I read an article recently called ‘Social enterprise will change everything’. Having spent seven years working in the sector, I’m not so sure.
Blue Ventures, which I founded in 2002, is a classic social enterprise, with a business and a charity side working in tandem. It runs marine conservation expeditions for volunteers and researchers in Madagascar. It is a win-win situation: the volunteers get an incredible experience and their time and money helps us with our projects to protect region’s endangered ecosystems.
Both arms of the organisation have won numerous awards, and we are considered one of the most successful new social enterprises in the UK. But our prize-laden mantelpiece belies the true nature of this and many other social enterprises. The company is still run from my long-suffering parents’ house and our directors’ pay packages have averaged just £24,000 over the past four years.
There are also ownership issues that are recognised by many practitioners. Social Enterprises aren’t worth as much to others as they are to their founders, and are therefore less attractive to investors. If we’d set up Blue Ventures as a for-profit, it might be worth as much as half a million today. We understood the consequences of the proposed business structure when we started and we’d do it again for the satisfaction and rewards it has brought. Still, there would certainly be more social enterprises if there were greater remuneration.
Our founders were lucky to have the support of parents and university educations. Without these advantages, Blue Ventures would never have got off the ground. Some practitioners have suggested a social stock market to enable people to invest in and release value from social enterprises, but so far no one has come up with the right model.
All this results in a ‘glass ceiling’ for social enterprises. If the Government wants to see them grow, it needs to do more than offer them crutches when they become uncompetitive. It needs to help them break through that ceiling, whether by offering them tax advantages, giving them relief from some of the red tape involved in setting up a business, or, better still, financial advantages for the people who work within them.
But the fact is you don’t have to set up a social enterprise in the strict sense of the word to solve social and environmental problems or appeal to the next generation of social entrepreneurs. My latest company, Bright Green, helps public and private sector organisations with an environmental or CSR agenda to recruit and retain the best talent. We believe that, as a for-profit, we’ll have more of an impact and attract more start-up capital and ongoing investment.
From a business perspective, if you can combine significant profits with a social or environmental agenda then there is no issue of scalability or ownership, and no problem when it comes to paying top wages to attract the very best people.
I don’t want for a second to suggest that the social enterprise model is invalid. Companies like Cafedirect or Divine Chocolate have used their social enterprise status to appeal to consumers who reject traditional corporates. But at the moment they are the exception not the rule.
I believe we’ll see companies like The Body Shop, Ecover and Innocent Drinks become the leading ‘social enterprises’ by reversing through this glass ceiling, rather than those organisations that remain true to the definition breaking through from below.
Such companies put pressure on other for-profit companies to become better businesses, and on social enterprises and consumers to realise that the profit-making model can often do as much, if not more good, than the social or charitable.
- Tom Savage is founder of Blue Ventures, a marine conservation social enterprise and Bright Green Talent, an ethical recruitment consultancy.