Sector star demands action on identity

[masyomo]

not so useful in retrospect

Before we set up we spent a whole weekend looking at different models we could use. Charity, Company, Charitable Company, Co-Operative & so on. We being mostly young people that were involved with us from a previous charitable programme that I used to run.

In the end we decided to set up as a Company and as a Charity. Setting up a company took 30 mins. Setting up a Charity wasn't too difficult either as I had a constitution from previous work I'd done..... except that after getting no response from the charity commission our Secretary chased them up to be told the soonest we could expect any kind of response was 6 months! I can't remember why now but at the time that caused a problem - I think it may have been related to work we were doing in Africa at the time and we needed to fundraise.

Then we heard about the new CIC structure - bridging the gap between Charities & Companies, a new model designed to support social enterprise that recognised the needs of this sector and so on. I contacted the regulator, exchanged a few emails and subsequently we applied to convert to CIC status. Initially we were rejected - ironically because we couldn't specify our charity as a CIC (because it wasn't yet registered!). So instead we had to relate our asset lock to 'a general good cause'.

Easy to look back now and say it was a mistake. But we had spent a lot of time trying to find the right structure and CIC seemed ideal. Had we had the benefit of trading for a couple of years before it would have been easier to understand the implications, but as a start-up not so easy. As for getting advice - at that time we had to explain to the bank what a CIC was, and our Accountant had to read up on it before taking us on!

[Ross McCulloch]

This has been a really interesting thread. I'd like to see more ongoing discussions around what structure organisations should go for - CIC, charity, social enterprise, LTD, etc

For many people starting out in the third sector this area is a particularly confusing one.

[Officebird]

The original question is indeed a complicated one to answer.

imo, and that's all it is - my opinion - any company can be a social enterprise even if they aren't constituted as a CIC etc. I personally don't think Charities are SE's. I think they are cahrities. I also don't think Co-Ops are SE's I think they are Co-Ops. I think an SE is a company/organisation that has social values and carries out activities that benefit their commmunity. The community served may be a geographical one, or something else like a particular section of society as a whole (Children and young people etc).

An SE doesn't work for the benefit of the shareholders, more the benefit of the community chosen.

If a bank makes £4 billion in profit for a year and donates £1 million to Cancer Research would they then have social values? Not in my book, but if that same bank spent £500,000 putting on free to attend events for familes in forests and parks around the country in an effort to provide entertainment, life experiences and encourage family cohesion for members of the public that may not normally be able to afford to attend such activities then I would say they had social values. So what percentage of profits does a company have to relinquish to be an SE? I don't know.

The enterprise part of the phrase SE has always meant 'business' to me. As a CIC we are a business first and foremost, even if our business was born out of a desire to help the community rather than make loads of money. We choose suppliers from within the sector if possible and refuse to deal with companies that don't share similar ethics to us but at the end of the day we still search out the most cost effective route as any business would.

btw the only reason I don't include Co-Ops and Charities is because they have always had their own set of social values and ways of working. I think SE's came about because businesses didn't have an outlet for this kind of activity. A CIC at least provides some form of regulation that insists on a certain amount of social accounting.

I think we all have a place in the third sector and perhaps the terms are so hard to explain because of the diverse nature of the organisations in the sector. We are a profit making organisation and don't hide this but we have elected in our constitution that we won't take dividends and once a certain salary figure is reached for each Director the rest is put into community projects that we feel there is a need for. Have we set that figure at £5000 pa? No, but we also haven't set it at £100,000pa. Each CIC or organisation has to impose their own policies and procedures that they are comfortable with, as with any company.

I don't think the sector should get too hung up about people claiming to be SE's when others don't think they are. Surely any company wanting to make a contribution to the community and society as a whole is a good thing?

[MJR]

Originally Posted by Officebird

[...]I also don't think Co-Ops are SE's I think they are Co-Ops. I think an SE is a company/organisation that has social values and carries out activities that benefit their commmunity. [...]
btw the only reason I don't include Co-Ops and Charities is because they have always had their own set of social values and ways of working. I think SE's came about because businesses didn't have an outlet for this kind of activity.

Just to reply to this narrow aspect: I think Co-ops are clearly SEs. Concern for community is the seventh cooperative principle - see www.ica.coop/coop/principles.html#7 - whether or not you agree that the other six are socially beneficial (and I think they are), the 7th alone makes all co-ops social enterprises.

Personally, I think SE came about because some businesses wanted to sign up to concern for community and/or education and training, without signing up for voluntary and open membership, democratic member control, autonomy and independence. In some ways, that's disappointing, but overall I welcome anything that moves more businesses closer to cooperative values.

[Officebird]

Originally Posted by MJR

Just to reply to this narrow aspect: I think Co-ops are clearly SEs. Concern for community is the seventh cooperative principle - see www.ica.coop/coop/principles.html#7 - whether or not you agree that the other six are socially beneficial (and I think they are), the 7th alone makes all co-ops social enterprises.

You certainly aren't alone putting co-ops as SE's. The Social Enterprise Coalition gave the award for 'Best Social Enterprise' to the Phone Co-Op in Oct 08. I just see them as Co-Ops. They obviously have social and ethical aims and this is to be commended. The Co-Op model, which I can't claim to be an expert in, is a fantastic one that benefits communities across the world at a real grass roots level everyday. I have no argument as to why I don't class them as SE's and am not ashamed about that. I just see charities as charities, Co-Ops as Co-Ops, Non-Profit as Non-Profit and businesses with social aims that are none of the above as SE's.

Perhaps I'm guilty of putting different businesses into boxes and that can't be a good thing I suppose Co-Ops are SE's but just in a different form than something like a CIC would take.

Originally Posted by MJR

Personally, I think SE came about because some businesses wanted to sign up to concern for community and/or education and training, without signing up for voluntary and open membership, democratic member control, autonomy and independence. In some ways, that's disappointing, but overall I welcome anything that moves more businesses closer to cooperative values.

You are right, not all businesses would want to incorporate as a charity or a Co-Op and therefore the CIC provided a vehicle to legitimise and regulate the social businesses. An SE doesn't just help the community or donate money. An SE's main reason for it's exisiting it to fulfill its social or environmental goals.

Horses for Courses and all that It has to be a good thing that so many businesses are now springing up for the good of communities and hopefully it will be encouraged by central government.

[adrian.ashton]

just to throw my position into this discussion about classifications...
(and based on my having been invited to be a key note speaker at a national conference several years ago about the relationship between the co-operative and social enterprise movements, and having taken a 'rated' co-operative development agency through a process of enlargening its remit to also support charities and non-coop models of enterprise...)

I see social enterprise having emerged from the co-op movement on the basis of two grounds:
(1) during the 1980's co-ops as 'busineses for good' (in the UK at least) began to become a little unsexy due to their need for collectivism in a culture and context that was becomming increasingly individualistic (hence the recent phrase of 'social entrepreneur')

(2) social enterprise, like co-ops, has no definitive legal definition in UK legislation. Instead, they are identified by their defining values.
For co-ops there are:
a) self-help
b) self-responsibility
c) equity (treating all fairly)
d) honesty and openeness
e) concern for others (community and environment)
f) solidarity
g) equality
h) democracy

with the exception of the last point of democracy, I think it'd be hard to find anyone who'd disagree with the above list as being the defining values set for social enterprise...

simailarly, the principle purpose trading legislation for charities means that some charities are finances solely through trading, in the same way that a private business would be...

to draw deliniations over legal form (of which there are soon to be 14), and within which some are recognised as a distinct legal identify whereas the same identiy can be conferred by values within a different form (e.g. co-op societies regulated by the FSA are seen to be true 'co-ops', whereas many worker co-ops are incorporated as companies), to me only serves to add to the confusion over what social enterprise is or isn't.


I guess this thread is rapidly becomming a good example of what a good discussion thread should be in allowing a number of us to share our current positions and thinking with each other openly and frankly;
it's also useful for me to re-iterate my golden rule on any position I hold in relation to me stance on policy, form, etc which is "please prove me wrong".

[Ross McCulloch]

Interesting article in Social Enterprise where Penny Newman, CEO of Fifteen, outline her feelings that current descriptions associated with social enterprise, such as being Fairtrade accredited or using ethically-sourced ingredients, ‘just undersell our reason for being and obscure our dual goals to make a profit and social return'.

Also worth noting that Rise is still requires funding to reach the £1m needed to push the social enteprise mark across the UK.

So is the social enterprise mark a good idea?

[MJR]

No, the SEM is too expensive, too restrictive and too simplistic.

The sector already has an identity: a composite of the charity trading arms, the cooperatives and the community companies that make up the sector. Any attempt to impose One Sector, One Mark, One Identity is doomed to failure.

Our diversity is our strength. We need to recognise that and embrace it!

[Ross McCulloch]

I'm in two minds about this.

On the one hand I think anything that strengthens the values of social enterprise is great.

On the other hand I think social enterprises should be competing against other 'normal' businesses based upon their ability to deliver an effective service/product as opposed to simply trading on their sometimes fluffy socially responsible credentials.

[duservicedesign]

Hi Ross and MJR

I am a huge fan of a "Mark".

It differentiates us from the Selfish Sector - and equally important from the Charity and Quasi-Public Sectors.

I have no problem with a Private Company calling themselves a Social Enterprise even if that just means they have a CSR clause in their constitution - but how would a public sector procurer know the difference between them and us (a beautiful CIC) without some way of "marking" ourselves as offering a social return on the client's investment.

It is a necessary step in making Social Enterprise the default supplier of Public Services.

cg