Cathy Pharoah
Set aside the romance and grasp the harsh realities of social enterprise, says our columnist
The demystification of the idea of social enterprise is long overdue. The cult of enterprise has held iconic status in the sector over the past decade or so. But the fact is that in a sector where income is under pressure on all fronts, entrepreneurialism is no longer just an aspiration; it's a necessary condition of survival. So it is time to get real about it.
This is the main message from the case of Linda Kirk, the local entrepreneur who was so enthused by the notion of the big society that she invested her own (relatively small) savings in a social enterprise to help vulnerable and poor women, and whose subsequent funding difficulties recently attracted the attention of the national media.
An experienced businesswoman who identified significant service demand among local women in County Durham and managed to attract some local council and other funding, she nonetheless couldn't make the sums add up. She found that the social enterprise rhetoric did not mean her, that Big Society Capital was aimed at the big boys and that little other dedicated funding was available or easily accessible either.
Kirk's case is not special and simply highlights the daily challenges facing the many small social ventures and non-profit organisations across the UK. And in a situation where such enterprise is one of the few local options available for getting a small slice of the cake in a declining labour market, it is time to set aside the rhetoric and aspirations around social enterprise and face the realities.
Existing social enterprise approaches place huge importance on entrepreneurial mindsets, on personal abilities to be innovative, creative, action-oriented, problem-solving, a leader (are you feeling up to the job?). But I think the sector already has these qualities in bucket-loads. They explain its successful growth over decades.
Enterprise failure (or success) in the social sector has little to do with these attributes, and the rhetoric is masking the real challenges of the small-scale local enterprise sector. One is poor access to intelligence and analysis of local market opportunities, and how they can best be used to meet need, or to fund ways of meeting it. The other is the ongoing lack of appropriate easy access to small-scale, higher-risk social finance. Small ventures need help to respond quickly and flexibly when a market opening appears.
Many small local organisations feel that the sector's concern about the impact of the charitable tax relief cap on major giving passes them by because major donors are a rare species in their patch. But if big donations to the major charities or to new grant-making foundations dry up, there will be a squeeze on all other sources of funding. This will trickle relentlessly down to the local level. That's why it is time to set aside the romance and grasp the realities facing local social enterprise.
Cathy Pharoah is professor of charity funding at Cass Business School
