SOCIAL FIRMS UK CONFERENCE 13 th & 14 th July 2009 INTRODUCTION TO SOCIAL ENTERPRISE

1. SOCIAL FIRMS UK CONFERENCE 13th & 14th July 2009 INTRODUCTION TO SOCIAL ENTERPRISE

2. Agenda • What is Social Enterprise? • The Social Enterprise sector in the UK • Where do they come from • Types of Social Enterprises • What are Social Firms ? Where do they fit in? • Characteristics • What kind of Social Enterprise are you? • Introduction to Legal models • 5 Key messages

3. What is a Social Enterprise? (1) • Tackles a wide range of social and environmental issues • Operates in all parts of the economy (health & social care, arts, childcare, sport & leisure, finance, transport,…) • Uses business solutions to achieve social goods • Has a distinct and valuable role to play in helping create a strong, sustainable and socially inclusive economy.

4. What is a Social Enterprise? (2) • First and foremost a BUSINESS. Engaged in some form of trading, primarily to support a social purpose • Aims to generate surpluses, then reinvested in the business or in the community to deliver social objectives • Not here to maximise profit for shareholders or owners

5. What is a Social Enterprise? (3) • Social enterprises have in common a commitment to meeting both their social aims and their business objectives in order to achieve financial stability . • = Double bottom Line – Or (+environmental aims) =Triple bottom line

6. The accepted definition “……businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders” Dti 2002

7. PRIVATE ENTERPRISE Sole Trader/ Partnership/ Limited Company (shareholders) • The Organisation • Owned by the Entrepreneur/ Shareholders • Profits distributed to owners/ shareholders • Business decisions made by owner/ • partners/ shareholders Business Activity Profits/ Surpluses

8. SOCIAL ENTERPRISE Committee of members • The Organisation • Owned by the Community • Profits not distributed to members • Surpluses reinvested • Decisions made by Board/ Committee Business Activity Profits/ Surpluses

9. Modern Social Enterprises • The Big Issue • Cafédirect • Co-operative Group • Day Chocolate Co. • Eden Project • Fifteen

11. The Social Enterprise sector in the UK • 55,000 social enterprises in the UK (DTI 2006) • 2000 (estimated) in the North West • 3 times the size of the Agricultural Sector • Key sectors: • health • social care • childcare • community transport • housing • leisure • waste recycling • media

12. Where do they come from? • Some start off as businesses – a group of people or an individual social entrepreneur combining a business idea with social mission • Some are voluntary or community organisations largely dependent on grants and volunteers but working to develop or increase trading income • Some are direct products of Public and Local Authorities, seeking to bridge a gap in their services.

13. A special type of business • Just like any business, they need to be well managed • They share many problems and factors for success (market and financial conditions) • Their distinctiveness come from their values: • The reasons why they set up • The needs they meet • The principles by which they work

14. Types of Social Enterprises (1) • Employee-owned business : creates and preserves jobs • Co-operative : association of persons united to meet common economic and social needs through jointly owned enterprise • Social Firm : commercial enterprise that employs and trains disadvantaged or disabled people • Intermediate Labour Market Company: provides training and work experience for the long term unemployed • Community Business: social enterprise focusing on local markets and services

15. Types of Social Enterprises (2) • Charity Trading Arm: enable charities to meet their objectives in innovative ways • Social Business: not-for-profit business, supports the work of a charity or non-governmental organisation • Credit Union: provide access to finance • Development Trust: focus on community based regeneration • Housing Association: provides social or low cost housing to people in need

16. The Ben & Jerry Case ……..

17. The Ben & Jerry Case Our Values • Our aim is to make the best possible ice cream, in the nicest possible way. • It’s not only mixing in the best ingredients that’s important to us, our suppliers are too. • We believe that using business as a tool for social and environmental change is just as important as sourcing the finest ingredients to make our ice cream. So, wherever possible, we source our ingredients from producers and suppliers who share our values. This can mean anything from free-range eggs to sustainably produced dairy, to Fairtrade certified ingredients.

18. The Ben & Jerry Case Our Aims : • Make the best ice cream in the world, using locally produced ingredients or fair-trade natural ingredients . • Provide employment and training opportunitiesto young people and people who may face barriers to employment through the PartnerShop programme and chosen suppliers. • Be socially responsible by looking after staff and partners welfare.

19. The Ben & Jerry Case • PartnerShop programme: franchise outlets selling Ben & Jerry’s ice cream. The shops are independently owned and operated by community-based organisations. • Apply Fairtrade principals – Source produces locally – www.info.fairtrade.net • Climate change college missionwww.climatechangecollege.org • Carefully chosen suppliers who have social/environmental aims also (Greystone Bakery) • Sustainable Dairy Farm programme – www.caringdiary.com • Recycling programme – now looking at converting ice cream waste into energy through a bio-gas digester.

20. The Ben & Jerry Test Is it or Is it not a Social Enterprise ?

21. Social enterprise is a concept

22. Mission Driven Established in reaction to a social or economic problem such as : • Closure of a factory • Social exclusion • The decline or absence of an important service • The lack of employment opportunities

23. Value-led organisations • Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity • Social Enterprises speak of values related to social justice, fair trade, concern for the environment, social inclusion, gender and community • Social Firms’values are based on Enterprise, Employment and Empowerment

24. TASK 1

25. Give 3 Characteristics of a Social Enterprise and explain your choice Social Enterprises are:

26. What about Social Firms What are they ? Where do they fit in ?

27. What is a Social Firm ? • A small business created to provide supported employment opportunities for people with a disability where more than 50% of income is from sales and more than 25% of staff have a disability, with a value base of: • Integrated employment • Same terms and conditions • Supported working environment • Market focused • Participative management style Source : Social Firms Scotland

28. Socially Responsible Businesses Charities & Voluntary Sector Government (inc NDGB’s) Private Sector Social Enterprises ‘The Social Economy’ Income from Sales Grants Taxes Private Goals Social Goals Political Goals So where do they fit (1)? Source : Social Firms Scotland

29. So where do they fit (2)? The ‘Mainstream’ Economy: Public + Private Sectors The Social Economy Social Enterprises & Emerging Social Enterprises Emerging Social Firms Social Firms Source : Social Firms Scotland

30. Who for? • Social Firms tend to be created for:- • 60% enduring mental health problems • 30% learning difficulties • 10% other high support needs • Cannot sustain open employment • Furthest away from the job market • Prefer to work alongside others who understand their situation Source : Social Firms Scotland

31. Social Firms Values • Enterprise : Social Firms are businesses that combine a market orientation and a social mission • Employment : Social Firms are supportive workplaces where the working environment is one that provides all employees with support, opportunity and meaningful work • Empowerment : Social Firms are committed to the social and economic integration of disadvantaged people through employment and pay a fair wage.

32. Examples of Social Firms in the UK • Six Mary’s Place – www.sixmarysplace.co.uk • SpeakUp - www.speakup.org.uk/ • Spot On - www.spoton-yorkshire.org.uk

33. Challenges faced by Social Enterprises • Social enterprises have to compete in the commercial market and face the same challenges and risks as more traditional businesses. • To succeed in competitive markets, social enterprises need to be as good as, if not better than, traditional businesses working to a purely financial bottom line. • You will need to use your entrepreneurial drive to achieve social and/or environmental and financial aims without relying on grants to succeed. • However, your independence will help to avoid excessive bureaucracy and allow you to change and innovate more quickly. • Success can bring reasonable financial remuneration, but also an interesting and fulfilling business career.

34. TASK 2

35. We deliver services under contract We charge beneficiaries fees for some of our services We sell products We sell training We have some trading income We have a separate trading company which passes its profits onto us Yes or No Yes or No Yes or No Yes or No Yes or No Yes or No 1- How Enterprising are you already?

36. 2a- What kind of social enterprise would be a good idea for YOU? • Describe your “social” purpose • Describe your business idea

37. 2b- What kind of social enterprise would be a good idea for YOU? A “social enterprise” activity will be a good idea if : • Fits in with your “social or charitable” purpose • Contributes directly to your organisation’s work • Contributes to your Mission • Meets the needs of your existing beneficiaries • Can generate surplus income • Has a high likelihood of success Does it fit ? • Yes or No • Yes or No • Yes or No • Yes or No • Yes or No • Yes or No

38. 3- Is your idea outside the scope? If you can’t place your trading idea anywhere on the spectrum but it will generate great social benefits, you could consider the following : • Discuss the idea with another organisation which has a more closely related social purpose. Perhaps work together on it. • Set up a separate organisation to take forward your idea. You should not necessarily consider changing your PURPOSE to make your idea fit !

39. 4- Setting up a Social Firm?How do you go about developing a supportive workplace ?

40. Planning for changea- Assessing your idea Plan a special Board meeting. Answer the following questions : • How is your organisation currently governed and managed ? Will this need to change? • How will the new products or services fit in ? • Who will benefit from the new activities? • Who will fund or pay for the service to exist? • Would you need to work with partners ?

41. Planning for changeb- Growing your idea Following on from the previous task, answer the Following questions : • Market : how well do you understand it ? • Capacity : do you have the skills and the time to make things happen • Finance : how will you fund the project ? Do you have a Funding or Income Generation plan ? • Operations : are you able to adapt to grow ?

42. Planning for changec- Bridging the gaps Actions : • Review strengths and weaknesses (SWOT, PEST) • Improve understanding of your market • Take action to become a supportive workplace • Adapt governance model / constitution or (M&A) • Review systems and procedures • Improve financial management • Review compliance to legal issues (HS, Employment law) • Build up capacity and improve skills • Develop new business plan • Adopt a new legal structure

43. Critical Success Factors for Sustainability In Social Enterprises • Good market research. • Identifying good ideas which present market opportunities. • Quality of service • Adequate resources for operational purposes. • High levels of motivation. • Profitability

44. Opportunities for Social Enterprises • Drive from the Government to encourage Public & Local Authorities to commission S.E to deliver public services. • The NHS has recognised the potential of SE for areas like primary care & GP Services • Not all about procurement – There is evidence of SE diversifying into commercial markets or collaborating with private companies to grow their business

45. Opportunities • The Department of Health • Social Enterprise Investement Fund- www.dh.gov.uk/seif • The right to request - www.dh.gov.uk/ • Futurebuilders Fund • http://www.futurebuilders-england.org.uk/ • Office of the Third Sector • www.cabinetoffice.gov.uk • Modernisation Fund / Community Assets prog , .. • New National Funding / Contract Tool • www.fundingcentral.org.uk • Public Procurement Toolkit • http://www.s-p-i-n.co.uk/assets/dtitoolkitforsocialenterprise.pdf • Get to know your commissioners !

46. Success Stories from Small organisations • Catering2order . A small social firm based in London won a contract in 2008 to provide catering services to the Olympic construction site. • Commissioners : Government – London Olympics • Genesis Dental Care opened its first practice as a social enterprise under NHS contract in April 2006. Genesis now runs 4 Dental practices in the North East. Its aim is to provide affordable, accessible treatment in poor communities long deprived of an NHS dentist. • Commissioners : NHS – Local PCT • Mow & Grow was established in 2006 to provide a sustainable gardening service in Waveney. Under various contracts Mow & Grow helps vulnerable people with gardening while offering a series of horticultural qualifications to its employees. • Commissioners : Local Authorities, Housing Associations, etc.

47. How Social Enterprises work in a legal sense Social enterprises can take a wide variety of legal forms, the most common are : • Company limited by guarantee • Industrial and Provident Society • Community Interest Company (CIC) • Others

48. Introduction to Legal Models Some Legal Models are not suitable vehicles for Social Enterprises – such as Sole Trader and Partnerships. In such cases, while the business might have been founded with Social Ideals if control of the enterprise and its Governing Body is not rooted in the Community the Social Enterprise Model will not apply Private Enterprise - Corporate Social - Ethical Business - Social Firm - Social Responsibility Enterprise Enterprise Models

49. Company – Limited by Shares Trading Models for Social Enterprise

50. Company – Limited by Guarantee Trading Models for Social Enterprise