Charities, social enterprises and the third way! (guest post)

A December report issued by the Government’s advisory panel to the mission-led Business Review is a useful contribution to debate about the various ways businesses can express social responsibility.  It’s important because it highlights that there are many ways a business can do this.

It’s perhaps useful for anyone running a business to reflect on what they are trying to do and how central their social aspiration is to the way in which they wish to operate, because this can help them find the right model.

The Hope Group combines a social enterprise with the Hope centre charity, which has been active in Northampton since 1974. Its social conscience is expressed completely in its legal structure and the very nature of the organisation; it’s entirely non-profit making and any surplus is re-allocated to the development of the charity. There are no shareholders and no-one takes any dividend or makes money from the work we do with homeless and poor people in Northampton. We are explicitly, 100% community and socially oriented.

Other social enterprises or Community Interest Companies (CiCs) are freestanding – i.e. not linked to any parent charity. They may be seeking to deliver some sort of social good to society from what they do, but individuals connected to the organisation can draw income and derive profits. In practice this category includes a wide range of organisations from those that do not produce profits and are wholly devoted to achieving a social good (and which probably in the past, would have been simply charities) to those that are best described as companies with a thin layer of social aspiration stitched on the side. The CiC model encompasses such a  diversity of bodies that it’s often difficult to understand what the term means, with each one needing to be looked at in terms of what they do and who benefits. Is John Lewis or Welsh Water really comparable to the Big Issue? The benefits of going down this road need to be carefully weighed up.

Many companies don’t want to go down the route of becoming a social enterprise at all, but this doesn’t mean their owners and shareholders cannot profoundly express their aspirations for doing good within the structure of the company. It’s this sector that the advisory group’s report considers: companies that invest explicitly in ways of achieving social impact, within the context of an ordinary limited company structure. For example, as cited in the report:

“Ethical Property Company (EPC) provides flexible, fairly priced office space to charities and social community groups in the UK. To help guide its mission-led approach, EPC developed ‘The Quintessentials’; five core aspirational principles of governance and management, including an obligation to report clearly, openly and honestly on social, environmental and financial performance. EPC publishes annual ‘social accounts’ alongside its annual reports and financial statements.”

Hope is often approached by local companies who have the same kind of aspirations – those who are looking to see how they can recruit people with multiple disadvantages amongst their workforce, or explicitly market their product based on its association with a charity like Hope. If companies want to develop this kind of approach,  Hope is an ideal partner to support these efforts and provide advice. In practice, companies need to work in partnership with charities to make these aspirations viable and it can be a win-win for both to work in this way. An illustration of this type of company, although not from Northampton, can be found here.

The challenge is sustainability, as companies can major on these aims whilst making a profit, but the additional jobs for a homeless person or shared profits for the charity may disappear if times get hard. Money raised solely to fund such provision through crowdfunding or other sources can also vanish in the face of other costs. Any arrangement of this sort therefore needs to be carefully thought through, and Hope is well-placed to help companies with ideas of this kind.

The last type of social vision expressed by many companies is their commitment to CSR (corporate social responsibility), which is a less vivid expression of social conscience compared to the social firm approach. This manifests itself in activities ranging from raising money for charities, right through to comprehensive reviews of the impact the business makes in targets for social improvement. The difference is really one of degree; how core is their effort at social responsibility? Is it embedded in the core operational model or viewed as an optional extra? Once again, it’s an ‘expressed’ social conscience that companies would be well placed to develop in partnership with charities. For example, if a company has an explicit aim to improve worker fitness, they are far more likely to get involved in fitness activity where they can raise money for charity.

These are the main social options companies can investigate, but it comes down to the limits of how socially committed you want yours to be. Thankfully, there is help available, such as through Hope or Inspire2Enterprise.

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About the author

Robin has been the CEO of Hope group since May last year, a local charity and social enterprise which has been serving the poor of Northampton for over 40 years. Robin has worked in the third sector for 24 years and has been a charity CEO four times (twice nationally) but has also worked in Northamptonshire for 12 years in service delivery and commissioning.