Geof Cox's Blog

What is it, exactly, we’re doing with Social Firms?

I'm running a workshop at this year's Social Firms UK Conference (13th -14th July) which will try to challenge the usually very practical focus of this event and ask some fundamental questions about Social Firm models (workshop details below).

It was inspired in part by a paper Doug Foster of Surrey University wrote a couple of years ago - which contrasted UK Social Firms with Italian Type B Co-operatives, linking the UK approach with more authoritarian industrial therapy and moral management traditions in psychiatry, while seeing the Italians as closer to more democratic therapeutic communities and social psychiatry - and also partly by my own research on Co-operative Social Firms, on the miEnterpise supported self-employment model and for the RIPFA Key Issues study on Social Firms - which highlighted the fact that Social Firm models have developed and achieved profile mainly in the mental health world - but there is much less evidence for success with other groups such as people with learning disabilities.

I wonder if anyone would like to put forward ideas on this in advance - which we can explore further as part of the workshop?

Workshop 6: Social Firms – Tinkering With Frankenstein?

Social Firms and the CIC Consultation

Having recently drafted a response on behalf of Social Firms UK to the April consultation on amendments to the CIC Regulations, I'm now thinking about the June consultation on the dividend and interest caps.

While the credit crunch has certainly revealed a problem with tying the caps too closely to Base Rate, my main concern is that from the point of view of Social Firms this consultation in fact asks the wrong questions about the dividend and interest caps.

Social Firms create jobs for people with disabilities and other severe disadvantages in finding employment. In doing so they tackle some of the most intractable cases of social exclusion, for example of people with mental health problems or learning disabilities. Their workers often have high support needs, and for this reason Social Firms often need an element of grant funding, at least at start-up, while still aiming to fulfill their social inclusion mission by becoming financially sustainable from trading alone.

The CIC form was a godsend to Social Firms, precisely because it combines an asset lock – which reassures grant funders - with normal commercial operation. The weakness of the CIC form lies in it's treatment of stakeholders.

The limitation of the Share CIC form for Social Firms, in particular, is that it does not allow the reward of the 'sweat equity' of the founders or on-going workers in the way that an ordinary share company could. Thus while the limitation on dividends is essential for outside investors (to reassure grant funders and therefore maintain the fundamental strength of the CIC form), we do not feel this should apply to shares held by or on behalf of emloyees – many of whom already experience the most severe financial exclusion.

Ostashkov Conference

19/10/2008 Moscow

Today I had one of those Kafka-esque comic experiences that really bring home what it means to deal with Russian officialdom. Having paid the entrance fee into the Pushkin Fine Art Museum (which is by the way absolutely wonderful – best experience in Moscow yet) I was asked to leave my bag in the cloakroom. Fair enough of course – but when I went to the cloakroom the official in charge insisted it was full. I could neither go into the museum nor back out (without losing the entrance fee)! I tried to suggest to the official in charge of bags that he could put my bag on the top of the rack and write a note of where it was as a 'check' for me - a common sense idea that was unfortunately far beyond my knowledge of Russian and his willingness to bend the rules. It is quite probable, of course, that as so often in such situations in Russia the solution lay in my wallet – but how do you know? and how do you know how much? Fortunately somebody came in to retrieve their bag at the vital moment – I put mine in the free space and the newcomer gave his bag-check directly to me.

Ostashkov: The view from the conference centre acoss Lake Seligar towards the monastery at OstashkovThe view from the conference centre acoss Lake Seligar towards the monastery at Ostashkov

Social Enterprise in Russia – Week 3 - Moscow & Aleksin

If you want to read from the start of my July in Russia experiences please start from Social Enterprise in Russia – Week 1 - Moscow, Schekino and Kaluga

My last weekend in Moscow (until October) turned out beautifully: still hot and sunny, but a gentle fresh breeze took the temperature down a little – to the high twenties rather than the mid thirties – and cleared the air.

The weekend highlight was the modern Tretyakov gallery – I finally understood socialist realism as something more than what I think Adorno called 'boy meets tractor' art. Right next to what is I guess the most famous architectural model in the world – Tatlin's Monument to the Third International – was the gallery shop: a few books and cards half-displayed behind counter and glass. This is Russia's equivalent to the Tate gallery – where I'm sure there would be half the floor devoted to sales. Later in the Oxfam office Sergey told me that the government (the Tretyakov is a state gallery) had been advised by top gallery consultants from the west on just such social enterprise, but they couldn't get a big sales floor past the middle level bureaucrats. I left the Tetyakov with 2 10-rouble postcards and wondered outside through the labyrinth of street artists painting portraits and selling picturesque landscapes, and thought about the commodification of art. Maybe the beaurocrats got it right after all...

Our last journey was to Aleksin. Southwest out of Moscow the countryside gradually becomes more like Britain – no hedges or stone walls, but bigger fields on rolling hills, sometimes even separated by lines of trees that if you're feeling a little homesick might just be mistaken for hedges.

Social Enterprise in Russia – Week 2 - Vyshniy Volochek & Ostashkov

We received a wonderful welcome in Vyshniy Volochek, especially from Vladimir Samuipov, the deputy mayor and celebrated local historian and writer, who presented us with both a copy of his latest book, on Pushkin's brief stay in the Tver region, and a bottle of the unique herbal liqueur 'Tverskaya' (ТΒΕΡСКАЯ). A man of culture and taste!

Social Enterprise in Russia – Week 2 - Rybinsk

Victor, my interpreter Anna, and I, have driven hundreds of miles through the Russian countryside, between Rybinsk, Vyshniy Volochek and Ostashkov. The countryside in this part of central Russia is mainly silver birch forest, but you pass also many clearings - very occasionally cultivated fields, but mainly wildflower meadows. These are very beautiful to look at, though not so nice at this time of year to actually be in – like most usually cold places the sudden summer heat teams with insects. Little of the land is used except for haymaking and gathering wild food – babooshkas sit patiently by the roadside selling mushrooms, blackberries, and what not. The climate simply won't support most agriculture - even pasture animals are hard to keep. When you get up close the grass is thin and scrubby, the land is covered in snow for 5 or 6 months of the year, and the summer is suddenly very hot

Even more occasionally you pass untidy villages – clusters of little wooden dachas with beautifully carved and fretted windows, usually just off the road. Often, some of the dachas are abandoned – indeed some whole villages are abandoned – another reason for the lack of agriculture and the return of formerly cultivated fields to meadows. Russia's population is shrinking by about a million a year, and with Moscow and a few other cities growing like topsy the countryside seems to be emptying fast. I was puzzled at first by the reaction of those Russians who find out I have 4 children, but soon discovered that it is normal for families to have just one child here, and 3 children makes you officially a Big Family (of which more below).

Social Enterprise in Russia – Week 1 - Moscow, Schekino and Kaluga

Oxfam have asked me to advise them on how social enterprise development might contribute to the anti-poverty programme they are currently running in Russia. I'm now sitting outside the Metropol Hotel just beside Red Square – quite appropriately (for a social enterprise blog) between the Marx Monument and the GUM department store (which has become a cathedral to capitalism) – trying to make sense of my first week here.

What can you say to people about setting up social enterprise in a country where any one of over 90 government agencies can inspect your premises at any time... where most of the inspectors aren't paid enough to live on, so whatever their personal morality they have to supplement their income somehow... and where 80% of the wealth of the world's largest country is concentrated in it's capital city - and outside Moscow almost everybody has only just enough money to live on?

If you've ever done any grassroots community work anywhere you would recognise Alla Novikova. She is the kind of middle-aged woman that is often at the centre of vibrant community groups. Well turned out, both sceptical and full of hope, first to speak up for others, yet clearly herself the heart and soul of the organisation. Her life experience has left her equally at home making policy or tea. Alla is chair of the Schekino branch of the All Russia Society of Disabled People. You might notice the missing finger lost in a train accident back in Soviet times, when she was 25, newly married with a new baby. You probably won't notice, because she'll be wearing trousers, that the train also took her leg. Alla knows what it's like to be disabled in a workers' state, where workers are supposed to be strong.

Social Firms UK Annual Conference

Social Firms UK is to be congratulated on another excellent annual conference this week. I am however unsure about one aspect: the decision to lobby for a waiver of PAYE and NI for any company that employs more than 25% disabled staff. Clearly this would be of enormous help to Social Firms, while at the same time could surely not be seen as special treatment since it would be open to any business. There is, however, always a price to pay for tax concessions – for example in greater regulation – somebody else deciding what 'disabled' means, and maybe changing their mind every other year.

Moreover, there is a danger here that goes right to the heart of the Social Firms movement, and for me this was reinforced by the emphasis several of the conference speakers placed on 'getting to scale'.

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