I was asked to join the board of a social enterprise, founded and run by a married couple. On paper they had something worthwhile. They’d drawn up a good business plan and not only did they receive grants but also awards for their plan from prestigious government funding bodies.
They needed a board of directors because they were a social enterprise; their funding bodies expected it. It seemed worthwhile and as I was exploring self-employment, it seemed relevant and possibly good experience.
As I became more involved, I found a flaw in their plan. They described their market but had no list of potential customers. While they ran events no-one attended, they invested in new premises and so had massive cash flow problems.
Furthermore, the couple initially had no skin in the game. All their investment came from grants. They started to put their own finances into the project. He left the country to do a course to support another project, leaving the woman to run the business alone. By then I was one of two remaining directors and frankly we were both alarmed at the direction it was taking. We were being asked to share the risk. The only mistake we made was to join the board of a project that looked good on paper but was flawed. We bailed.
I’m not proud of this but I think we did the right thing. I’m losing money now to my own business. That’s my decision. I’m not worried. I’m investing in something I believe in. Here I was being asked to risk a mess of someone else’s making.
Social Enterprise
This is a huge problem with social enterprise. With conventional small businesses, people invest in their own skills and abilities. They try something out and if it works it grows. Most businesses fail because they’re either not viable or poorly managed. Pouring grant money into a non-viable business is a waste of resources. But how do you know whether a business is viable? If my business ever proves viable, one option would be turn it into a social enterprise. By then I’ll have evidence it’s viable. But that is not how the social enterprises seem to work in practice.
My father was self-employed and a lifelong socialist. His views changed over time and he became disillusioned with the Labour Party. I suspect the roots of his change of heart was his realisation the left viewed him as a capitalist. He ran a small business that struggled to make money for nigh on 30 years. He was too marginal to interest right-wing politicians and Trade Unions backed his workers against him. It’s hard to manage workers who are not up to the job, whatever your political standpoint.
I’ve always leaned to the left and for many years did not question the radical orthodoxy that says capitalism is bad. Every business owner is in business for their own benefit. I became a community development worker and for up to 30 years lived the dream of people collaborating unpaid for mutual benefit. And that’s what it is – a dream!
Why should people work hard to set up projects without pay and then raise funds to employ people from outside their neighbourhood to run their project on their behalf? Many do and some ask that question.
The Good News
The business I left is still alive! I occasionally meet the woman who runs it and there are no hard feelings. Somehow she managed to turn it around. She understood they’d put their directors in an impossible situation. I would argue with that view. The funding bodies insisted they had directors. Directors are not employees. They don’t have time to invest in demanding 24/7 projects.
This experience showed me the need for the local economy as a proving ground for business and social projects. Investing in projects that are not proven is unlikely to work. Funding bodies should fund successful enterprises, which might sound paradoxical. Maybe our focus should be on supporting those prepared to carry the risks themselves.
LOCKDOWN POSTSCRIPT
The first time I shared this story, in a private Facebook group, I received a lot of positive feedback. This surprised me because social enterprise is a popular idea. The problem is not with the idea so much as the execution of it. My argument was not with the couple so much as the funding body that provided support with financial regulation and little else.
So, what place does social enterprise have in the post-lockdown new normal? I’ve taken my eye off this particular ball but I still have a few thoughts on the matter.
It has a role but it needs to be divorced from the funding industry that’s sprung up around the idea of social enterprise. The key to unlocking social enterprise is to understand its key distinguishing feature, mutuality.
Mutuality
Most people think mutuality is an outmoded idea. They don’t appreciate the massive changes mutuals, especially the retail co-operative movement, made to the economy of this country. Retail co-operatives invented wholesale distribution. The Co-operative Wholesale Society provided stock for shops across the whole of the United Kingdom through ships and trains. No-one had ever done this before.
They introduced innovations. The first ever department store was a few doors up from the first Co-op on Toad Lane in Rochdale. It was a co-operative store, with the beehive emblem over the door.
Now that people understood co-operation, they took to all manner of friendly societies and mutuals, often through public houses, temperance halls and non-conformist churches. These developed into insurance companies, building societies and some banks, including the Trustee Savings Bank.
Education was always important and many co-operative stories had a reading room or library. This led to the scientific institutes and organisations such as the Workers’ Educational Association.
Most of the organisations that make up modern society have their origins in this movement. Many have moved away from co-operative principles but they did not come from national government initiatives or the landed gentry.
Social Enterprise Post-Lockdown
This suggests post-lockdown, we’ve much to learn about mutuality. Whatever you think about the current government, it is not outrageous to suggest change will come first from people collaborating.
You’d think, with the Internet, change would happen apace. The evidence for this is scant. I suspect real creativity happens when people meet together and that is difficult at present.
Is change on hold until we meet together or can we find ways to build mutual solutions online?
Why I do this
Stories rarely remain unchanged, the context in which they’re told matters just as much as the context referred to by the story. I wrote this sequence of 21 stories about 18 months ago. You may have read some or all of them in their earlier form. Reading them now, we perhaps see something different, especially as we consider the difference meeting online makes to Social Enterprise.
As I republish these stories, I revise and polish them. Some need little change, for others the changes are extensive. At the end of each story, I add reflections based on where my thinking has moved onto, especially in the context of Lockdown.
This is story 16/21. Last Story: Adult Education: Makeshift, not Impolite! Next Story: Recession: Dark Holy Ground