Harriet Whitehead: Are social enterprises more receptive to people's needs than charities are?

21 Oct 2019 Voices

In a speech soon after her appointment, Baroness Stowell, chair of the Charity Commission, told the sector: “People can find other ways to do good that do not depend on registered charities”. 

She added: “We cannot assume that the concept of the registered charity remains the primary vehicle through which people express their charitable instincts into the future”.   

With this in mind, a recent debate hosted by the law firm Stone King was perhaps timely, asking: “To be, or not to be a registered charity, that is the question”.

It was chaired by Baroness Pitkeathley, president of NCVO. Speakers were allocated a side to debate, with the “to be” side ultimately persuading the majority of the audience.

The “to be” side included Jonathan Burchfield, charity partner at Stone King, Kathy Evans, chief executive of Children England and Rosie Chapman, chair of the Charity Governance Code Steering Group. The “not to be” side included Julian Blake, social enterprise partner at Stone King, Chris Wright, chief executive at Catch 22 and Precious Sithole, chief executive of Social Practice ENT.

Not all charities are Oxfam 

Evans, from Children England, opened the debate by saying that “by taking opposing positions we can untangle and examine some of the different positions of a situation that is in reality far more complex” than “to be” or “not to be” allows. “False binaries are demonstrably not true,” she added.

She emphasised that “no one here is arguing that charity is a superior form of organisation to any other”, and that “it would be as strange to say that all companies are bad because Carillion collapsed as it would be to say that all charities are Oxfam”.

However, she said that there are three distinctive traits that charities should hold, which make them different from other organisations:

  • Gift: “there is no market for being compassionate for people with nothing”.
  • Bottom line is mission: “people and mission first before money”.
  • Public accountability: charities are “part of the public realm”.

Following Evans' speech, Chapman said that charities are “inherently outward focused” and “open and transparent”. She said that the “robust approach taken by the regulator” gave registered charities “credibility”.

‘Underfunding and over regulation’ means small charities are ‘constantly fighting fires’

However, speaking in favour of social enterprise, Wright from Catch 22 said: “Over the last 30 years I have observed a shift to compliance led, bureaucratic, transactional approaches to delivery”. He said “the state as the default provider of public services has run its course”, arguing that social enterprises are “more relational, more local, more receptive to people's needs”.

Precious Sithole also advocated for social enterprises, from the perspective of smaller organisations. She listed three things that distinguish such organisations from traditional charities:

  • Flexibility in funding through earnt income, where charities are “unable to think strategically”.
  • Freedom from regulation, as many charities are “burdened” by “a lot of expectation”, which is particularly challenging when much of their work is done by volunteers.
  • Governance structure, as the responsibility on charity trustees is “not efficient” and “needs to be rethought”.

She said charities' “underfunding and over regulation” often means smaller ones are “constantly fighting fires”. She added that they are “missing from some of the most pressing issues of our time”; “generally silent” on political issues “despite some of the issues directly affecting their beneficiaries”.

She added that the charity sector generally “lags” on diversity and inclusion compared to both the private and public sector.

Complementary?

Overall, Evans' warning that this issue is a nuanced one rang true.

Social enterprise is certainly a growing sector. But it may be that neither charity nor social enterprise is better than the other, as the two complement each other depending on the circumstances and the organisation's business model.

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