Geof Cox's blog

Day Two in Rybinsk: -18°c

By way of background I gave Helen a copy of the Wikipedia article on Rybinsk – unfortunately her eye was drawn unerringly not to the town's illustrious past or many architectural treasures, but to the article's apocalyptic warning that...

the giant Rybinsk dam, which holds the Rybinsk Reservoir (until recently the largest man-made body of water on Earth) places the town in imminent danger of the dam breaking and the reservoir flooding the city

Hopefully the fact that the reservoir, and most of the huge span of the Volga, are almost entirely covered by ice at the moment makes the danger a little less imminent!

Many people in Rybinsk have other pressing problems. In soviet times this was a closed town, and they still manufacture aircraft engines and components, but during the collapse of the soviet system in the 1990s most military work here ceased, and about 80,000 people lost their jobs. Only about 20,000 new jobs have been created over more recent years – this in a country where welfare benefits are not really enough to live on at all, let alone achieve any quality of life.

My social enterprise development sessions – which sometimes seem to revolve entirely around discussions of the impenetrable workings of Russian customs – are thankfully interspersed with Helen's story development workshops.

2010 social enterprise visit to Russia - 1

When I got into the car in Rybinsk this morning Victor pointed to the temperature displayed on the dashboard. Although it was a beautiful sunny morning and not even particularly early – about 9am – the outside temperature was still only -16°c. Victor told us about a previous visit to Rybinsk, when even he had found it so chilly he ran to the car. When the dashboard lit that day the outside temperature read -42°c.

Over the last two years I've been advising Oxfam on the role social enterprise might play in their anti-poverty work in Russia. At first this was focussed on strategy: understanding the legal/financial environment for social enterprise, the resources and capacity of the NGOs for disadvantaged people Oxfam is working with, what external support might be available, and so on. Now at last the work has moved on to what for me is a more exciting phase: real social enterprise development work.

The kind of felt character that first caught my eyeThe kind of felt character that first caught my eye

A typical question...

Here's a question I received in an e-mail last week:

I'm going to the SE conference in Cardiff next week. On their registration form they have Charities and Social Enterprises listed in different delegate fee categories. I thought that Charities (or more specifically their trading arms) are SEs? Am I easily confused?

I get a lot of questions like this at workshops and seminars, and you can read my own attempt to cut through the definitions confusion here: What's all this about social enterprise?

But this particular asking of the question did make me think a bit harder - because it came from a lady who has worked for years at a high level in social enterprise - actually for one of the employee ownership apex bodies - and who is currently researching her Masters in Ethical & Responsible Tourism.

Do we just have a definitions mess - or is there a bigger tragedy going on here? Have we actually succeeded in taking our wonderfully clear and simple and popular message - that you can do business to do good - and muddying it up so thoroughly that hardly anybody can now understand it?

Sounding like David Cameron...

I was in a meeting with a well-known social entrepreneur today who was most disturbed when somebody said he sounded like David Cameron. Are we turning Tory? Or have they finally worked out, in the aftermath of the financial world collapse, that business models based on greed and exploitation really don't work?

Here's what I think is happening...

The historic alliance of Big Business and Conservative Counties has collapsed. Globalisation with its reduction of market town high streets to bland uniformity and replacement of human contact with automated switchboards is no more acceptable to Middle England than it's ability to move production to China is to Trade Unionists.

It's obvious to all now that unfettered competition doesn't lead to real diversity and choice – to the local and individualistic and quirky - but to the illusory choice of colourful wrappers around international monoculture and financial institutions too big to fail.

We may have different views on where to put windfarms, but we can all see that using more and more energy on making more and more stuff we don't really need, spending more on advertising them than making them in the first place, and transporting them half-way round the world, is just plain crazy.

Do structures stymie social enterprise?

At a recent social enterprise investment conference Financial Times enterprise editor Jonathan Guthrie said that although social enterprise was 'an attractive-sounding phrase', one of his worries was the 'vagueness of the structures'. According to Guthrie, this presents problems for funders - and in the end funders will impose what they see as appropriate structures. Nick Temple from the School for Social Entrepreneurs, who shared the podium with Guthrie, disagreed with this.

I think this disagreement is over two sides of the same coin: the positive side of the diversity of structures we have is being better able to develop exactly the right structure for purpose; the negative side is how confusing and difficult the choices involved in this can be.

Funders have always, and will always have specific requirements on legal/financial structure: grant-giving trusts and foundations have them, banks have them, and now specialist social enterprise funds have them. This is not a problem in itself - a big part of developing the right structure has always been anticipating the scale and type of funding that will be appropriate - though getting the optimal structure to meet funders' criteria, plus all the other constraints of business model, scale, mission, values, and so on, can indeed be difficult. I was involved a few years ago in a research project for Social Firms UK that revealed that over half of all the social enterprises surveyed were disatisfied with their legal structure!

'Right to Request' tender collapses

The DoH tender to provide support to NHS staff wishing to set up social enterprises has been suddenly withdrawn.

The collapse of this tender will have come as no surprise to social enterprise developers engaged with the NHS - but the slow take-up of the 'right to request' is not because social enterprise goes 'over the heads' of frontline staff as one senior NHS manager patronisingly claimed.

The problem is much simpler than this: it is the failure of the DoH to deal clearly and honestly with the NHS pensions issue. A survey of PCTs in April revealed that 'the biggest [stumbling block for frontline staff exercising their ‘right to request' to set up a social enterprise] is uncertainty over NHS pension rights and benefits'.

In a number of places, such as its official Guide to the Right to Request, the DoH lays out clearly the many contracting routes open to social enterprise, including the so-called 'PMS' contract forms that can provide proper NHS pension scheme membership. Except that – you guessed it – when you actually come to the contract negotiation you find that those forms of contract are no longer really available for social enterprise.

The fact is that far from smoothing the path of social enterprise, it is now almost impossible to set up a social enterprise within the NHS pension scheme (although existing staff already in the pension scheme will probably be able to remain in it).

The number of 'social enterprises' just doesn't add up

The government has increased it's estimate of the number of social enterprises in the UK from 55,000 to 62,000. However, this is due neither to any actual growth in the number of social enterprises, nor any new research – rather it is 'down to a new and 'complicated' way of working out the estimate'!

The actual basis of the figure of 55,000-62,000 is rarely scrutinised. It in fact derives from the Small Business Service Annual Survey of Small Businesses: UK 2005 (www.berr.gov.uk), but this counted only social enterprises that confirmed ALL of the following criteria:

  • they think of themselves as a social enterprise (Q45b)
  • they never pay more than 50% of profits to owners/shareholders (Q45)
  • they generate more than 75% of income from traded goods/services (or receive less than 20% of income from grants and donations) (Q43)
  • they think they are a very good fit with the Government Definition of a Social Enterprise.

These criteria in my own view would exclude much – perhaps even most - social enterprise. Here are just some examples:

Social Firms Conference

I'm just back from the 2009 Social Firms UK Conference. One highlight was a surprise presentation to its 'turbo-charged' Chief Executive Sally Reynolds, marking Social Firms UK's 10th Birthday. I wonder how many people (in addition to Sally and myself) have been to EVERY Social Firms UK Annual Conference (I even remember the geese!).

This year Simon Hebditch and I ran the 'Tinkering with Frankenstein' workshop as previewed in this blog. One aspect of the Conference that closely reflected the workshop/blog themes – and that some old Social Firm hands found a little disquieting - was the emergence of 'WISE' – Work Integration Social Enterprises – as a major focus. This is one of the effects of the recent broadening of the focus of Social Firms UK itself - beyond disabled people to anyone with 'a disadvantage in finding employment'. I was among those who welcomed this broader focus, on the grounds that ex-offenders, homeless people, substance abusers, etc, often present similar issues (in terms of employment and enterprise) to disabled people – and indeed such groups often suffer from learning disability, mental health or other problems that precipitated them into crime or drugs or homelessness in the first place.

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