Social Enterprise – the way forward?


Published in 2010

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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.