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Best of both worlds

Written by Josh Russell on Wednesday, 03 April 2013. Posted in Insight, Analysis

For a long time, business and social causes were seen as bitter rivals but we have begun to understand that when they come together, they can truly change the way the world works

Best of both worlds

There’s no arguing: what’s good for society is often good for business too. According to the Fightback Britain Report (2011) from Social Enterprise UK, the UK has more than 68,000 social enterprises. These contribute £24bn a year to the economy, which – just to put it into context – is more than a sixth of the UK’s current deficit target for the year. Right out of the gate, the idea that social enterprise is based purely on wide-eyed idealism is a misguided one and as a sector, even disregarding the social value it generates, it makes a huge contribution to the UK in very real and measurable terms. As Nick Temple, Social Enterprise UK’s director of business, puts it: “Even before we start talking about the fluffy stuff, these are significant economic contributors.”

Obviously, then, it’s important for social enterprises to be clear and transparent about the way they are structured. Generally, there are two main paths that most social enterprises take. “If they are structured as a not-for-profit they are finding the means to sustain themselves financially in a variety of different ways,” explains Pamela Hartigan, director of the University of Oxford’s Skoll Centre for Social Entrepreneurship. Beyond the funds required to sustain their mission, everything they earn is invested in their social aims.

“And if they are for profit, it means they are bringing in profits but they are not profit-maximising,” she says. “They use their profits as a means to an end, to continue to grow their social mission.”

However, this distinction is far from rigid and in reality it’s probably more important to focus on how an enterprise prioritises its social purpose, than how it would classify itself. Big Issue Invest is the investment wing of The Big Issue Foundation, aimed at investing and growing charities and social enterprises. It has recently teamed up with internet registry company Nominet Trust to deliver the Tech for Good scheme, which is making a £50,000 investment in tech start-ups that are working closely with young people.

“As far as we’re concerned, actually what you ask is: ‘What is the social impact that business makes?’” says Nigel Kershaw, OBE, co-founder of The Big Issue and chief executive of the charity’s investment arm. He explains that when The Big Issue was first set up, it was designed as a business response to a social crisis that philanthropy was struggling to address alone and this is at the core of what defines a true social enterprise. “For us it is about how you find a business response to that crisis.”

Temple also feels it’s more a case of approach. “We all have to make profits but it’s just what you do with them that’s different,” he says. Rather what defines a social enterprise is the extent that their values inform everything they do; they aren’t in business simply to make money, instead using financial growth to further serve their social aims, and this will permeate every level of their structure. “They have their social purpose written into their DNA, into the governing documents of the organisation,” Temple says.

This is where the real change of approach comes in. Up until the last few decades the social concerns of businesses have been fairly cynically managed; models of corporate social responsibility (CSR) may have contributed (even fairly significant) funds toward charitable causes yet this has been with a focus on mitigating social or reputational costs. “But I think there is a genuine shift in recognising that we can’t separate business out from social needs and community,” comments Dan Sutch, head of development research of Nominet Trust. “I wouldn’t say this a PR thing to improve a brand; I think it’s a genuine engagement.”

Public perception of business practices is becoming increasingly astute. A public donation or ongoing charity work is not going to offset questionable business practice – customers expect a company’s values to be reflected in every practice they are involved in. “It’s not so much what do you do; it’s equally as much how you do what you do,” explains Scott Leonard, founder and creative director of the social enterprise The Champion Agency, which employs creative young talent and uses its work to engage with young people in urban communities.

He draws on examples such as financial institutions implicated in risky or fraudulent practice and high-profile organisations that have avoided paying massive amounts of tax. None of these companies have lost customers because of a drop in the perceived value of their products – instead, people are switching off because they dislike the way they conduct their businesses. Leonard explains: “It’s nothing to do with the service; it’s to do with how they do what they do.”

 

This changing attitude toward the responsibilities and abilities of enterprises operating in the social space doesn’t just apply to customers; in part the business community is simply naturally evolving in response to the changing demands of the working population. “What we’re seeing is companies recognising that to recruit top talent they’re going to have to transform,” says Hartigan. In her position, she has seen a huge change in what young people are expecting in their careers. Many more individuals are looking for ways to make a greater contribution to society within their careers, rather than seeing the two things as being at odds. “They’re saying, ‘I want to do something with my talents that’s going to drive meaning’,” she reports.

In light of this need for a more meaningful way of making a living, it’s not hard to see why social enterprise is proving to be such an appealing model. “Being able to demonstrate the social value and the wider value such organisations create is becoming increasingly important,” says Temple. For a long time it has been the norm to view social and economic value as being two entirely separate, perhaps even diametrically opposed, outputs and this rigid view of things is giving way to a new view of profit and success. “It’s a broader sense of value that says you need to act in a way that’s more long-term, you need to think about what sustainability means beyond finance and you need to think about planet and people as well as profit,” he says.

“It’s such an interesting, almost unique time in history,” says Sutch. In light of the economic crisis he feels that individuals are beginning to question the bottom line as being the only measure of an enterprise’s value; there is an increasing need for those enterprises to once again recognise that they as much rely on the communities they exist in as those communities rely on them. “Businesses are rooted in community and rooted in the social value that they create; whether it’s intentional or not there’s always a social impact to what they do,” he says. “If we’re going to rebuild an economy then it has to be born on recognising business value and the social value, and how they can be combined.”

In many ways, social enterprise can be a strongly disruptive force but the manner in which this disruption is playing out is very interesting indeed. Temple mentions one of Social Enterprise UK’s members, Divine Chocolate, the innovator that first introduced Fairtrade chocolate to our shores and is 40% owned by the Ghanian Cocoa Producing Co-operative. “What’s interesting about Divine is it’s partly pushing forward and proposing a totally new business model for how chocolate is made,” he says. “Now Kit Kat is Fairtrade, Cadbury’s Dairy Milk is Fairtrade, and actually the Fairtrade cocoa and chocolate market is £430m in the UK – despite the fact that Divine is only responsible for £10m.”

These enterprises can help spur traditional business on, trialling and establishing better business practices that the corporate world can take on. Hartigan gives the example of the relationship between McDonalds and sustainable fishing advocates the Marine Stewardship Council. As a result the fast food outlet has approached every single one of its suppliers and facilitated their change to sustainability. “That’s the role of social entrepreneurship,” she says. “It’s to be a harbinger for new business models.”

This is the significance of the change social enterprise is bringing. Big Issue Invest’s Kershaw recalls a recent event he attended to celebrate the life of Thomas Payne. “There was a quote which I believe is from Common Sense 1776 which I think is really great: ‘We have it in our power to begin the world over again’,” he says. In light of the economic crisis, the way we assess value has come into question and this is giving us a chance to introduce new value in the way we conduct business. “I really think there are these moments where you know that actually things move and change. And I think this is a time of seizing the opportunity.”

 

Songs of innocence

A desirable flip flop brand that’s been praised in the nation’s press, including being championed by Cosmopolitan and Heat. And two young men, orphaned in the 2004 tsunami, inspired by their experience to build an orphanage for Indian children who have lost their parents. These are two sides of the coin that is Gandys.

“One of the major points myself and Paul both made is that through our negative experience, we wanted to make a positive out of it,” explains co-founder Rob Forkan. And they’ve certainly been doing that. The business has been steadily raising funds for the founders’ Orphans for Orphans programme, which aims to open its first Gandys orphanage on the tenth anniversary of the natural disaster. Additionally, 10% of the enterprise’s profits are donated to the charity Mango Tree Goa, thus far providing the supplies and teaching for 100 Indian children for a full year.

The remarkable social impact of the enterprise is just one element, however; the enterprise is also drawing an incredible amount of interest from experienced blue-chips amazed at the impact the firm is having back here on the domestic front. “They’re asking us: ‘How do you do it? Why is it that you’re getting so much recognition for it?’” says Forkan. In part, he explains the way the brand is catching public attention down to the fact that people can tell the enterprise has a genuine connection to its social aims. “We’re doing it because it comes naturally.”

 

Putting the heart back into advertising

 

Advertising isn’t always considered to be the most ethical industry. But one social enterprise is disrupting that image and placing ethical marketing back at the heart of the community.

The Champion Agency was born when founder and creative director Scott Leonard began to feel disenchanted by the way values were addressed in the advertising sector. Gradually, he began to realise he wanted to explore options with clients outside the expected avenues. “Primarily, I was chasing clients that had either a social edge or an innovative edge,” he says. Additionally, through the Google Digital Expert Programme, he spent some time mentoring a team that contained a couple of prison graduates. “Within five minutes, I’d decided I didn’t want to know which people were prison graduates,” he recalls. “What was important was you had 12 sparkling kids in the room.”

This experience led to the founding of The Champion Agency, a design agency that trains and utilises young talent to help socially minded or disruptive businesses and organisations, whether they be Lloyds TSB, the car club Zipcar or more grassroots community projects. An excellent example of the latter is its work with Block Workout, the south London exercise project founded by ex-gang member Terroll Lewis, which uses exercise to help give young people alternatives to gangs. Its inspiring design, playing off and subverting the iconic Black Panthers art by Emorie Douglas, shows exactly why organisations like The Champion Agency are able to challenge the existing ideas of what commercial business should be.

As Leonard explains: “The inspiration that the youth can bring, certainly from my perspective, when you give them a chance, is just phenomenal.” 

About the Author

Josh Russell

Josh Russell

As editor, Russell is the man in charge of properly apostrophising our publication and ensuring Oxford commas are mercilessly excised. Our digital doyen, he’s also a Photoshop Pro, a dab hand with InDesign and the man to go to if you need a four-hour soliloquy about the UK's best silicon startups.

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