Smoke, mirrors and social value

I’ve lost track of when the term social value was coined as a phrase, but maybe it’s the first time that you’ve heard it? I suspect it metamorphosed from a number of other terms such as social impact and best value, but what does it really mean? For me it’s about considering not only at the price of a product or service but the other added social and environmental benefits that might come from purchasing that service or product. For instance in buying the Big Issue you know that you are not only getting a good read but that you are mainly performing a business transaction with someone who is homeless, giving them ‘a hand up not a hand out’, so not only financially, but giving self-esteem, structure and focus to an otherwise chaotic life in the process. The Social Enterprise Mark is designed to be the short-cut for buyers to help them make these sorts of decisions which are often hard to put a figure on.

The term Social Value has become more widespread recently, because of the Public Services (Social Value) Act 2013 that was passed a year ago. It requires all public agencies to consider social value at the pre-commissioning stage of commissioning public services. However we need to look at its origins to understand why we are where we are. It was originally known as the Social Enterprise Act and was designed to require more public sector commissioners to consider buying from social enterprises because of the added social value that it could give, pound for pound.

However, as predicted in my blog Social Value Lite, 2 years ago, corporates and private businesses are now lining up to demonstrate their social value. It’s the ‘new sustainability’ or ‘new CSR’ and is a term that seems interchangeable. Whilst I do not think that social enterprise has a USP around social value, it is its central purpose.

For this reason, we as certified social enterprises, do object to being preached at regarding how to achieve social value by an increasing number of banks and businesses, which are themselves famous for anti-social business behaviour! You can’t see social value in isolation, it needs to be the sum of the parts. Social value and impact was supposed to be a way that social enterprises and others in the social sector could differentiate their business approach and now we seem to have come full circle. Professor Adrian Henriques, expert in CSR, talks about this conundrum in his blog Social Value Just a Placebo.

Social enterprises need to get much cleverer at voicing why they are socially different. If we are not careful the substantial resources of the corporates will completely marginalise us in this debate. We are already seeing a pipeline of slick ‘social value’ reports and other promotional tools which leave social enterprises standing. We need to wise up about motivations, to be less coy and sycophantic toward ‘real business’ and be proud of our place within the private sector, not begging for crumbs. I know that life is hard at the moment, but we lose this one at our peril.

My interview with Consult & Coach for a Cause

I was recently interviewed by the Conscious Capitalism blog about social enterprise, the changing face of today’s economy and how the Social Enterprise Mark is important. You can read the original interview here: http://consciouscapitalismblog.me/interview-with-lucy-findlay-managing-director-of-social-enterprise-mark/

 

How would you define a social enterprise?

A social enterprise is a business that puts the society and the environment at its heart rather than the financial interests of individuals.  It operates as a business but in a way that puts others interests first.

What is the role of social enterprise in today’s economy?

Social enterprise can do virtually anything.  It is an ethical alternative business model.  We see increasing numbers of social enterprise working in health and education because of the opportunities that government policies are opening up.  However social enterprises can also fill in the gaps and provide innovative solutions for those people that are marginalized by society eg employment and training, provision of important services that the private sector would not provide due to the lower profit margin.

Why is, in your opinion, accreditation important for social enterprises?

Without accreditation/certification there is no consistency over what is called a social enterprise.  Although the UK is seen as a leading country in this area but each person has their own idea about what social enterprise means.  The Social Enterprise Mark reclaimed those words for the social enterprise sector.  We consulted with existing custom and practice to develop the criteria.  We want to be seen as different.  You can only differentiate if you are clear about the boundaries of why you are, and challenge others that claim to represent social enterprises when they are not.  It also provides an external verification of the credentials – so it’s not ‘we are a social enterprise because we say we are’.

Describe the process of being accredited by the Social Enterprise Mark.

It is very simple in the UK. You go onto our webpage http://www.socialenterprisemark.org.uk/and fill out the online form using your governing documents and accounts.  Our criteria are also found here.  We also have a customer helpline if people have problems.  If the company does not qualify we will advise them on what they need to do.  Once we have all the information this is then assessed by our assessor and if necessary it goes to our Certification Panel for approval which can take up to a month. Each year our Markholders have to declare any changes that might have been made which could include changes that mean qualification is questioned. In some cases we have to remove the Mark.  In the case of international applications we are still trialing our approach: for example, in Middle East C3 – Consult and Coach for a Cause is helping us explore the market and test the framework!

What has been the biggest challenge for you working with the Social Enterprise Mark?

Starting something from scratch, when everyone else thought it was too difficult and the struggle to get recognized and get others to buy into your vision…to name but a few.

Where do you see social enterprise sector in ten years? 

I think that social enterprise will be a much more common business model (certainly in the UK).  Many new graduates are interested in making a difference to society rather than just loads of money.  Life is becoming very different and more people have ethical motivations and want to carry that through their working life rather than just doing something as a volunteer or when they retire.

And finally, what was your personal motivation behind going into the social enterprise field and what advice would you give to social entrepreneurs at the beginning of their career?   

My personal motivation is provided when others see and buy into the Social Enterprise Mark’s vision about being an alternative.  There is potentially no limit for social enterprise if we were more creative in our thinking.  Many children understand more than adults who just see business in very limited terms.

I would advise other new social entrepreneurs to give it time.  It always takes much longer than you think.  Also be really clear about what it is that you are doing and why and articulate what you are selling in one simple sentence.  I’ve lost count of the social enterprises that can’t clearly articulate what they do.  Most of all – make sure that there is a market for your product and there is a business case to develop it!

Walking the talk?

footprints

When you buy an item of wooden furniture, do you check it’s made from certified sustainable timber? Do you seek assurance from your plumber that he’s qualified to repair your leaky tap? Accreditation in one form or another forms a major part of our daily lives. As these two examples show, they can also serve quite different purposes.

In one, you want to eat at your new dining room table with a clear conscience knowing you’ve not destroyed the planet in the process. In the latter, you want to avoid a flood in your bathroom by employing someone who knows how to fix things. What links both examples is third party endorsement that the product or service you need has been independently validated by a trusted source as a legitimate match.

But in our world, where doing good is your raison d’etre , how do your buyers know you’re walking the talk?  Since the pilot Social Enterprise Mark in 2007 and the full launch in 2010, we have learned an incredible amount, not least from the labelling world.  Learning from experiences in Fairtrade and the food world has really helped us focus on what’s actually important – that’s the certification process and remaining true to it.  We have not been diverted by other marks or badges.  In many ways the social enterprise world has created great confusion with a plethora of similar sounding terms leaving people baffled, unsure and talking at cross purposes (particularly if you are trying to set one up!).

We created the Social Enterprise Mark to reduce confusion – it is the short-cut to recognising genuine social enterprises. The Mark acts to simplify and bring people together through their shared social values and common business approach.

We arrived at the criteria by working and consulting the social enterprise world and we have consistently applied the Mark with the support of our Certification Panel, who take their job extremely seriously and were specially selected for their expertise.  The Panel are key to maintaining our integrity – they are separate and help guide us through complex applications and compliance issue.  They apply their considerable knowledge and learning from the past 5 years, which is stored in our Certification Manual, the tool for consistency in new applications and renewals. To quote one of our Mark holders, Plymouth University’s pro-vice chancellor Julian Beer “As the social enterprise sector expands and opportunities for fake social enterprises increase, the Social Enterprise Mark is crucial in recognising genuine social enterprises. Only by meeting robust criteria, overseen by the independent Certification Panel, do social enterprises attain certification.”

I would like to make clear that, where an organisation has failed to meet these standards and criteria, we have removed their licence (we are not a membership organisation).  Where businesses do not qualify we tell them and offer guidance in how they can change how they operate. Some do and others don’t. That’s fine by us. By putting a marker in the sand we’re giving people a choice and clear position on which to make decisions, whether as a prospective Mark holder or a buyer of goods or services.

This is fundamental to our existence and it’s for this reason we do not believe in self-assessment.  Of course offering such clarity does cost money.  There are plenty of good businesses out there doing good work, but they are not social enterprises and will never get the Social Enterprise Mark.  This point is key because shareholder profit motives leads to behaviours associated with this structure, ie making money for shareholders takes precedence over ethical issues if you have to make a return to investors (look at the concern about the ownership of the Co-operative Bank).

Dr Mark Reynolds of Integrated Care 24 explains it well:
“Operating as a certified social enterprise means the ethos of the organisation is confirmed as “for patients, not for profit” with any surplus being applied to service development, and so to public benefit, rather than to private profit.  The Mark helps us prove our social enterprise values and purpose in delivering the best possible care, within very tight resources, to our patients.”

Health is just one of those sectors undergoing massive change at the minute and where the term social enterprise can mean many different things. Having one Mark helps to make it easier and more credible when you need to stand up and be counted.

We’ve just published our Annual Review which shows our certified social enterprises contribute £5.4 billion to the economy.  These certified social enterprises use the Mark to differentiate themselves from their competitors. Hence the Mark is revered as the only authority for independent validation of a company’s social enterprise credentials, which explains our high levels of customer loyalty.

Our Mark holders are using their Social Enterprise Mark to foster change, embedding the Mark at the very heart of their organisations. It is being used by newly formed health social enterprises to enable culture change internally and externally to instil trust and confidence with patients, staff and communities.

For the education sector, it’s a similar story: the Mark helps to create a culture and ethos of social enterprise in students and staff, as well as supporting the development of social enterprise in the local community.

We have exciting growth plans for the future, building on our work which demonstrates the best of social enterprise, not just talking, but walking the social enterprise talk.

social enterprise mark

How many ‘lords a leaping’?

'Lords a leaping'

Source: Wikipedia, The Twelve Days of Christmas song

I hadn’t noticed before, but there are any number of ‘lords a leaping’ in the well-known Christmas song, the Twelve days of Christmas – anything from 10 to 12, in fact! (Source: Wikipedia, Twelve Days of Christmas)

I wonder how many lords are ‘a leaping’ today, following the Chancellor’s Autumn Statement yesterday?  I’m sure there are not that many social enterprises ‘a leaping’, that’s for sure!

As you may know, I was a member of the working group that consulted on the Social Investment Tax Relief (SITR) that was highlighted in the Autumn Statement yesterday.  The outcome is disappointing at best.

Despite pointing out a clear solution to HM Treasury, in the form of the Social Enterprise Mark criteria to identify social enterprises, the Treasury have limited the impact of SITR to a small set of legal structures, where few organisations will benefit.

I’m clearly concerned that around 30% of Mark holders are potentially excluded from being eligible.  However, if this is the chosen method of applying social investment, we have yet to see if it will really address the resource needs of Mark holders anyway.

The Government  will publish its response to the consultation alongside draft legislation next week and I’ll be attending the next HM Treasury consultation in January, but I don’t expect to see a u-turn.

I doubt you’ll see ‘1 Lucy leaping’, thats for certain!

Social Enterprise Day call for clarity on social value

Social Enterprise Mark's Lucy Findlay

It’s Social Enterprise Day and there’s lots going on all around the UK. I’ve been part of a week-long Social Enterprise Festival in Plymouth where I met celebrity social entrepreneur Melody Hossaini and attended the launch of the brand new Futures Entrepreneurship Centre at Mark holder Plymouth University. The Festival has been very lively and inspiring and culminates in a Social Enterprise Trade Fair today, where Rachel Brown and the Social Enterprise Mark are taking part. I am also one of the 50 voices on the Guardian Network talking about what social enterprise means to me.

Tonight, I’m joining Alastair Campbell and the CBI for their annual dinner in Bristol to make links with business for our Mark holders. This evening in Plymouth, Julie Hawker, one of our Social Enterprise Mark Ambassadors is presenting the Social Enterprise Mark to Plymouth University and Peninsula Dental Social Enterprise. In addition Julie will be taking part in a social enterprise debate which explores how a city can become a social enterprise city. Anne Mountjoy will be linking up to the debate from the Exeter Social Enterprise Network by videolink.

For Social Enterprise Day, we’ve announced the results of our research which asks does the Social Value Act have Teeth? I urge you to share this announcement and the report widely – let’s create the momentum for the Social Value Act to start working for social enterprises.

Happy Social Enterprise Day!

 

How to legitimise your social enterprise

This article is a summary of the interview conducted by Ben Pawsey, following Lucy Findlay’s 2 Degrees Sustainability Champion award. The article was previously published here.

Founded in 2010 in the UK, the Social Enterprise Mark Company (SEM) awards its “Social Enterprise Mark” to organisations that demonstrate their social, environmental and ethical values and behaviours, in particular with regards to profit distribution.

As the only international certification scheme for “genuine” social enterprises, the Mark helps social enterprises gain competitive advantage by highlighting their social and environmental credentials and purpose to stakeholders (much like a B Corp certification).

The Social Enterprise Mark Company was founded by Lucy Findlay, who was first inspired by the social enterprise business model when she met two female social entrepreneurs who ran successful inspirational social enterprises in tough communities in the UK. She has worked in the social enterprise world for more than 15 years running various organisations that promoted social enterprises and working with government (Prime Minister David Cameron awarded one of the first national Social Enterprise Marks). I spoke with Findlay last month at the 2 Degrees Sustainability Champions Awards, where she was recognized as Supporting Player of the Year.

Ben Pawsey: How did you come to found Social Enterprise Mark Co?

Lucy Findlay: Social enterprises identified that there was a gap in the market to differentiate themselves on the grounds of their business model – i.e. that they are trading for people and planet rather than for shareholder gain. The organisation that originally set it up consulted the social enterprise sector throughout England to develop the criteria and the branding. This was built from the learning and experiences of other leading labelling schemes, such as Fair Trade, etc. An important aspect of the Mark is the Certification Panel, who act as the ‘guardians’ of the criteria and oversee the certification process.

BP: Over 500 businesses have declared their social enterprise credentials to earn their Social Enterprise Mark since its launch. Can you describe some of the key credentials and SEM’s thinking behind them?

Lucy Findlay: There are five main criteria:

Criterion A – Must have social and/or environmental objectives in the governing documents. This is to prove and to provide transparency of purpose, which is a vital element of being a social enterprise.
Criterion B- Must be an independent business. This is to prove independence and self-governance distinguishes businesses from the public sector, from projects within larger organisations and private sector shareholder led businesses.
Criterion C – Must earn 50% or more of its income from trading (i.e. not grant funding). 50% traded income is currently accepted as a way of distinguishing a business from a grant-reliant organisation.
Criterion D – A principal proportion (50%+) of any profit made by the business is dedicated to social/environmental purposes because social enterprises are driven principally by social and environmental objectives rather than the maximising of profit for private gain or the gain of individual shareholders.
Criterion E – On dissolution of the business, all residual assets are distributed for social/environmental purposes. A commitment on residual asset distribution demonstrates a commitment to social/environmental objectives rather than financial gain on disposal of assets.
BP: SEM is based in the UK but its principles are being adopted globally. Last year we published a piece on ‘What Exactly Is Social Entrepreneurship?‘ to address the confusion around the subject. Do you feel that globally the definition is successfully being honed or is at risk of becoming further muddied? Where do the opportunities and challenges lie in either case?

LF: I agree with the definition stated in the article but I would drill down further, really interrogating what that means. For example the statement that ‘the main emphasis for a social entrepreneur is social value creation.’ We have taken this point and drilled down into the inherent tension of social business, especially around social motives versus profit motives. Mohammed Yunus, for instance, is really clear on the need for clarity of motivation and speaks about it in the context of the recent collapse of the Bangladesh garment factory here.

Being social is at the core of being a social enterprise and profit maximisation for shareholder gain can run counter to the social goal/mission of the business. Social enterprises are there to address a social problem and any investment and business motivation should address this factor. This is why we are clear that no more than 50% of profit can be distributed for shareholder gain.

I think that many people do not really understand why a profit motive is a problem when you are addressing a social issue and increasingly, CSR is being put into the same bag as social enterprise. Each approach has its own validity, but you need to understand what motivates that business to really understand its behaviours. I’ve lost count of the amount of businesses that have said that they are in fact social enterprises because they are creating local employment and might sponsor the local football team and run a CSR progamme. But this is a fundamentally different proposition from taking a wholly social/environmental approach and reinvesting all or most of the profits back into solving that problem.

BP: What does the future hold for social enterprise? Are there any trends you can see emerging from the past few years?

LF: There are a number of trends that we can see for the future in England and in the UK more widely in some cases. As the term ‘social enterprise’ gains increasing traction in the policy, business and charity worlds, there are a number of areas where the social enterprise market is expanding, for instance:

  • Start-ups that address social/environmental challenges that in the past might have been addressed in other ways – e.g. through charity or public policy, or not at all – e.g. climate change
  • Conversions of public sector activities into new social enterprises – e.g. Health and Social Care where many government departments are now outsourcing contracts to new social enterprises
  • Quasi-public organisations becoming more socially enterprising – e.g. universities, which are now required to become more customer-focused and more responsible for generating their own income rather than receiving grants from government. The social enterprise message resonates as the organisation has a strong social purpose but wants to improve its own business credentials. The social enterprise marketing message also resonates with students who are increasingly more ethics-conscious.
  • Recent research in the UK has shown interestingly that more women lead social enterprises (38%) as opposed to 19% in the mainstream business world.
  • Learn more about the Social Enterprise Mark and how it could benefit your business.

    Ben is Executive Producer of SustainableBrands.com looking to serve the Sustainable Brands community conversation online. He also coordinates the SB Innovation Open aimed at disruptive startups making a scalable positive impact on our future.

    Ben’s background is in Design having… [Read more about Ben Pawsey]

    Are you being served?

    http://www.google.co.uk/imgres?imgurl=http://3.bp.blogspot.com/-R7OG8S2qMec/TxmB7iO99rI/AAAAAAAAQJk/KjKLanKOMC0/s640/Mollie_Sugden_as_Mrs_Slocombe.jpg&imgrefurl=http://www.chainsawsandjelly.com/2012/01/creepy-girl-mrs-slocombe.html&h=364&w=500&sz=28&tbnid=1VVIYGboskBInM:&tbnh=94&tbnw=129&zoom=1&usg=__LALfeSlJm07rnJAtq0sliPJVkpo=&docid=fPnWMPflFnNKXM&sa=X&ei=2efwUcmdJ-Sa0QXr0oGABw&ved=0CDwQ9QEwAQ
    The recent state of social enterprise research, by SEUK, The People’s Business has reported that more than ever social enterprises are needing appropriate investment ‘Twice as many social enterprises (48%) as SMEs sought finance in the past 12 months and 39% cited access to finance as the single largest barrier to their growth and sustainability – the most common barrier experienced.’

    This mirrors the findings of our work with Social Enterprise Mark holders who cannot access the right resource level for their growth – ‘The median amount of finance sought by social enterprise was £58,000′ – below the minimum thresholds of many specialist social investment vehicles. This supports other research identifying the need for smaller-scale, patient, risky and unsecured lending for social enterprises. David Floyd in ‘That Shrinking Feeling’ provides good commentary on this issue, although he argues that what social enterprises need most is more customers, but I would say it’s chicken and egg, without investment a social enterprise can’t grow to reach its full potential and access new customers.

    At last the penny is dropping that social enterprises cannot access the finance they need through social investment channels – but where are the solutions? Indeed, small scale lending where it does exist, is so risky that it has to be backed up by very high interest rates to justify that risk, which puts social enterprises at a double disadvantage – not only do they have to demonstrate social impact, but also, this is not taken into account on the bottom line by the social investment sector, which in turn charges high interest rates to make its own business model work. The social enterprises then become financially uncompetitive with the private sector which can access cheaper equity and do not have to demonstrate social value. This unlevel playing field and to represent certified social enterprises are two of the factors that led me to volunteer for the HM Treasury Working Group on tax relief for social investment in social enterprise and the argument that I put forward for lower than commercial rate of return for investors. I urge all social enterprises to respond to the consultation and share responses with me.

    Another investment channel is the banks. The ‘Banks and social enterprise’ article by Claudia Cahalane shows how much banks are courting social enterprises for current accounts but the unsecured lending offers are very thin on the ground. Why is it not possible to look at some kind of blended product from the banks? I know that there are banking rules that have become more onerous, but why can’t banks’ CSR programmes look at working with others to develop a CSR stream that provides such patient capital which does take into account social value and mission? We seem to be looking into a very small box with everyone saying why it can’t be done. Could this be a great publicity opportunity and chance for the banks to put their house in order and demonstrate their social credentials?

    Meanwhile the social enterprises will struggle on with no investment and certainly no grants (now a dirty word). The upshot, as David Floyd says, is that we may not be shrinking in numbers, but we are shrinking in size (turnover). Isn’t it time to do some re-thinking? Who will dare to take this challenge on?