Social Enterprise offers no guarantee of better public services

On Saturday mornings I take my children swimming. We go to a large sports centre that used to be run by the council. These days it’s run by a social enterprise, though unless you’re ‘in the know’ about these sorts of things you’d be unlikely to notice. The social enterprise was spun off by a local authority some years ago – this is, according to the government’s Big Society vision, the future of public services.

The staff at the centre are pleasant (mostly), the teachers are as excellent as they always were, the management is, well, rubbish (not to put too fine a point on it) and the customer service is poor. And that’s important – and more than me just venting my spleen about shoddy service – because we mustn’t kid ourselves into believing that social enterprises offer any guarantee of better services for people as we merrily go about spinning off public sector services into workers cooperatives and not for profit organisations. The end result, from a citizen’s perspective, may not improve; in fact it could even get worse. Like the public and private sector, the not for profit sector varies….some are good, some not so good (and it’s not a given that the best quality offering is always the most successful…remember Betamax?).


okay, so I realise this is a gratuitous use of a pic of some cool retro-tech 🙂   

That’s not to say that social enterprises don’t have other qualities and benefits – they do. One strength that they have is a community asset lock, which is a fancy way of saying that they serve a social purpose, rather than serving the interests of shareholders. The primacy of the profit motive in private enterprise has some benefits too, but to my mind, a focus on social objectives is a good thing for a public service to have at its heart, but it’s not the same as delivering a better quality service. Of course this raises an important question; do we care more about the quality of public services that are delivered or what the organisation that delivers the service does with the profits?

Of course that rather presupposes that social enterprises are actually generating any profits! There are certainly some social enterprises making money (and a handful of household brands spring to mind) but there are also a huge number who are highly dependent on grants, donations, government funding and philanthropy to sustain themselves. That’s okay – lots of charities are reliant on grants and no one thinks the worse of them for it (except maybe the government with its questionable rhetoric of ‘the sectors’ dependence on the state’). But it is somewhat disingenuous to hide behind the banner of ‘enterprise’ whilst operating in a not-too-dissimilar fashion to the average (and much less ‘sexy’) charity.

Similarly, there are substantial numbers of social enterprises that are not tremendously ‘social’ in their endeavours – benefiting very few people in need or serving their beneficiaries poorly (or tenuously). Again this is not something exclusive to the social enterprise sector…some charities are run as if they were personal fiefdoms rather than agencies afforded the privilege of charitable status in order to serve their beneficiaries’ needs. However, to see the hyperbole surrounding social enterprise you’d be forgiven for believing that social enterprises are universally enterprising and socially driven and this is simply not the case.

Some social enterprises benefit a lot of people but don’t actually make money (at times, if not consistently, this is been the situation for the Big Issue – often, quite rightly, held up as one of the exemplars for the sector). Others do make real money but provide benefit to few people (okay…I am generally prepared to speak my mind, but even I’m not going to get myself into even more hot water by naming the organisation I’m thinking of…so you’ll have to come up with your own examples!). Both of these things are okay. In fact they’re very good when compared with some of the alternatives. But the label ‘social enterprise’ is, in both instances, misleading.

The government (and for that matter the last lot too) seems to see social enterprise as the answer to public service reform, funding for the not for profit sector and pretty much everything else. And it’s easy to see the attraction – save money and be seen to be supporting good causes (and I mentioned saving money, right?). Social enterprises, for their part, are generally happy to keep quiet, pick up the cheques and concentrate on doing the things they want to do…and who can blame them? Social enterprise is a small part of overall business in the UK (and only accounts for a modest proportion of the not for profit sector) and whilst I believe there’s significant growth potential, I don’t believe it will ever dominate our economy.

Meanwhile we seem to leave the commercial sector more or less to itself to generate profit for private investors, often with a cost to society at large and the taxpayer in particular. A bank branch in a poor neighbourhood may be regarded as ‘commercial unviable’, but the costs to society of the financial exclusion suffered by that community are ultimately borne by the state. If anything like as much political and financial backing were put into making private sector businesses more social as goes in to supporting social enterprise we could achieve real transformative positive social and economic change.

Corporate Social Responsibility (CSR) has not improved substantially over recent years. You only have to read the Centre for Responsible Credit’s report on bank’s CSR programmes to see how poorly they fare – even in comparison with their overseas contemporaries. There are some honourable exceptions and moves to develop more holistic CSR programmes that are integrated with corporate plans, supply chains, culture and practice, but these are the exceptions. For the most part they are little more than glorified marketing strategies, bolted on to corporate plans as a way to make companies look good and employees feel good.

If we want to improve public services, to support and build assets and resources among deprived communities, stimulate social action and create a modern economy fit for the 21st Century, then we need to be honest about the respective strengths and weaknesses of different approaches. Until we do so we will carry on allowing some businesses, some charities and some social enterprises to get away with poorly serving social interests.

Toby Blume




6 thoughts on “Social Enterprise offers no guarantee of better public services

  1. As usual Toby, a great blog. As passionate as I am about social enterprise (and believe me I am) I am more passionate about customers/clients/service users (delete where appropriate) getting the highest possible standards of service. Too much bad practice or customer care gets by because of the labels we use. Social enterprise is not a panacea. But at their best they can be an amazing way of providing great services, great value and still make money, which is reinvested in the community. But, as you point out, we mustn’t hide behind our labels. The people we serve deserve more than that!

  2. Some very good points Toby. There are some great SEs doing very good things, there are also some managers who seem to feel being a SE shows they have good intentions so they really don’t need to deliver quality services. In fact this is a phenomenon seen quite widely in the voluntary and community sectors. Agsin – choose your own examples.

  3. @Graham – thanks. my blog’s not intended to be an attack on social enterprise – far from it – but there is a debate to be had about what really matters to us (as citizens) in public service reform. @Kath – of course you’re right and i’ve tried to make the points you raise in my blog (some perhaps better articulated than others). VCS, social enterprise, private sector, public sector….we can point to examples that are good and not so good in all of them, but i do worry about the tendency of policy makers to overlook these variations in pursuing the ‘next big idea’ as if all that’s gone before it is rubbish to be jettisoned from public discourse.

  4. The advantage of the social enterprise sector is not in being a cheaper route to market for bureaucrats – implementing their policies and plans (although this may be a benefit it CAN offer). Its’ advantage lies in the ability of social entrepreneurs to tell stories of social change, social injustice and progress. In being able to attract, retain and develop talented and committed people who share in the vision and have the potential to manifest it. In harnessing the potential of those affected by injustice and using it to drive progress.So instead of trying to manoeuvre to catch the crumbs from the top table perhaps the sector should focus on sharpening vision, improving stories, and building a movement that people will want to join and work in because of its autonomy, independence and creativity; its ability to provide fulfillment and a decent wage – not because of the funding streams that it can secure (along with KPIs, evaluation frameworks and other game playing inducements attendant with the mainstream).When we are sat at the top table we have our backs to the real social enterprise marketplace.Of course the sector needs to maintain good relationships with the ‘top table’. It needs to influence, lobby, advise and occasionally disrupt. If it can secure investment on its terms than so much the better. But it needs to ensure that the money and power available does not corrupt – as it so often has. That the pull of the cash does not lure us away from core purpose and beliefs. That it does not allow us to kid ourselves that the latest funding stream to ‘do things to people’ might just work – this time – if we can only get our hands on the cash. The social enteprise sector has to have the guts to be uncompromising on vision, values and beliefs. It has to maintain integrity.This requires the sector to develop an entreprenurial management and leadership culture. A progressive mindset. Progressive management. Not Political.The social entrepreneur needs to be comfortable and competent at managing and leading through vision, values, social goals and objectives and then relying on creativity and innovation to secure sustainable investments. They must be obsessed with the social change they are trying to deliver and the recruitment and retention of a tribe of professionals and volunteers who can help. Not with reading the political runes. They need to promote change, not maintenance, autonomy not dependence, courage not conventionality.The advantage of social enterprise is that it can be transformational. People will join a transformational movement and bring to it their passion, creativity and hard work. Turn it into another transactional part of the prevailing bureaucracy and this advantage will be lost.And finally of course any organisation can be a social enterprise regardless of structure. Many ‘for profits’ have learned how to create social change and a sustainable profit!

  5. I think you make a number of very important points Mike (and i thought your blog on similar issues was very good – ).a few thoughts occur… the ‘movement’ you describe distinct from broader civil society? most of what you say could equally be applied to charities and community groups (at least those who walk the walk as well as talk the talk). or is there something different?the other related thing is the reference you make to social entrepreneurs. personally i’ve always been more comfortable with the idea of social entrepreneurialism, rather than social enterprise. being entrepreneurial doesnt mean you have to make money through what you do – and much of the community sector is unlikely to be commercially viable…but that doesnt mean it has no value. it could be coming up with a steady stream of good ideas that people want to fund with grants…just interested to hear your thoughts

  6. I think the ‘movement’ I describe is a just a society where prosperity is seen to mean more than money. For me ‘civic society’, ‘third sector’, ‘VCFS’, ‘socent’, ‘Big Soc’ are just labels, usually invented by policy makers or the bureaucrats/entrepreneurs who wish to influence them. The ‘difference’ as I see it is between those who see their work as a utility – something that helps them to test their skills and potential, to find common cause with others and produce the goods and services necessary for a becoming existence; and those who see it as a disutility – something that they would rather not do if they were not ‘compensated’. Entrepreneur, in all its derivations, is a slippery word. I am interested in people who can make things much more interesting than just a profit, like social impact, or ‘progress’ for them and their loved ones. How they make the economic engine tick is often a secondary concern, mere tactics. Social impact and turning a profit – all well and good. Making a social impact but also making a loss, consistently? Then either you are not creating sufficient value, or that value is not being recognised by those who benefit from it.Whether revenue streams are from sales, philanthropy, charity or public sector funding – is all just tactics and risks.What does it mean for work (regardless of who does it) to not be ‘commercially viable’? Either it represents good value and use of resources or it doesn’t. If there is a market failure spanning the free market, state funding and philanthropy then either the value is not there or it is not being properly articulated. For many their work is not ‘commercially viable’. For some this leads to a tactic of pursuing state funding or philanthropy – which in the long run nearly always turns you into a dependent client class. Others just choose a life of poverty/austerity – the starving artist.

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