“Beware the Ides of March” (March 15 2013 AD, not 44 BC)

The Soothsayer’s warning to Julius Caesar on March 15 proved fatal.

While not wishing a similar fate for Big Society Capital, Social Enterprise UK and London Third Sector Organisations in the Big Society Capital Glee Club, Social Enterprises across the country have noted that during the second half of March 2013 things have not been going well for Social Investment Market protagonists. And all this despite the post Budget hype about possible tax relief on Social Enterprise investment!

Above all, most Social Enterprises believe that the £600mn allocated to Big Society Capital could be more effectively used. The first draft of An Alternative Strategy to Support Social Enterprises is shown below.

The following represents a brief summary of events since the Ides of March 2013:

  • Niahm Goggin’s Institute for Voluntary Action ‘Charities and Social Investment’ Research Report for the Charity Commission

    Page 18.“Most of the study participants in charitable trusts and foundations said that they had not reached their current limits for social investment and could do more. There was some scepticism about recent projections of market size.”

    Page 24. “Study participants in charities and some national bodies suggested that non-charitable social investment intermediaries were overly concerned with charity demand for investment rather than charity need for investment to meet the needs of their beneficiaries.”

    Page 25.“‘I want to bring elements of the casino to the social investment market, not bring the social investment market into the casino.’ (Intermediary)”

  • Mary Duffy’s Clore Fellowship ‘Shining Armour or Sheep’s Clothing?’ Report
    Page 23.“The Social Enterprise landscape is dominated by SMEs and the deals being sought by many investors are bigger than these organisations require. Some point to a ‘big hole’ at the <£50k investment level (even more acute at <£20k) and the failure to address this because of administrative costs and risk involved. They say that this gap is greatest at the start-up stage where organisations struggle to reassure investors that they are a good risk. There are concerns that smaller scale, tougher work will suffer, threatening creativity and diversification and cutting across the rhetoric about fostering social impact innovation across the funding arena". Page 27.“There is a view that many intermediary organisations populate their teams mainly with those from the finance side, demonstrating what they prioritise and what they are seeking in terms of direction. This leads to trust issues – are these ‘bankers out of work following the crash’ trying to cash in on something to ‘tide them over until they go back to earning big bucks’? Are they ‘rich ex City guys seeking salvation’?”

  • Nick O’Donoghue’s “Plan Vanilla” lending pronouncement, Wednesday 27 March 2013 – which represents a big shift in focus for Big Society Capital from his bold £100mn investment pronouncement on Tuesday 15 January 2013. This perhaps represents his first public acknowledgement of difficulties with Social Investment?
  • Vibeka Mair’s “White-washing Capitalism” piece in Civil Society on Wednesday 27 March 2013 in which she quoted Robbie Davison, Chief Executive of Community Interest Company Can Cook, and his accusation about “Big Society Capital, the biggest Social Investor in the UK, imposing a market-based ideology on the social investment sector”. She continued: “And he and others say that Social Investment intermediaries are concentrated in a City of London bubble with no real understanding of the finance needs of the voluntary sector”.
  • Reports on March 19 2013 about the Social Investment Business grant of £199,000 to Big Society Network
    “It is also not clear how the £199,900 has been spent and what, if any, social outcomes have been achieved, as the campaign that was meant to be funded by the grant appears never to have launched and has now been put on hold by the Cabinet Office.”

  • @j0nathanjenkins (Chief Executive of Social Investment Business) and his anguished Twitter exchanges last week, in particular, asking “@huckfield how wud u allocate 600m then to 3rd sector if the only given is you must do it in a sustainable way not a one off?”

@huckfield replied to @j0nathanjenkins, saying that alternatives would be posted on this site. The first draft of An Alternative Strategy to Support Social Enterprises is shown below.

But as all these ‘London Bubble’ events above have been unfolding, Leslie Huckfield Research and many others are most of all concerned that many Social Enterprises across the country face severe financial difficulties, are being forced to declare staff redundant and are eating into their reserves.

For them, Social Investment promoted by Big Society Capital, Social Investment Business, UnLtd and other intermediaries is irrelevant, inaccessible and serves none of their desperate needs.

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An Alternative Strategy to Support Social Enterprises

Leslie Huckfield Research offers the following proposals as a basis for further discussion. These are summarised below and set out in more detail in An Alternative Strategy for Supporting Social Enterprises under Hot Topics .

At this stage Leslie Huckfield Research offers this Initial Draft of An Alternative Strategy for Supporting Social Enterprises merely as a basis for discussion. But these suggestions are offered in the knowledge that they are more relevant to the real needs of Social Enterprises than the “structured investment products” promoted by Big Society Capital and its Social Investment Market intermediaries.

It is proposed that £400mn Dormant and Unclaimed Bank and Building Society Accounts, together with a further £200mn investment under the Merlin Agreement from four major banks – previously allocated to Big Society Capital and its intermediaries for development of a Social Investment Market – should now be reallocated to regional Social Enterprise Networks for their decision on spending priorities.

Following detailed consultation with appropriate regional Social Enterprise Networks, it is proposed that for future Social Enterprise support and development, these Networks might seek to pursue the following Menu Options:

    A) Supporting Social Enterprise Regional/Local Networks

    B) Public Social Partnerships And Change Funds

    C) Social Enterprise Markets Programme and Social Enterprise Infrastructure Support Fund

A) SUPPORTING SOCIAL ENTERPRISE REGIONAL NETWORKS
(the following to be discussed):

OUTCOME 1:
To ensure that Social Enterprises are better funded, informed, encouraged and supported to develop, grow and contribute to public and other service provision and delivery.

Objectives:

  • To encourage national and local government, Trusts and Foundations to create new Social Enterprise funding programmes, initiatives and availability, including investment in new structures.
  • To improve communication and connections, information sharing and links between social entrepreneurs and Social Enterprises across regional areas.
  • To provide up to date, relevant information and support of benefit to Social Enterprise and Social Firms at the level of individual organisations.
  • To ensure Social Enterprises are better informed on policy development and signposting to local, regional and national support programmes and initiatives.
  • To develop and promote mutual Social Enterprise support and inter-trading opportunities.
  • To optimise regional and local initiatives so that these incorporate and relate to local Social Enterprise and Third Sector developments.

OUTCOME 2:
To enhance the profile of Social Enterprises, their value to local communities, meeting regional and national objectives using policy engagement and media.

Objectives:

  • To raise the profile of Social Enterprise as a business model, through highlighting values and benefits of Social Enterprise to broad range of stakeholders.
  • To increase understanding and awareness of Social Firms and work integration opportunities.
  • To measure, record and disseminate economic progress of Social Enterprises and Social Firms and identify ways in which they can improve performance.

OUTCOME 3:
To ensure that influence and contributions from Social Enterprises to policy development locally and nationally is enhanced

Objectives:

  • To represent the needs and views of Social Enterprise to policy and decision makers at regional, local and national levels to assist proactive policy development.

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B) PUBLIC SOCIAL PARTNERSHIPS AND CHANGE FUNDS
(the following to be discussed):

1) Public Social Partnerships (further details and examples to be provided)

A Public Service Partnership (PSP) differs from other commissioning approaches since it is based on needs to be addressed, rather than services available. These needs become the driver for other partnerships. A PSP typically comprises three stages:

  • Social Enterprises work with public sector purchasers to design a service
  • A consortium of public, Social Enterprise and Third Sector Organisations may conduct a short-term pilot, helping to refine service delivery parameters
  • The service is further developed to maximise community benefit before being competitively tendered

The PSP Concept was developed in Scotland under the previous EQUAL Social Economy Scotland Partnership.

2) Change Funds (based on current Scottish Government funding models)

The Scottish Government currently operates 3 Change Funds – for Reducing Reoffending, Integration of Adult Health and Social Care and Early Years, which fund development and operation of Public/Third Sector Partnerships for developing integrated services.

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C) DEVELOPMENT OF MARKETS AND SOCIAL ENTERPRISE INFRASTRUCTURE
(the following to be discussed):

1)Developing Social Enterprise Markets (based on current Scottish Government Programme)

  • The Programme would complement the Public Services (Social Value) Act 2012 and other procurement initiatives.
  • This Programme would increase Social Enterprise engagement in service design to meet community needs and increase overall Social Enterprise sustainability.
  • Resulting from this public sector commissioners would be able to contract sustainably, maximise Social Value, and deepen their engagement with Social Enterprise.

2)Social Enterprise Infrastructure Fund (based on NCVO Funding Commission Report 2009)

Regional Social Enterprise Network Restructuring Funds might be established:

  • The Social Enterprise Infrastructure Fund might assist one-off support, legal costs re-structuring costs, including rationalising and/or restructuring regional and local infrastructure.
  • Regional and Local Social Enterprise Networks would provide a significant role in helping to reconfigure the present pattern of infrastructure, through:

    • Working with relevant regional structures and key funders like Big Lotery, Trusts and Foundations at the national, regional and local level.
    • Highlighting where investment needed to bring provision up to standards and ensuring best use made of ICT.
    • Encouraging Social Enterprise Infrastructure Networks to apply for support for developing merger or collaborative working and shared support

And, Finally

These proposals above represent the response from Leslie Huckfield Research to @j0nathanjenkins. Though the above proposals are based on funding and projects under programmes and recommendations elsewhere, they are offered here as a basis for discussion and detailed consultation with appropriate regional Social Enterprise Networks for their decision.

Since many of these proposals are based on those which are currently operating in Scotland, funding suggestions are offered primarily as a basis for further discussion with appropriate regional Social Enterprise Networks across England, and where appropriate, in other devolved nations.

Above all, these suggestions recognise the acute funding problems now faced by many Social Enterprises – which the Social Investment products offered by Big Society Capital and its intermediaries fail to understand and offer no solution.

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