Survey of Leicester Social Enterprises

This is an archive article

LASS is now sending out its survey of voluntary organisations, charities and other third sector organisations to see how many of them are social enterprises or are planning to become one. The survey will be limited to Leicester, Leicestershire and Rutland (LLR).

LASS has received funding to undertake this work as part of the modernisation programme grant-aided by Capacity Builders. The purpose of the survey is to map the extent of social enterprise take-up in LLR and to build up a database of organisations that have an interest in this subject.

The survey is being sent to organisations by post, email or telephone call over February. The aim of the survey is to assess how many bodies there are which are already social enterprises and how many are planning to form one over the year ahead.

The results of the survey will give much-needed insights into the growth of social enterprise activity in the local area.

The survey will be conducted by the Social Enterprise Development Workers of LASS, from their base in Regent Road, Leicester. Results from the survey will be available early in March, when all the data has been collated. Copies of the report will be available and a summary will be posted on this blog.

Standards for live music venues

Hotels get a star rating between 1 and 5, so why not a star rating for live music venues?

The star rating for hotels is given to indicate the quality of the facilities they offer, based on a set of standards and criteria. If we were to offer  a  stars for music venues would would the criteria be? From the point of view of the fans, this might include

* good sound, set at reasonable levels and operated by suitably experienced sound engineers who are present at the controls throughout of the show.

* reasonable and affordable entry prices, relative to the acts that are appearing

* reasonable prices for refreshments and a good selection of them

* some food and snacks being available

* a sheltered smoking area

* toilets that are kept clean throughout the night

* a quiet area for non-smokers to relax in

* comfortable seating for those who want it

* friendly and courteous staff, including those controlling the entry

* the venue is kept clean and in good decorative order

From the point of view of the bands

* good sound with stage monitors, suitable microphones and a decent house drum kit

* the sound system is operated by experienced engineers throughout the show

* Pre-show sound checks

* a secure area for the storage of instruments and equipment

* at least one dressing room

* an easily accessible system for enquiring about bookings

* an efficient and well organised system for publicising shows

* acts are paid promptly in accordance with terms and conditions agreed at the time of the booking

* reasonable refreshments available to band members

* polite and courteous staff available to help band members while they are present at the venue

* suitable stage lighting

* achieved standards of health and safety in all areas including the stage

* a web site that offers bands a good standard of information about how to play at the venue including contact with regular promoters

As with hotel ratings, the number of stars would be awarded by an independent inspector who would visit the venue to check that criteria are met and would do this at least once a year.

It might also be a good idea to ask fans and band members to vote on what rating they think a venue should be given. There is nothing wrong in involving users in this process; it is they who have first hand experience of using the venue.  The technical inspection is also required because issues like health and safety and the payment of bands would not usually be experienced by fans and voting alone is not reliable enough. A voting system shares power between venue users and inspectors.

Pubs sometimes achieve awards, such as “pub of the year”, as an acknowledge of excellence. If enough publicity is attached to such awards, this might be good for business.

If such a rating system were to be introduced, what benefits would it confer on the industry?

I think that the advantages would include fans be better able to make judgments about value for money. True, fans don’t usually decide whether they will go to a venue, based on the facilities available at the venue; they go to see the band of their choice, if they are playing there. It might be of  more value to the bands when deciding which venue to include in their tour. It’s very difficult for bands to know what standard of venue they are booking into when playing out of town. Their only recourse at present is the find other bands that have already played there and ask them.

Once a rating has been set, its then a benchmark. The venue might see an increase in its rating as being good for business.  There might be a degree of competition between venues in the same town, to achieve better ratings than the others. Industry analysts might be able to see if there are trends in ratings over a period of time.

Are there any disadvantages in this idea?  All standards have costs. Venue must meet health and safety (including fire) standards in order to stay in business. If inspectors find them to be at fault they are given the opportunity to correct faults in order to stay open.  They have to find the money to do this.  Voluntary standards would also require venues to find the money to upgrade some of their facilities in order to achieve an additional star. At the moment there is not a lot of incentive to improve standards. Increased standards have to be funded and this is not easy in the current economic climate.

Rating systems are by no means universal in the leisure industry. They have become established for hotels and restaurants but certainly not for pubs, cinemas or leisure centres. Rating systems work best where there is a choice for the consumer or user. If a live music venue is the only one in town, there is no competition for increased ratings.

At present the only bodies to set standards for such venues are the local authorities that license them for public entertainment and that is largely restricted to the safety of the public.

The economics of local live music

The economics of local live music

Published: 2010

It’s very difficult to run a live music venue and since the start of the credit crunch, hundreds have closed.

Making a profit from live music is, at the small scale end of the market very difficult. At the top end  of the market, companies are making huge profits from live music. In fact, the overall value of ticket sales for live music has overtaken that for the sale of recorded music (for the first time ever.)

It is the ticket buying public that funds live music venues. It is what fans pay at the door that keeps these small venues open. Its is often thought that small venues make their money from bar sales. This is not the case. In most venues, the bar sales budget is kept separate from the operation of the music side.

The music side of the venue has to pay for sound engineers wages, entertainment licensing, performing rights fees, publicity and promotion, cleaning, repairs, electricity, business rates, insurance, door staff and all the work of booking in bands to play at the venue.

In the bar side of things, they have to pay for drinks stocks (often in too small quantities to be able to offer good prices), licensing, health and safety, bar staff wages and cellerage costs.

If the venue makes a profit at all, it has to plough some of this back into the business to fund surpluses at the bank.  Venues go through good times and bad times and its in the bad times that good operating reserves are needed, particularly in these times when overdrafts are available than they used to be.

Demand for live music tickets can be very variable; it can for example be affected by the weather. A long spell or wet or very cold weather can affect ticket sales. The public can be very volatile in their consumption of leisure; people that used to enjoy going out to see a band might now decide to buy a video or CD to watch or listen to at home. In the local area, attendance will depend on the supply of bands that people want to go and see. If the local area has a constant supply of new bands, this will fuel ticket demand. Once a crowd has heard all the bands in its local area, their interest in seeing them regularly might wane. We might also argue that the musical and artistic quality of local bands and artists is a factor driving demand. Where there are high quality bands and acts, people will feel motivated to go out and pay to see them. Even if the venues are not of a high standard, people will put up with this, to see they bands they want to support. However, poor standard venues will see people coming down for one or two gigs but no wanting to get back there regularly over a period of time, if they facilities are dismal.

The public is getting used to increasing standards in the leisure industry, in bars, restaurants, cinemas, shops, cafes, theatres and clubs. Big companies have invested a great deal of money in making these venues attractive. They want to give customers a really good experience when they go out to spend their income on leisure. Sadly the small live music venues can compete with this. the public are getting used to clean, well lit, well decorated venues that are fitted out attractively and staffed by people who are properly trained.

Perhaps this is why they feel so let down when they go to small live venues that are grubby, dimly lit, staffed by untrained students who have to work for a pittance and offer poor value for money. Our small live venues are well below the standards we are used to in the rest of the leisure industry.

Why is this?  Other leisure venues tend to be run by large national chains, big companies that have money to invest in their outlets.  Pubs and bars tend to change hands quite frequently and at eash change of owner, they tend to get revamped and modernised. By comparison, small live music venues tend to be privately owned and do not change hands that often. Most of them operate on a shoe-string and have insufficient turnover to be able to invest in refits and upgrades to their facilities.

One other factor can affect ticket sales at the permanent live music venues.  This is the supply of free music gigs in the local area. Pubs that have falling takings, particularly mid-week, often start to put on bands, knowing that this will bring people into the pub. Bands can fill an empty pub, if only on one mid week date. they don’t charge on the door because this would put off the small number of regulars who do venue out on that night. But the down side of all this free music is that the bands don’t get paid either. The more bands that go and play for free in pubs, just to get a performance opportunity, the less ticket revenue goes into the live music venues. Why pay £5 to see a band at a venue when you can see them for free at a pub the week after?

Free gigs offer some bands the chance to play in a new venue, perhaps to some new people who otherwise would not hear them and in some circumstances they might think this worth the odd free gig now and again.  But if there is a systematic programme of free gigs, going on regularly, with bands who also play in ticketed venues, everyone looses. There is nothing wrong with a few bands putting on a charity funding raising event where they all play for free. But if they are out playing free entry gigs week after week, that serves to lessen the demand for tickets at the venues. It undermines the venues and the bands that could otherwise make a little money out of ticket sales.

Its all about seeing the bigger picture. Permanent live music venues play a key role in live music; they are hard to keep going and they depend on tick sales.  If a live music venue were to say “we will stop hiring bands to play here that play free gigs in our local pubs”, it would be harsh but it would also be realistic. If the permanent live music venues were all to close down, then bands would have no where else to play other than free gigs in local pubs. I think that would be a great loss to the quality of live music in a town.

What is a “social Enterprise”?

WHAT IS A SOCIAL ENTERPRISE?

A Social Enterprise is an organisation that is a business where profits or surpluses are reinvested or used to benefit the community, rather than to reward private investors. These businesses trade for primarily social or environmental objectives. They trade because they want to benefit the community rather than private individuals, such as shareholders. They do not usually distribute profits in the form of dividends. The purpose of their existence is social rather than financial. None of these ideas is absolute and we can find exceptions to all of them.

The government defines social enterprises as “businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.” [6]

The purpose of running the business is to benefit either the community or the people who work in the company.  Some social enterprise companies do have shareholders and all of them are there “for-profit” rather than “not-for-profit”.

Companies that run as social enterprises are often distinguished by their legal and management structures. The things that people have used to  characterise a social enterprise and  differentiate it from a charity or voluntary organisation include

* Having social goals and objectives that refer to the community
* Their principle activity is trade (either in goods and/or service delivery.)
* Assets are held for the benefit of the community
* They tend to have a more democratic approach to management
* They can be accountable to service users, customers, employees or other stakeholders

There are various legal forms that social enterprises can take, including:

* Co-operatives
* Credit Unions
* Housing Associations
* Industrial and Provident Societies
* Companies Limited by Guarantee
* Limited Partnerships
* Community Interest Companies
* Co-operative Consortium
* An unincorporated association

A Community Interest Company (CIC) is a special legal entity set up by the Government and subject to regulation by The CIC regulator.[1]

Social Enterprise companies can be subject to an asset lock. This means that, should the company be wound up, its assets must be passed to a charity or other suitable organisation, for the benefit of the community. Any assets that are liquidated must be transferred to another organisation whose assets are also locked.

CICs can have limited liability in the same way as private companies. They are subject to an asset lock and to a community interest test, which is applied by the CIC regulator at the time the company is formed. The liability of the directors can be limited in much the same way as a company limited by guarantee. CICs can be limited by guarantee or by shares.

It is not the case that social enterprises are defined by the type of trade they carry on; a social enterprise can do almost anything, provided that it can make a case for saying that its commercial activity benefits the community. “A CIC can pursue a wide variety of social objectives such as environmental improvement, community transport, fair trade etc.” [2]

“A CIC can be established for any lawful purpose, as long as its activities are carried out for the benefit of the community” [2]

A CIC cannot be a charity. A charity may operate a CIC as a trading subsidiary and this would gift its profits back to the parent charity. A CIC can have a single share holder (a parent charity). It can issue a dividend to its share holder but the amount of this dividend is capped by the Companies Act (currently 35%).

CICs can pay the directors of their boards a salary, as would be the case with most private companies. CICs do not attract any tax advantages, as charities do.

The CIC legal form was established in 2005 and it is estimated that there are now around 3000 – 4000 CICs (3,500 being an often quoted figure) [4] but this is a small proportion of all the social enterprises in the UK. [3]. It is estimated that there are around 62,000 social enterprises in the UK [6].

There is a national association of CICs [4] which acts as a representative body for all CICs in the UK and represents their interests to Government and the Regulator.

Social enterprises are sometimes referred to as “not-for-profit” businesses. But then it is possible that an organisation, which sells good or services, portrays itself as being “not-for-profit” and need not call itself a social enterprise.

If an organisation or company that trades makes a surplus (of income over expenditure) then it might either donate that surplus to a charity or other social beneficiary or it might reinvest that surplus back into itself.  Either way, there is no real accountancy difference between a surplus and profit. [8] They are both an excess of income over expenditure.

Community benefit

When we examine businesses that say they are social enterprises, it is clear that the term community benefit can mean a number of different things.

“Community” can be a discrete and definable group of people living together in a geographical area, ranging from a very small village through to a whole city or large urban area. It can also refer to society generally, meaning, the whole of the UK or one of its principalities (England, Wales, Scotland, Northern Ireland).

The Charity Commission refer to “The Public Good” as an alternative to “community benefit” [2].

The terms “public”, “social” or “community” are often used interchangeably without there being any clear technical differentiation between them.

These are general beneficiaries.  Some organisations might have specific beneficiaries, such as the employees of the company (as would be the case with co-operatives.)

Enterprise and trading

Charities can trade. They can sell goods and services in order to raise money.  This is often referred to as fund-raising. Whilst a lot of charitable fund-raising consists of asking for donations of money (tin-rattling and raffles), charities frequently do sell products at a profit or engage in events that are carried on to make a profit (such as a dinner or concert.)

Charity Law lays down restrictions on what trading registered charities can do and what they must do with the profits [2]. They can do this without having to create a separate trading subsidiary, although the Charity Commission issues guidance to regulate the trading activities of charities.

The main difference between a charity and an enterprise is that a charity primarily engages in activities that address its core goals (such as the relief of poverty) whilst an enterprise exists mainly to conduct itself as a business to make money for its beneficiaries.

What is clear from looking at social enterprises is that they confer two main levels of benefit

* What they do benefits the community (e.g. provide a service) – their work is the beneficial outcome.
* They make a profit from sales and this profit is a benefit to the community – their commerce creates a distributable beneficial financial outcome.

Nearly all social enterprises need to make a profit; they might be able to survive on a break even basis, but, like most businesses, need to make a profit in order to build up their reserves or to justify their existence if they are subsidiary of a charity. Profits can be reinvested into operational costs or into reserves that ensure the company’s financial future.

Many social enterprises have been created for the benefit of people who are in some way disadvantaged, such as, people who have been unemployed for a long time, people who are disabled, or people who live in areas of high deprivation.

One objective of such enterprises is to create employment and income for their client group, through commercial activity.

Social Enterprises by type of activity

As already observed, these bodies can engage in almost any kind of activity.  We can see that there are certain types of activity

* Very specific activities such as undertaking one particular function or providing a specific kind of service (for example, selling cheap wheelchairs to disabled people or teaching children from a particular ethnic background.)
* A range of activities within a defined field, for example, social care, health, education, environment, sport, etc. All kinds of things might be sold, a variety of services might be provided but there is a focus on a field of interest or group of service users.
* Geographically limited activities, where, for example, the social enterprise is a shop or centre in a village, town or city. Its customers will tend to be people living in that defined locality.

Discussion

What is clear from examining the evidence, about  organisations that are calling themselves “social enterprises”, is that it is a broad church in which there is a wide range of activities being engaged in by an equally broad range of legal entities (legal types of organisations.)

A recent debate about what is and is not a social enterprise calls into focus the issue of definition. A company called Call Britannia set itself up to employ people from a deprived area of Birmingham. Some bloggers commented that they thought that this was not a social enterprise. It was claimed that this was a private limited company. It was argued that this company could not be a social enterprise if it distributed a dividend to its private investors. The blogger argued that social enterprise is “a way of doing business rather than a specific, single ‘model’. [5] He went on to argue that some companies could be more commercial than others and some more social than others. Some private sector limited companies see themselves as having a social mission and that what they do has a socially beneficial impact. Private companies often donate from their profits to charities and enter into sponsorship deals with community bodies. Some very large public companies are known to be philanthropic. It is common now for companies to donate a fixed amount or percentage of a fee or charge to charity. Some companies get involved in fundraising for specific charities that they wish to support. [7]

Some have argued that “social enterprise” is a brand rather than a model. An organisation can self-identify as a social enterprise, when it thinks it has a social mission and wishes to benefit a community or cause. Commentators have argued that many voluntary organisations have dubbed themselves in this way but whilst they are very social, they are not very enterprising.

Another point of view is that “social enterprise” is an activity rather than a particular structure or legal form”. [9] Geof Cox argues that “social enterprise is a verb not a noun – its something you do, not something you are”. The debate doesn’t end at this point, because other commentators have emphasised that structure can be as important as function. It all depends on what the definition is for.

Any kind of legal structure can be used to engage in “social enterprise” but it is the nature of the commercial activity that primarily defines this as being socially entrepreneurial with a possible added property of what can and can’t happen to the profits and assets. Layered on top of this is the view that truly social enterprises will have a set of values and ethics that differentiate them from mainstream business entities. [9]

This presupposes that there are clear activities, procedures or models that must be present for an organisation to justify calling itself an enterprise. Simply selling goods is not in itself enterprising – many charities do that all the time as part of their fund-raising departments.

Given the general level of technical looseness in this subject, the word “enterprise” is frequently used as a synonym for business; an “enterprise” is a commercial project or a business. When an organisation is “enterprising” it is being run as or engaging in a business. So if an organisation is a “social enterprise”, that means it is being run as a business that has social benefits.

In the wider world, the term “enterprise” often means something that is associated with risk taking, as when an investor puts money into a company or project in the hope that there will be a return on investment or pay back.  Buying shares in a company is a risk-taking enterprise. In the social world, entrepreneurs want to reduce risk as much as possible.

They don’t often want to engage in something that is risky. Commercial investors risk their capital in an enterprise in order to hopefully win a return. Social capital investors are not so keen on risk.

“Enterprise” in this sense can just mean “trading”.

Conclusions

It would be easy to get into hang-ups about the word “enterprise”.  In the writings about social enterprise, there is a severe lack of accuracy; words are used in a  facile way that lacks technical specificity. A social enterprise is just an organisation (some form of company) that has been created to trade for social benefits.

There is a very broad range of organisation types, activities and methods that can be found out there. This makes accurate counting and classification difficult if not impossible.

Charities and other types of voluntary organisations undertake trade but they are not social enterprises because this is not their primary purpose – they engage in trade as a feature of a broader fund-raising function.

What characterises a “social enterprise”  is that it has trading as its primary activity.

Notes

1 The Companies House Web site.

2 The Charity Commission web site.

3  The Guardian.

4 http://www.cicassociation.org.uk/

  1. http://www.bssec.org.uk/blog/?p=384 A posting to the Birmingham and Solihull Social Consortium about a company called Call Britannia.

6 The Social Enterprise Coalition.

http://www.socialenterprise.org.uk/pages/about-social-enterprise.html

  1. Evidence from the Charities Aid Foundation http://www.cafonline.org

  2. Actually there is a difference between a profit and a surplus in strict accountancy terminology. See http://www.ventureline.com/Glossary_S.asp

  3. Highly useful discussion by Geof Cox http://www.geofcox.info/index.php?q=node/55

  4. http://www.geofcox.info/index.php?q=node/100

Social Enterprise – the way forward?

Published in 2010

The information shown in this article might now be out of date. This article has been retained for archival purposes.

So why would be want to get into this anyway?
Social Enterprise is one of those annoying phrases that seems to mean something when you first see it; the more you get involved with it, the more confused and murky it becomes.

It’s not new. S.E. has been around for a few years. Certainly since the late 70s in the UK.

It’s not strange.  Examples of well known S.Es include The Eden Project, The Big Issue, The Co-op, Jamie Oliver’s restaurant and the London Symphony Orchestra.

It’s not isolated. The Government has been pushing S.E. through The Office of the Third Sector and through ministers who have been going round the UK speaking about it.

It’s “social” because its about giving something of benefit to the local community, society or the public. It’s “enterprise” in nature because its about doing business.

It’s “for profit”.  Though the profit is more likely to be re-invested into the company than distributed to share-holders as a dividends. Strictly speaking it’s for social profit.

Social Enterprises are likely to replace a lot of what we have been calling “voluntary bodies” – the charities and other volunteer-led organisations that have sprung up in their thousands, all over the UK, since Victorian times. Whereas voluntary organisations wanted to give away everything they provided (and get it paid to do this from the public purse), S.Es are more likely to sell their services or get their projects funded initially from grants but then make them sustainable if there is a market that can pay for them.

Our economy has depended for hundreds of years on private investment. From Tudor times this was largely provided by wealth individuals. With the rise of the Joint Stock companies, capital investment became increasingly institutionalised through banks and investment houses. With the rise of the state, in particular the ‘welfare state’, public spending on quangos, grant aid to charities and voluntary organisations increased and this was amplified when we entered the European Community and that because a source of regional structural funds.

It now looks like there is a sea change underway in the way that the Third Sector is funded. In the Thatcher era we saw privatisation and rolling back the frontiers of the state in order to reduce public expenditure. As this happened there was also a huge expansion in the non-statutory sector, so that any savings that were achieved by privatisation were offset by huge increases in payments being made from the public purse to the wide variety of non-government organisations springing up all over the place.

The current sea change, programmed by the Labour government, looks like privatisation but it’s capitalism with a social face. It’s about putting less state money into the voluntary sector and expecting the sector to fund it own funding. If we step back and look at the bigger picture, can we see the same amount of social product being created at the same level of resources, or are we simply going to witness a huge decline in social capital?

Clearly the models are changing – from the charity and voluntary organisations to the social enterprise. The methods through which resources are acquired and services and products are delivered are subject to fundamental change. What concerns us most is whether the same proportion of GDP will go into this sector.

We also left wondering whether the new methods of providing social capital will be more or less efficient than what we have seen over the past 100 years. Is it actually more cost-effective to have the non-statutory sector funding itself, rather than channeling resources through the coffers of the state?

Bear in mind that the non-statutory sector includes health, welfare, the arts, sport, community projects, environmental projects and possibly a wide range of other things besides. That is a majorly big number of ‘mouths’ to feed. The other issue that weighs on my mind is that ‘he who pays the piper calls the tune’. A private social sector, funding itself, will be free of state control, in any direct sense, only subject to the same laws as any other commercial enterprise. That for me is a bonus.

Social Enterprises in Leicester

Social Enterprises in Leicester

Published: 2010

Some of information shown in this article might now be out of date.  This article has been retained for archival purposes.

I am trying to identify all organisations in Leicester/shire that are social enterprises.  If you want to add to the list, please comment with details.

Here are the ones I know about:

STRIDE
Chief Executive – David Brazier
10 Woodboy Street
Leicester
LE1 3NJ.
Soft Touch Co-operative
120a Hartopp Road
Clarendon Park
Leicester
LE2 1WF

www.soft-touch.org.uk

The Trees Group
165 Glenfield Road
Leicester
LE3 6DJ

www.thetreesgroup.org.uk

Well for Living
LASS Social Enterprise Ltd
53 Regent Road
Leicester
LE1 6YF