Forum 2007 – Allison Ogden-Newton
Social Enterprise: What’s the Big Idea?, Allison Ogden-Newton, Social Enterprise London
Allison Ogden-Newton, Chief Executive for Social Enterprise London, introduced the idea of Social Enterprise. She explained that Social Enterprise was an alternative income generating strategy or business model which combines financial sustainability with social and environmental missions. Whilst it is often a great route for many organisations it is as challenging as launching a business and isn’t merely an easy route to more funding. It involves a shift in the way of thinking about how to finance your objectives. To become a Social Enterprise a certain percentage of income generated must be from the sale of goods or services, also, profit distribution is limited to activities supporting the Enterprise’s social aim i.e. reinvestment, funding of external and internal programmes.
Allison explains that Social Enterprise is:
- Improving local public service delivery
- Addressing market failure
- Empowering consumers, communities and workers
- Enabling the voluntary sector to improve sustainability
The benefits of being a Social Enterprise means that there is less reliance on grant-funding; the problems associated with being reliant on grants are:
- Disconnects payment from quality of service
- Removes choice from the service user
- Doesn’t allow organisations to build reserves
- Weakens long-term sustainability
- Discourages innovation and risk-taking
- Unresponsive to (over or under) demand
- Means too much time is spent applying for grants rather than providing services
- Can result in over-dependence on a single source of funding
A charity may see a need in a community and set up to do something about it. A Social Enterprise would only set up to do something about it if there was a concrete business basis for this service.
Social Enterprise may be appropriate if a significant proportion of the organisation’s income is derived from trading, if there is interest in reviewing the current legal structure or membership structure, if there is interest in improving management practice, and if there is interest in service innovation and development.
Examples of Social Enterprise include: The Fifteen Foundation – a charity set up to inspire disadvantaged young people to believe that they can create for themselves a career in the restaurant business. It uses Fifteen Restaurant to both fulfil its objectives and raise the income needed to do so.
Technicalities: charities are allowed to sell any good or service provided it is in line with their stated charitable objectives (primary purpose). Charities who wish to sell something unrelated can get round this legislation by setting up an independent trading arm that gifts all profits to the parent charity – this needs to be approved by the charity commission and the inland revenue. Charities can undertake a small amount of for proit, non primary purpose trade through the charity.
Social Enterprise London runs a consultancy – the largest area aside from government is charity and their trading opportunities. SEL offers general information sessions and produces practical guidelines, it runs a network of around 400 Social Enterprise organisations while delivering technical training to the sector.
www.sel.org.uk
