A social enterprise – So who’s job is it?

The media is full of problems – housing, welfare, immigration and on each one the debate tends to follow the same pattern “whats the Government doing”, “what aren’t they doing”, “what should they be doing”?  We act at times as thought the state has the power to change every social ill. But there are of course limitations to how far the state can do so, particularly in times of austerity. So where else can we turn? The charity sector springs to mind, but equally in hard finical times its seems optimistic to hold too much hope for organisations that fundamentally depend on the good hearts and spare cash of others. More accurately, many charities depend on Government funding which is of course diminishing in the current climate. 

I have however recently discovered an alternative. Last week I visited OxfordJam the fringe festival of the Skoll world Forum on Social Enterprise. The place was a flurry of excitable people discussing a myriad of ideas to save the world, or more accurately save ‘their’ particular bit of it. I spoke to an ex accountant who was setting up a solar power lamps manufacturing business in Africa; promoting local jobs while improving the health and education of the locals. Health and education you ask. The locals use kerosine lamps which give off carcinogenic fumes. Also kerosine is expensive and runs out, meaning children have to resort to lamp-posts, literally, to do their homework. A film maker was using cinema to reengaged disenfranchised youth. Planning programmes of films with them and combining them with educational films and classes. A former (conventional) business man was running a translation helpline for schools to converse with parents who don’t speak English. In inner city areas where many families speak English as a second language this is a real problem, as teachers will often tell you.

Social enterprises run like business, often selling products or services, but their primary goal is not financial profit but positive social impact with profits invested back into the cause. This is what distinguish them from charities (although the distinction can be vague) and it arguably makes them a more sustainable and therefore exciting prospect.

Much of the debate at OxfordJam was around what their role can and should be. Should it be to focus on a particular issue or group of people? One of the more famous examples would be ‘The Big Issue’ and homelessness. Or should they address more society wide problems like environmental awareness. Another question is, if social enterprises are to operate like a business which maximizes social rather than monetary profit, what is their currency? Should they rely on a contextual, holistic, judgment of their positive effect or should they quantify their social impact.  The direction of travel is certainly the later and there is a growing emphasis on techniques like ‘social return on investment’. This applies economic analysis to give a monetary value to social impact. Quantifying an intervention based on the money that would have been spent on other interventions to address the same problem. For example promote healthy eating now or pay for the medical costs later.

Venture funding and start up costs are another issue. The Government set up Big Society Capital in April 2011 and announced £600m of funding for social enterprise, which is channelled by intermediary venture funders into budding social enterprises. Foundations and charities, such as Unltd (who I was helping at the ‘Jam’) also provide start up loans and grants, as well as support and advice. And some funders offer more complex financial tools, such as social impact bonds, to allow such ventures to get a footing in ever more competitive markets.

Whether the Big Society approach of drawing back the state to leave room for such social intervention is the right one, is not the topic of this blog. But the spread and success of social enterprise does raise the question of whether our discourse is too heavily focussed on what the state should do and less on what ‘we’ can.