The social enterprise sector has blossomed over the past decade and now offers a viable option for charities looking to buy products and services, says Annie Kelly.
In an era when ethical business is fast becoming a buzzword and fair trade has finally become trendy, the commercial world is facing an increasing pressure to adopt socially responsible business practices.
And it is often charities that are campaigning for companies to improve their environmental or social records.
Although the voluntary sector's own business practices aren't measured with the same public scrutiny, it is safe to say that most donors would expect their charities to operate in a responsible way. The publication of The Campaign Against the Arms Trade's annual clean investment list, which exposes those charities with investments in the arms trade, is always guaranteed to generate press coverage. Charities' partnerships with businesses often polarise public opinion on whether charities should ever endorse commercial products.
Partnering with companies that work towards social rather than commercial ends is one way charities can make sure that any money spent on externally sourced services is at least being channelled through a business that is working to similar ethical objectives.
The growth of the social enterprise sector in the UK is starting to offer real choice in the products and services provided by social businesses and co-operatives. This means that social enterprises are becoming viable options for charities looking to buy in products and services. There are now social enterprises and co-operatives that provide everything from furniture recycling to event management to marketing and consultancy services.
"It's true that even 10 years ago you'd be hard pressed to find a social enterprise or co-operative that could realistically compete in the open market," said Gordon D'Silva, chief executive at Training for Life, a charity that runs social enterprises providing training and employment to disenfranchised and peripheral communities. "But that's now changing and social businesses are coming into their own."
An example of this is CO3, a social enterprise launched by a co-operative of businessmen that specialises in providing corporate social responsibility consultancy services to both the voluntary and private sectors. The founders chose to set the company up as a social enterprise because they felt it reflected the ethos of the service they were providing. As well as working with big businesses, CO3 also helps small community groups build ethical and social policy frameworks. Their fee structure is designed to reflect the client's size and ability to pay.
The profile of social businesses has been helped by high-profile examples such as celebrity chef Jamie Oliver's Fifteen, a restaurant set up to train young chefs. The Hoxton Apprentice is a similar operation run by Training for Life. "The Hoxton Apprentice is surviving not because people feel sorry for the people that work for us, but because the food is good, the service is good and the prices are competitive," says D'Silva.
The Hoxton Apprentice is starting to develop a catering service that D'Silva hopes will be used by charities hosting seminars, conferences and fundraising events. "Making links with charities and voluntary groups that have a similar outlook and objectives is really important," he says.
"Forging networks and partnerships of organisations that are taking a different approach to business is the future of social entrepreneurship."
The NCVO has a policy of using and supporting social businesses wherever possible. It currently offers subsidised gym membership to all its staff with Aquaterra, a social enterprise and charity that runs a string of community fitness centres (see case study). "It makes sense for the NCVO to have agreements with other parts of the voluntary sector," says James Georgalakis, the media relations manager who set up the arrangement with Aquaterra. "Social enterprises like Aquaterra are very committed to helping build more healthy communities - this is exactly the kind of organisation we want to be associated with and support. They are very reasonable compared with most commercial gyms, plus they offer all kinds of concessions for residents, OAPs and people on income support."
Using social enterprises can also help voluntary organisations achieve their charitable objectives. Christian Aid and Comic Relief supported the launch of the Day Chocolate Company, which makes ethically branded Divine chocolate. The charities' support and business helped the company grow into the UK's leading fair-trade chocolate supplier. More than one third of the Day Chocolate Company is owned by cocoa farmers in Ghana, which fits perfectly into Christian Aid's mission to alleviate poverty and create sustainable futures for people in the world's poorest countries.
At the very least, giving your business to a social enterprise will mean that donors' money, even if it is being used for outsourced services, is still being used in a socially responsible way.
Calverts, a social enterprise providing printing, graphic design and mailing services, has a large number of charity clients including Oxfam, the Refugee Council and Unicef. Founded in 1977 as a co-operative, it is still run as a democratic social business and staff members all have an equal say in how the business is run and managed.
All the paper used is recycled, the ink is made from natural products and the equipment used is as environmentally friendly as possible. The company only works with clients that meet specific ethical standards and all money made is poured back into improving the products and trying to reduce costs.
Even so, for a charity looking to outsource a large-scale printing job, Calverts is unlikely to be the cheapest. Though it has managed to start charging more competitive rates as it has grown, the company admits that it can't beat many commercial competitors on price alone. This is a hurdle for many social enterprises and co-operatives: as anyone that buys fair-trade coffee will know, ethics don't come cheap.
Charities have to tread a fine line when outsourcing work. As much as they have a moral obligation to act in a socially and environmentally responsible manner, they also have an obligation to get the best deal possible and use their donors' money as frugally as possible.
Homelessness charity Shelter does use social enterprises from time to time, but has no fixed policy on this. "It depends on the outcomes required," says a spokesperson. "If the cost-effectiveness is better with a commercial company, then we go with them, and likewise for a not-for-profit."
Christian Aid has a similar outlook. Jeff Dale, head of marketing explains, "We would never actively discriminate in favour of social enterprises," he says. "Our fundamental mission comes first and we have to look for the very best service we can get with our donors' money. And it's often hard finding a social business that can match commercial rates."
Arthur Stitt, sales director at Calverts agrees that charities have to spend their money wisely, but argues that social enterprises provide added value in terms of social capital that a charity should take into consideration when looking for a new business partner. "It depends whether price is your only prerogative," says Stitt. "If you're paying a low price, it's usually for a reason. If you buy from a supermarket, it'll be a lot cheaper than a small independent store, but that may be because the supermarket is screwing down its suppliers. We don't.
"If you're an organisation that professes to be doing some social good, then it fits well that the supply chain should be of the same mindset, otherwise your efforts could come across as window-dressing," he says.
"There's no point running a huge mail campaign about human rights if the paper you're using has been produced using child labour."
And the more customers that use social enterprises, the more these organisations will be able to reduce their costs and provide better services.
William Snagge, director at Smart Packing, a packaging and mailing company that provides employment opportunities for people with learning difficulties, says a more long-term approach to cultivating social entrepreneurship needs to be taken by all organisations, including charities.
"We need customers to recognise that social worth sometimes compensates for slightly higher costs," he says. "The more custom we get, the better we will become at delivering our services, the bigger we'll grow and the more people we'll be able to provide with training in a real working environment.
"There are strong signs that the social enterprise sector is getting to the stage where it can compete commercially, but it's not a straightforward process," he adds. "Charities need to encourage social enterprises when they can. With their support, we could change the way that business works."
Charities can now find social enterprises that can meet the majority of business needs. If social enterprises are properly supported, then there may come a time when sourcing a socially responsible property manager, cleaning company or locksmith is a natural choice for all organisations that are working to create a more equal and sustainable world.
CASE STUDY - AQUATERRA
Aquaterra Leisure group was set up as a social enterprise in 1997 when Lewisham Council decided to put the contract for its range of community gyms up for tender. Aquaterra formed, won the business and has been managing a string of community gyms in London ever since.
The premise behind Aquaterra is simple. Its mission is to improve the health of members of the community and encourage people to keep well and fit. As it is not a profit-making organisation, it pours money from memberships back into improving facilities and launching new programmes for peripheral groups in the community such as older or disabled people.
"Many people who use our gym could never afford the fees charged by other gyms in the area and, traditionally, community gyms have been under-equipped and badly managed," says Mark Jones, manager at Aquaterra. "By working as a social enterprise, we're able to concentrate on providing our members with the best facilities."
It runs programmes to help improve older people's mobility to try and reduce the number of broken bones suffered as a result of falls. It also works with local charities and community groups on projects promoting healthy eating and exercise.
Aquaterra offers charities and voluntary groups competitive deals for their staff. NCVO employees pay £12 a month for membership to Aquaterra, with the charity paying a subsidy on top.
How to find a social enterprise to suit your business needs
- The Social Enterprise Coalition is the UK trade body that brings together all types of social enterprise. Its website has a search engine where charities can search for social enterprise by location, trading activity and social aim: www.socialenterprise.org.uk - Social Enterprise London is an umbrella body representing social enterprises and co-operatives in London: www.sel.org.uk
- Shopsocialenterprise.com is an online shopping site where clients can buy products and services from social enterprises: www.shopsocialenterprise.com
- Vol Resource is a comprehensive online directory that includes social enterprises by trade as well as links through to relevant websites: www.volresource.org.uk
- Training for Life is a charity that runs a range of social enterprises including a restaurant, web design service and a gym. Also runs a range of training programmes: www.trainingforlife.org.uk
- Near Buy You is a national social enterprise trading network. Potential clients can search for a social enterprise near where they work: www.nearbuyou.org.uk