Breadcrumbs

To be socially positive, stop asking for more public cash

Third Sector, 20 July 2010

Tax incentives have not so far helped social development, so social enterprise should not ask for more in the current environment, says Rodney Schwartz of ClearlySo

The Chancellor of the Exchequer has spoken. Our fiscal crisis is severe and deep cuts are required to restore our national finances. Failure to cut, the government claims, will imperil our nation and risk a funding crisis like that of Greece.

Whether or not you agree with this assessment of our predicament, this is the context against which we in the social enterprise sector must measure our reactions. To listen to the comments of my peers, it would seem our present mission is to shout for our share of dwindling government resources. This approach is seriously flawed for several reasons.

First, there is little convincing evidence that the myriad incentives for our sector have done much good. A Social Investment Task Force report recently described the body's progress since it was set up in the early years of the Labour government. The claims are appropriately modest. Although much has happened since then, the unavoidable observation is that this was merely contemporaneous with government tax incentives, rather than a result of them.

In areas where government has been particularly generous, such as Community Investment Tax Relief, the take-up has been noticeably disappointing. In fact, most of the exciting activity in social investment has happened in the unsubsidised market.

The situation is not dissimilar to the venture capital arena, where tax credits have failed miserably to create an enterprise culture in the UK: generous treatment for venture capital trusts has served only to depress already pathetic UK venture capital returns.

The second reason is the current environment. As a sector, we exist on the premise that social objectives are at least as important as financial or corporate goals. Our mantra is the "triple bottom line", or "people, planet and profit". When the most severe budget cuts are under way, it is callous, if not unseemly, to be lobbying for more cash.

Social enterprise has been the recipient of extraordinary largesse in the past decade. Private sector money is arriving in increasing amounts. Hundreds of millions of pounds more are promised from the Big Society Bank or the Green Investment Bank. It strikes me that the socially positive action could be to make a point of asking for no more cash, so the money can be spent on those who really need it. Perhaps we should, as a gesture, consider asking the government to use the money from unclaimed assets to pay down the national debt?

Until we demonstrate that we are truly different from others, we can hardly claim to be so.

Rodney Schwartz is chief executive of social venture capital website clearlyso.com

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