Social Business and Procurement
Although expanding procurement opportunities for social enterprises is all the rage at the moment we don't believe that social enterprises should be favoured over other businesses. For us the issue is how and what is being purchased. Many organisations can do more in considering the social and environmental impact of their purchasing and change this so that it is in line with their corporate objectives.
As this happens social enterprises should be more competitive, and assuming they get on tender lists, have a better chance of winning the work in competition with others. If the way things are being bought doesn't take these issues into account its up to social businesses to talk to the people responsible for letting contracts and show them how they could get more for their money.
Getting on tender lists can be difficult and, without a track record, hard to get past financial criteria. One option is to form partnerships with larger businesses that are already on tender lists and work with them to offer better value.
Social enterprise, flavour of the month or sign of the times? A brief flowering under the (currently) benevolent sun of New Labour or a deep shift in the guts of the economy?
In all processes of change there will be periods when the rhetoric is some way ahead of the reality. But if that gap gets too big, cynicism will begin to fill it and flavour of the month will become a very nasty taste in the mouth.
By now, we’ve all got a picture of ourselves beside a beaming Patricia Hewitt. But will Patricia be smiling in a couple of years’ time? Where are all the new social and community businesses? Where the groundswell of entrepreneurs rising to the offers of loans, mentoring, championing, business advice, etc, etc, which are being hurled at us?
The goal is wide open. Where are the people with the golden boots to send the ball into the back of the net?
Chin up and keep smiling. Try this: how many social entrepreneurs does it take to change a light bulb? Don’t know – the capacity building RDA grant isn’t in yet.
As Traidcraft, the leading fair trade social enterprise in the UK, we are pleased with the new clothes that £3.25 million worth of fresh equity investment can buy. We pitched shares in our unlisted plc to the general public and have been oversubscribed. It appears that there is an appetite amongst people with capital to invest in places where they can get a real emotional return on their investment rather than a purely financial one. Many people seem happy enough to purchase a new car and watch several thousand pounds go up in smoke in depreciation when they start up and drive off the forecourt, others would rather invest in changing lives and making a difference. Over 23 years our supporters have stuck by our vision for a world in which trade can be used to fight poverty. The aim in this trade is to ensure all stakeholders get a fair share. That is why it remains trade rather than charity.
Look – the emperor has no clothes on!
It’s a joke to believe that social enterprise can be anything other than social and community work using the language of the private sector. How galling it is to hear grant funded welfare agencies talking about the “business” when they only have life because of the grants they get and never really have to account for. Social enterprises are a gift for New Labour. It apes the private sector, it implicitly criticises the public sector and it can be used as a smokescreen to turn up the heat a voluntary sector that needs tax payers money. There are only a handful of not for profit organisations which you could say hand on heart are real enterprises, genuinely identifying and selling into real markets. The vast majority are simply recycling taxpayers’ money through a wide variety of regeneration schemes. Once that tap gets turned off they’re dead. The social enterprise emperor is naked and we should start shouting this from the rooftops.
Is social enterprise getting the right support?
There are over 3 million private businesses in the UK, perhaps 1.7 million of these are private companies and the rest are sole traders or partnerships. There are perhaps 100,000 voluntary organisations and perhaps 30,000 incorporated social economy organisations. Lets say that 10% are social enterprises, which would be 3,000 in the UK that are 'doing business'. In part some think social enterprise fills a gap because they provide services in areas where private business has gone away, where the private sector cannot make a profit. They do this with a mix of contracts and grants from other, and often public, sources. This makes sense from the purchaser’s point of view because if the organisation is drawing on grants to deliver the service it will be cheaper to the purchaser (but not necessarily cheaper to the tax payer). The issue is that they can compete with business because they get money that businesses cannot get. If they didn't get cheap money then there would be no reason why private business, if offered the opportunity, couldn't tender to provide the service. The bigger question is how much public money is being spent to support, develop and finance a sector where they may be gaining contracts that could be provided by other businesses? Social enterprises provide services because they get paid to, not because it is necessarily more efficient. For those who think that social enterprise is about driving up the levels of enterprise, not relying on cheap money, the support should be targeted at social enterprises that can help to create markets not at those that will continue to require other finance in order to compete with private business. There are not important services that will require public funding but these services, be they provided by public or voluntary sector organisations, are not necessarily social enterprises…at least yet.
