I’ve written a number of times in this column about the opportunities for charities and social enterprises in developing enterprising models and the resilience that this can bring, principally through increasing earned income.
Resilience is a slippery term, and PhD theses could be written on how it should be defined. Don’t worry, I’m not about to try. But in our sector, I think it is clear that financial resilience on its own is not really resilience because it ignores the fundamental reason we are here: impact. In other words, a financially resilient organisation that is not delivering impact is not, in my view, resilient at all.
So in considering how we might take a journey towards becoming more enterprising, it is essential that we also consider how that enterprising activity will relate to the impact we create and deliver, and who will benefit.
Let’s take as an example the ubiquitous community café. Ask a social investor about the viability of a community café and you will probably get a wry smile. In fact, some have a blanket policy that they won’t lend to community cafés because they are so unlikely to be profitable. Suffice to say, many organisations consider the idea of establishing community cafés when faced with a hole in their budgets as a way of generating some additional cash; and many find that a café does nothing to fill the hole, and might even make it deeper.
So in purely financial terms, a café might well not look like a good idea and resemble a failed enterprise.
But if you bring an impact lens to the discussion, you might come to a different conclusion. Say, for example, that your impact model includes providing workplace training to people who have been excluded from the labour market for a long time. Using a community café to help provide those employment opportunities might be central to the delivery of your impact. What’s more, the café might generate enough income to wash its face.
In that case the income model and the impact model are aligned, and the enterprise generates enough income to fund the impact it is designed to create. In other words, it is a success.
Without being clear about the impact you are seeking to create through any new activity – especially, given the risks involved, any new enterprise activity – and without knowing whether you are actually creating any impact, you can’t tell whether this is a successful way of using your resources.
That doesn’t necessarily mean that all enterprising activity has to generate impact. But if it doesn’t, given all the effort that is likely to be involved in getting it off the ground, it had better generate significant surplus that can be invested in impact-generating activity. Again, it is crucial that expectations and intentions are clear.
So where would you start in considering the impact of new enterprising activity?
The resources on Impact Support are a good place to start, and have been created with direct input from more than 100 charities and social enterprises. A series of videos from Impetus PEF also provide a good overview on how to get started with impact management practice.
Embedding change around use of data and impact management is as much about leadership and organisational culture as it is about systems and processes. Learning from peers and sharing practice can both be important parts of that culture change. The Inspiring Impact programme has worked with various subsector partners to develop this sort of peer-led support.
Research has shown that the benefits of improved impact management practice can go to the heart of organisational effectiveness. They include improved confidence, a better alignment of impact and resources, and helping to identify new ways of working and discontinue old ways of working.
In the context of considering how to develop new enterprising models, considering the impact goals is as essential as analysing the financial business case.
Seb Elsworth is the chief executive of Access, a foundation that helps widen access to social investment for charities and social enterprises