Transcript Social enterprise a world movement

Social enterprise:
sustainable funding for
charities
Charlotte Chung – Policy and Research
What is Social Enterprise?
Social enterprises are businesses driven by a social purpose. They:
• Have a social mission core to their purpose (set out in their governing documents)
• Generate the majority of their income through trade (revenues mainly from goods
and services provided, not grants or donations)
• Reinvest the majority of their profits (towards the social mission)
• Are autonomous and independent organisations
• They take a range of different legal and governance structures.
• Many started their life as charities, public sector, private sector.
Social Enterprise in the UK - Setting
the
scene
70,000
social enterprises in the UK (5% of all
•
businesses)
•
•
Contributing £24 billion to the UK economy and
employing over 800,000 people.
They operate in a diverse range of sectors from
health and social care, to renewable energy,
transport, retail and housing.
Social Enterprise UK
•
Established in 2002 as the national body for social enterprise
•
Membership organisation: ~ 600 members reach to over 10,000
•
Bring together all the different forms of social enterprise under
one umbrella
Main purposes:
•
Supporting the social enterprise thrive
•
Developing the evidence base for social enterprise
•
Influencing the national policy and political agendas
•
Showcase the benefits of social enterprise
Changes to the public
sector:
• Funding cuts
Increased
trading
• Dwindling grant
funding
• World’s fastestgrowing market for
social investment
• In 2011/12, market
grew by almost a
quarter to £202m
through 765 deals
•Increase in
commissioning services
vs. direct provision
• Changes in structures
of contracts:
 Payment-byResults
(including,
Social Impact
Bonds)
 Requirement
for ‘Social
Investment
Partnerships’
e.g. DWP
Innovation
Fund
The rise of social
investment:
• Big Society Capital
Social
enterprise
Increase in earned income > £10 billion since 2000/01 (92%)
> trading with government - statutory contracts more than doubled
from £4.5 billion in 2000/01 to £11.2 billion in 2010/11
 displaced grants + result of the increased commissioning vs. direct
provision
> trading with public more than 40% – or £2.3 billion in real terms
Fulfilling your social mission in a profitable and sustainable way:
Customers
• Move from satisfying your funders to satisfying your customers - this could include
a understanding the change in previous relationships e.g. moving from grant to
contract with same local authority
The ‘p’ word: Profit
• Social enterprises are for-profit companies.
• Aim to make more money delivering their products and services than it costs to
deliver them.
• No need to prioritise profit above all else but being focused on delivering a social
mission in a business-like way.
• That means being explicit about what you’re selling and who you’re
selling it to. A product is not necessarily a slice of cake or a t-shirt – it could be
12 weeks of mental health awareness training you sell to a local
authority.
• Constantly looking for new opportunities to do business
It’s not completely different from a charity applying for a grant or launching a
fundraising appeal for a new project. The difference is that your starting point is the
market.
Commercial mindset
• Most products or services that you deliver need to be paid for by
Someone.
• Products or services not paid for by someone have to be cross-subsidised
e.g. HCT Group
• Adopting a commercial mindset is not just about selling things. It’s
about selling things at a profit – or at a loss that you understand and have
budgeted for.
• Know your costs
= a transition to becoming more ‘enterprising’ will also require an review of
what skills are available in the charity (e.g. Pricing, market research, marketing
etc.)
A commercial mindset can actually enhance your social mission....
1996 - June O’Sullivan joined Westminster Children’s Society
Traditional charity running nine small nurseries in the London Borough of
Westminster
Dependent on a block grant from the local authority
2005 – June became CEO and decided that the charity had to become a social
enterprise:
“I was determined to move us away from the charitable model. I didn’t want to ruin
the ethos and the fantastic history the organisation had but I didn’t feel that if we
were to rely on our charitable model we would survive.”
Challenge – move from grant dependency into a sustainable business while
continuing to provide affordable service for children and parents
Part of the answer was expansion.
Renamed London Early Years Foundation (LEYF) in 2009
Opened nurseries in other London boroughs creating economies of scale:
“Our business model is quite simple: increase
occupancy; increase revenue; reduce costs. That’s it. It’s
wh at you have to do.”
Initially, many LEYF staff were worried about the social
mission
Shift in culture and thinking to understand new approach and benefits
“What I had to explain to them is that we had to balance the business model so
that way we would actually be producing enough profit to give many more
children a free offer.”
The Salvation Army is a Christian Church and registered charity
with over 50,000 members and over 4,000 employees in the UK
Salvation Army Trading Company Ltd (SATCoL): charity shops, clothing
recycling, a company selling brass band instruments, a bank and an
insurance company.
“Their job is to sell stuff at a profit and hand the money over to the Salvation
Army.”
Also run charitable services on enterprise basis....
• Employment Plus – a back to work service that receives 90% of its income
from contracts, mainly from delivering the Work Programme as a subcontractor.
• Homelessness services – which run 65 hostels + generates income from
housing benefit and Supporting People contracts.
Both provide training and work experience for people who use their
services.
Enterprises work together e.g. Employment Plus runs electrical testing
business and trains hostel residents to gain employment
28/11/11
28/11/11
Social Investment: state of play
• In 2011/12, market grew by almost a quarter to £202m
through 765 deals.
• 29 active Social Investment and Finance Intermediaries
•Increase in secured lending from 84% in 2010/11 to 90%
in 2011/12, however greater diversity of social
investment
• Key sources of finance: majority from central
government; a quarter from social banks (via deposits);
<5% from trusts and foundations
Players and products
...other innovations in social investment
• Crowdfunding - small amounts of capital from a large number of individuals to finance a
new business venture
• Peer-to-peer lending
•Community shares - raising money from communities through the sale of shares or bonds
to finance enterprises serving a community purpose
•Social Impact Bonds – a form of outcomes based contract
www.socialenterprise.org.uk
[email protected]
@SocialEnt_UK
@CharlotteChung_