The government is over-counting social enterprises

I was interested to read about Charles Leadbeater, speaking at the International Year of the Co-operatives, indicating that too much time was perhaps being spent trying to make the social enterprise/co-operative movement the next big third sector thing. He said: “I think social enterprise is not supposed to be that big. I think it is supposed to have huge influence on the other sectors.”

The social enterprise sector spends a lot of time justifying itself by using the estimate of that there are 68,000 social enterprises. But it doesn’t question, firstly, whether the figure is accurate and, secondly, if it is, what the figure actually shows us.

‘Mapping’ the sector has been notoriously difficult, and it still is (I personally hate this term, being a geographer who was always taught that a map should include a North point and a scale). Original attempts tried to work through a process of elimination –  drawing down information about companies via legal structures and trying to apply a set of criteria gleaned from those that had on-the-ground knowledge. This gave good information about ranges of sectors and regional percentages, but did not give good estimates of numbers, because the methodology supposed high levels of intelligence about local organisations which did not exist and a consistency of application of criteria of what was a social enterprise. It was also incredibly expensive.

Instead, BIS now includes questions in the ONS Annual Business Survey to allow social enterprises to self-identify, given a number of questions about fit of definition, profit share and trading income. At the Social Enterprise Mark Company, we have tried this approach in various guises, but have discovered that most respondents do not have the time, inclination or understanding to answer these questions with any degree of accuracy.

We have discovered a huge level of complexity of hybrid legal and group structure. The question about profit  share is also not easy unless an organisation is a CIC or charity, as it may well vary on an annual basis (many companies are not even making a profit at the moment). We have also discovered that, even with a regulated legal structure, many CICs, for example, are not actively trading. The government also counts those that are gaining income of up to 75 per cent from grants and donations, which begs the question about where the ‘enterprise’ bit actually comes in. This is why the only accurate way of finding this information out is through an independent assessment process.

In counting, we also need to understand what it shows. Are huge increases in numbers of social enterprises actually a good thing, and is that growth sustainable? This government and the last encouraged the wholesale growth of new social enterprises through policy incentives such as externalisations from the public sector and exit strategies from funded regeneration programmes. In many cases, these new organisations might have displaced or competed with existing social enterprises in that local area. Social enterprises are also increasingly merging in order to survive the current economic climate.

Measuring numbers does not say anything about the quality, impact or sustainability of those businesses themselves. The social enterprise mark ensures that this is the case by asking organisations to provide evidence of these aspects.

So is there an answer to the numbers question, given our experiences of applications to the mark? My suspicion is that we should probably cut the numbers in half given (a) the original DTI mapping figure of 15,000 in 2005, (b) the growth of the sector and (c) the experiences we have had in registrations to the mark. But I doubt we will ever really know. What we should be concentrating on is measuring the quality, impact and sustainability of social enterprises that we do know about and help new ones get the best possible start.

Lucy Findlay, managing director, Social Enterprise Mark Company

  • Michael Naidu

    Leon, you can be proactive, take the person’s name, the agency and charity they are representing and then register a complaint, in fact the fundraiser will have a contact number on them. Yes I agree that charities should have service level agreements in contracts but that will never completely stop poor practice as is the case with any sector/business. The FundRaising Standards Board was set up to regulate fundraising and need people to activily complain directly to the charity who have a responsibility to deal with that complaint effectively.


    • Leon Ward

      Thanks Mike.

      I did tweet their agency and will ask them to call me. I understand your point but at that moment in time with everyone staring at me I just wanted to hide – it was so embarrassing – the last thing I wanted to do was to stop take his name number etc because then I would have extended the time with him + I had a conference call to get too.

      Fortunately, there were only two fundraisers on that street and because it’s an in-house agency probably easily to identify.


      • Michael Naidu

        Hi Leon, completely accept that you didn’t couldn’t stop. Interesting you should say that they are an in-house agency. Not sure what that means as most in-house teams are directly employed by the Charity they are fundraising for in which case the Charity will be directly responsible for the fundraisers actions.


        • Leon Ward

          It’s an agency owned by the charity. Quite an usual set up – and probably slightly more worrying. Perhaps they’re newer to the game then some other agencies. Thanks for reading and commenting. Really appreciate it.


          • Mike Wade

            Sorry to hear about this one Leon. I’d be interested – did the agency and/or charity get back to you? Did they handle the complaint effectively? Rogue stuff always happens, it how they deal with it that counts

          • Leon Ward

            I had actually contacted them on Twitter and didn’t hear back so have re-reported it via their website and will chase in due course.

  • Christian Dapp

    Ouch. I’m impressed that you’re talking so calmly and evenly about this- because the fundraiser is clearly in the wrong. Creativity in stop lines is absolutely vital, experimenting with new ones, definately, and sometimes, they might even get a fundraiser into an awkward situation or come out badly. It happens. But this one is just too unprofessional to merit any of this reasoning.

    You make a very valid point that standards expected and standards delivered can vary wildly, but I would say the same thing about Starbucks or Tesco’s- when you have a huge amount of people working across the country in entry level positions, with a wide range of qualifications and life experience, sometimes you’ll get excellent service, sometimes mediocre, sometimes awful. The vital thing, as Michael said, is to complain- as that way, individual fundraisers are found out, and the sector as a whole improves.

  • Ivor Sutton

    So right and so true, Jude!

    As someone who stems from the private sector, but who ambitiously and successfully transferred my passion and skills into the public and third sectors, I do not believe that there is a sufficient amount of personal examples and experiences placed on the board room table to reflect knowledge of the policy and practices that will enter into the domain of our community. Why is this?

    One would have though, by nature, by entering into the third sector – working in a Charity environment and seeing first-hand the diverse range of challenges and objectives that the client seeks support with, will encourage this ‘dress down’ of ‘where we actually comes from’ and ‘how’ can the team with all of its diversity improve services to its users and reach organisational goals too. But, it’s my view that such form of interaction and a relationship building between ones own experiences or ‘stories’ and that of the policy that needs to be developed, are never really encouraged to meet.

    I have said many times, i strongly believe that the third sector is really missing out on promoting itself as best as it could. Why Charity directors and its management are not acting sufficiently to develop their business case by encouraging the ‘stories’ of their teams and its service users, I don’t know. These are valuable tools that will ultimately help to reduce stigmatising, reduce ignorance and develop understanding throughout our communities to the diverse range of challenges people are facing. Furthermore, if Charities are to balance empathy with business in order to grow their client base and to build confidence with funders, they need to become innovative in their strategies.

    My end though is ‘is this worthy topic going to trigger this change?

  • Mike Smith

    its interesting how the words ‘sexual harrassment’ has not been mentioned here which is a criminal offence and surely should have been reported to the police.

    • Leon Ward

      I don’t feel like it needs to be reported to the police, instead, I’m dealing with the agency to ensure that the individual receives the proper top-up training that he needs. I’m not an enemy of charities or of fundraisers, rather, just a critical friend who wants to help them improve.

      • Mike Smith

        So if you see illegal behaviour you would tend to not report it to the police but to keep it in house so that it can be swept under the carpet as that’s what will happen? Surely you don’t think that charities should be above the law. If the sector supports this behaviour by not reporting it as a crime how would this look to the law abiding public? Surely this image would damage the reputation of the sector?

      • Mike Smith

        And just following on from my previous post, isn’t it a criminal offence to not report or to turn a blind eye to a crime? It’s like saying that you would not report a friend if you knew or witnesses him assaulting someone in a public space. It’s not ethical is it.

  • tracey Mealing

    Lets be honest with ourselves the Olympics was a once in a life time opportunity and volunteering for most was the only way to be part of a bit of history. Yes it put volunteering in an amazing light but most volunteering does not have its sex appeal to attract plus it was a limited time activity which again is attractive you can take annual leave and do it.

    The reality of volunteering is that for a lot of organisations the volunteering opportunities are mundane, repetitive and required on a regular basis. Just as vital as the volunteers at the Olympics just not as high profile.

    All is not lost though we have seen a positive increase in volunteer numbers and hours given. However, it is more transient but healthy