiment with...

JustGiving launches free guide to raising money using social media

25 Nov 2014

JustGiving and social media consultancy Social Misfits Media have launched a guide to how charities and...

Join the discussion

 Twitter button

@CSFinance