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

British Heart Foundation's Mending Broken Hearts appeal raises £25m in four years

27 May 2015

A British Heart Foundation campaign to fund new research into heart defects has raised £25m over the...

One-fifth of charities surveyed do not accept donations through their own websites

27 May 2015

Some 20 per cent of charities do not accept donations via their own websites, and 38 per cent are not...

Charities invited to participate in 24th annual Charity Shops Survey

26 May 2015

Charities with retail operations are now invited to respond to the 24th annual Charity Shops Survey, the...

Housing Bill in Queen’s Speech creates ‘worrying precedent’ for charities, says NCVO

27 May 2015

Today’s Queen’s Speech includes a Housing Bill which will force some charities to dispose of assets...

Methodist charity gives no reason for double defaulting on accounts submissions

27 May 2015

A Cornish Methodist church and registered charity has failed to give any reason for defaulting on annual...

Sir Ian Botham threatens to sue RSPB for libel

26 May 2015

Sir Ian Botham has threatened the Royal Society for the Protection of Birds with a lawsuit, claiming the...

One-fifth of charities surveyed do not accept donations through their own websites

27 May 2015

Some 20 per cent of charities do not accept donations via their own websites, and 38 per cent are not...

Children's Society and NSPCC to improve their digital services

26 May 2015

The Children's Society and NSPCC both said last week they plan to revamp digital services for young people,...

RNLI releases first charity app for the Apple Watch

26 May 2015

The Royal National Lifeboat Institution has today launched what it believes to be the first UK charity...

Join the discussion

 Twitter button

@CSFinance