Social entrepreneurs: Hard heads, high minds

Make money, or do something worthwhile: the two often seem hopelessly contradictory. But a new breed of social entrepreneurs with a growing social or global conscience have been trying to replace the traditional capitalist model with a more principled way of doing business. Kirsten Downer examines the trend and meets some of its advocates.

Question: what do Bill Gates, David Cameron and eBay founder Jeff Skoll have in common? Answer: they all believe that a new breed of entrepreneur can save the world. And they're not alone.

Many believe that so-called social entrepreneurs - hard-headed, high-minded individuals who measure performance against a social and environmental bottom line - are our best hope of building a better society.

Take Crissy Townsend, a graduate of the School for Social Entrepreneurs (SSE) and manager of east London charity Teviot Action Group. Eight years ago, depressed and illiterate, she decided to do something about her inner-city housing estate. She grabbed a ball of red wool and mapped out a route on a map for the bus service the area lacked and began a campaign. A year later she got the bus route. But it didn't stop there. Spurred on by her success she has worked relentlessly - and it has paid off. The estate will soon get its own Docklands Light Railway station, crime and racial tension have been drastically cut and new businesses, jobs and training are now being created for local people.

Women run a third of the enterprises registered with the Social Enterprise Coalition (SEC). The marriage of what have traditionally been thought of as 'female' empathic attributes with the so-called 'male' values of the business world is clearing the way for many women and individuals from black and minority ethnic backgrounds to showcase their entrepreneurialism, according to Claire Dove, chief executive of Liverpool's Blackburne House, which runs training and business set-ups for women and is an SEC member.

"Because social enterprise is less male-dominated and its holistic ethos is totally different from business, women and people from BME communities are more likely to get involved," says Dove.

There are more than 15,000 social enterprises in the UK and they employ half a million people, according to the Department of Trade and Industry.

In the US, the term social entrepreneurship refers to income-generating activity; in the UK it can apply to any individual effecting social change through innovation. Social entrepreneurs will certainly be found within a social enterprise, but they also exist within the public and voluntary sectors.

Jonathan Bland, chief executive of the SEC, the representative body for social enterprise in this country, believes that Britain harbours "potentially hundreds of thousands" of budding social entrepreneurs.

Rowena Young, director of the Skoll Centre for Social Entrepreneurship, says "the difference between social and other types of entrepreneur is to do with the overarching values that influence everything they do. Their empathy will be finely balanced with analytical skills and a sophisticated understanding of how to effect social change."

That same over-riding commitment to the cause is the key test for entry to the School for Social Entrepreneurs, which runs courses for people wanting to create social change.

Just as in the business world, social entrepreneurs are marked out by their dogged determination; opportunism and resourcefulness are also key attributes. Their dynamism can transform a service or community. Individuals such as Townsend are motivated by experiencing injustice at first hand.

"I knew that five minutes away was Canary Wharf, where they had everything," she says. "And we were living in poverty. If it was good for them then it was good for us, too."

Others, such as Richard Adams, founder of Traidcraft (see page 31) are motivated by strong spiritual or ethical values. In fact, social entrepreneurs are a diverse bunch. Nick Temple, network developer at SSE, says the students range in age from 17 to 70 and span all ethnic and class backgrounds.

This diversity is reflected in the array of projects they initiate, from refugee radio stations to recycling companies. It also means the projects take a variety of forms: industrial and provident societies and companies limited by shares or guarantee.

But what makes social entrepreneurs so effective? The answer may lie in how they approach leadership. They tend towards a hands-on, empowering style. This is true of Geoff Walker, chief executive of Midlands-based Sandwell Community Caring Trust, which cares for more than 350 disabled and elderly people and was recently voted the second best UK company to work for in a Sunday Times poll. Because Walker drives the minibus and undertakes some care activities himself, incoming staff have mistaken him for a fellow employee. His annual bonus is exactly the same as that of his staff. "I always tell staff that all our jobs are important," he says. "But I think seeing that I got the same size of bonus as them convinced them I mean it."

A leadership founded on greater parity and less hierarchy makes for more motivated staff - and improved motivation means greater efficiency and enhanced profitability. Sandwell was an ailing council-run service, but became a £5.6m enterprise that pays its employees top rates and has a low level of staff turnover.

Because Sandwell's employees can see profits going back into the service or their pockets - rather than a pit of council debt - they feel more motivated. And because the trust doesn't have to hand over 50 per cent of its profits to shareholders or owners, more money stays in the community.

Social entrepreneurs, like business people, must know their market well to be effective, but in their case the market is their community. They are often part of that community themselves, making it more difficult for them to walk away from their mistakes. Their intimate understanding of the problem means their solutions tend to be tailor-made for the community rather than imposed from above. Hill Holt Wood, a thriving Lincolnshire-based social enterprise, is a case in point. It helps to turn young people away from crime by involving them in managing an ancient woodland. Founder Nigel Lowthrop believes the connection to place has been crucial to the project.

There are hundreds of similar case studies, but it's still premature to prescribe social entrepreneurship for all society's ills, and there is no comprehensive national data on the impacts. At the moment, data is either anecdotal or specific to individual projects, and there are those who warn against pinning too much hope on individuals.

Jill Mordaunt, senior lecturer in social enterprise at the Open University, worries about what she sees as a "horrible paternalism" surrounding the emphasis on individuals as agents of change. There's no denying that strong personalities can get things done, she says, but the danger is that other people can become so caught up in the personality cult that they lose all perspective on the value of their projects.

The same drive that makes social entrepreneurs so effective on one level can make them difficult to work with. Even social entrepreneurs themselves admit they can be pig-headed and stubborn to the point of perversity.

Bob Geldof's aggressive rudeness helped to get Live Aid and Live 8 off the ground, but the events' success required teams of more diplomatic personalities to clear up after him.

So-called 'founder syndrome' - when the individual behind a charity or enterprise refuses to relinquish control - is another occupational hazard.

Another is what Mordaunt describes as "role fusion".

This is when criticising an organisation is seen as criticising the individual behind it, she says. "It can happen when people don't have sufficient distance from what they're doing," she adds.

To make any impact sustainable, the initiator's input must be tempered by governance structures and a team of motivated people, says Bland. "In Sweden, social entrepreneurs are called 'fiery souls'," he says. "And we all know fires burn out."

Social entrepreneurs share the voluntary sector's ethos of creativity and innovation - but not its risk-aversion. When venture philanthropist Graham Hillier approached 10 aid agencies six years ago with a cheque for £1m to be spent on a new project that would yield tangible results within three months, only two agencies got back to him (Third Sector, 2 October 2002).

Adams feels the word 'entrepreneur' implies that the learning is all in one direction - from business to charities. But increasing numbers of people believe it works the other way round - that social entrepreneurs are transforming an outdated business model that has been dying on its feet.

"In the mid-21st century, social enterprise will be the way you do business," says Lowthrop. "It was a capitalist model for the 20th century, but times are changing."

Perhaps Townsend best sums up this new ethos in words no self-respecting Alan Sugar would ever utter: "We do all this because there's kindness in us. Because we care."

PROFILES JESSE PETERS, 25

Founder, Haringey Warriors Youth Organisation

Jesse Peters was 21 and had just completed a short spell in prison when he set up HWYO, a non-profit organisation that uses sport and music activities to engage young people, reduce offending and build life skills in Wood Green, north London. Today the organisation has 600 members and an annual turnover of £95,000. Last year he won an award from UnLtd, the Foundation for Social Entrepreneurs, in recognition of the project's potential to be replicated.

My experience in prison was a wake-up call. It showed me how lives are affected by problems in the community. Through talking to young people in the area, we find that their greatest interests are sport and music.

So we initially engage with them through these activities and then, as we build a bond, we help them to develop confidence and life skills.

Haringey is one of the most deprived boroughs in England. There are other youth groups in the area, but they're more about deterrence than providing direction.

We effect real, positive change. We run summer camps within housing estates.

After a recent camp, the local police reported a 60 per cent reduction in anti-social behaviour over the summer period. Residents say they feel safer in their own homes while the camps are running. But the biggest impact is on the kids themselves. For example, the other day a mother told me that since coming to us her son is doing excellently at school and is much more intelligent in the way he relates to his teachers.

What motivates me? I believe everyone wants the same things in life - to be happy, to live life well. Once you get past the defensive mechanisms - and some of our kids have amazingly difficult stuff to deal with - you get to the good of a person.

My advice to other budding social entrepreneurs would be that if you really believe in your idea and you want to make a change, then go for it. Doing training courses - including procurement contract courses that teach you how to tender - really helped me.

POLLY GOWERS, 38, AND JULIA FELTON, 54

Founders of Everyclick

Polly Gowers and Julia Felton launched search engine everyclick.com in June last year after working together on a web-traffic optimisation business.

A for-profit company with shareholders, everyclick aims to become an ethical alternative to Google, channelling 50 per cent of its revenue to charity. They describe what they've done.

We've both put our careers and houses on the line for this idea. It's so staggeringly simple. This money is out there flowing on the internet, no matter what. Why shouldn't it go to charity? Google and Amazon have all grown huge on the commissions they get for their sponsored links to companies. We do the same, but we share 50 per cent of that commission with UK charities.

It provides all donors and internet users with a free way to give and has the potential to provide a sustainable fundraising tool for all UK charitable organisations.

This is the biggest emotional rollercoaster we have ever stepped aboard.

We manage stress levels through having a great team at everyclick and by buying more hair dye, having very tolerant friends and family and by working more.

We know the risk is worth it when we receive letters from charities and users saying 'thank you'.

We're not part of the voluntary sector, but we are providing a tool for the voluntary sector to use. Our online marketing and technical background has been invaluable - the most challenging part of the job is communicating the idea to people and countering the apathy of 'it can't work'. It's a bit like cats' eyes in the middle of the road - until it's been invented, no one believes something so simple can work: they think it's too good to be true.

We're inspired by charity and business role models: Bob Geldof, Richard Curtis and Google co-founder Larry Page. To succeed as a social entrepreneur, you've got to have a thick skin, stand by your principles and never give up.

RICHARD ADAMS, 59

Serial social entrepreneur

Richard Adams has set up and developed more than a dozen charitable, community-owned or co-operative enterprises, including the UK's first 'alternative' public share issue, Traidcraft. He was awarded the OBE in 2001 in recognition of these achievements.

In 1973 I started a business shipping fresh fruit and vegetables from small farmers in developing countries. I wanted to ensure they got a better deal than they did selling locally. This became Tearcraft. I then set up the independent business, Traidcraft, in 1979, launching it as a public company in 1984. I had a hand in setting up the Fairtrade Foundation, the ethical loan and finance business Shared Interest, the original New Consumer research group and magazine and the Out of this World chain of organic food stores.

These organisations have provided jobs around the world for more than 30,000 people, but have influenced millions more by showing that an alternative way of doing business is possible. For me, trying to develop a new model for a sustainable global economy is what it's all about.

I have a love-hate relationship with enterprise. I've seen big business become global business, bringing wealth and prosperity to billions but widening the gap between rich and poor. It promotes efficiency ahead of equity, relies on competition more than co-operation and fails to cover its real operational costs - low-paid labour and massive social and environmental degradation. Above all, it is dependent on ever-increasing growth, which is unsustainable.

I don't like the term 'social entrepreneur', which implies that we're a sort of charitable, do-gooding version of the real thing - mainstream business. Even the most 'socially responsible' business people draw the line at a fundamental critique of their growth and competition model.

Much of mainstream enterprise makes the achieving of a better world more difficult.

Advice for other social entrepreneurs? When you're at that critical stage of presenting ideas to potential backers, work out where your ideas can help realise their agenda and make it part of your pitch - people will give you far more attention that way.

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