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Posted by Sarah Brown on 07 Oct '13

Who would have thought that a little blog about what is a social enterprise would cause such a stir

As a consultant that specialises in social enterprise about a month ago I wrote a blog about the differences between business, charity and social enterprise. It has prompted some really interesting debate in LinkedIn groups particularly in the Charity UK and the Big Society groups where there have been over 50 comments. One of the most succinct responses was the first from Lucy Haughey, Director & Founder at The PlanB Partnership

As a consultant that specialises in social enterprise about a month ago I wrote a blog about the differences between business, charity and social enterprise. It has prompted some really interesting debate in LinkedIn groups particularly in the Charity UK and the Big Society groups where there have been over 50 comments.

One of the most succinct responses was the first from Lucy Haughey, Director and Founder at The PlanB Partnership

“In my experience the differences (in the right order) are: Purely for profit. Afraid of profit. Profitable smartly. :-)”

Some people have felt this is not right and Lindsay Milner argued particularly strongly that it was “unfair and inaccurate towards many businesses and charities.

Many businesses are not in it purely for profit…. At the other end of the private sector spectrum, M & S has a stance on corporate social responsibility that seems to be genuinely motivated. Even if you are a cynic about big business, which I usually am, there are examples of private sector companies acting in ways that show profit is not the only motive.”

As the debate has raged over the weeks it has become clear that I’m not the only one who thinks it is all very confusing. For some the difference between the different organisational types is purpose, for others where the money goes, for others the asset lock and yet others governance – you get more control as a social enterprise manager than as a charity manager and total free reign if you run a company! As an aside Jeff Mowatt, Director, People-Centered Economic Development UK, pointed out that

“An asset lock didn't help in the case of the Forest of Dean Healthcare CIC, who processed some £200k of public funds into the bank account of a private consultant without ever trading.”

What has become abundantly clear is that there is some tension between those that support social enterprise and those that support charities. I’ve found this surprising and concerning so I was pleased to see the comment from David McAuley, Operations Director at The Trussell trust.

“What I would say is they all usually all start with a purpose (make money, help other, social mission, unemployed etc.) this drives their vision and their mission - how they will go about it; this drives their objectives and these help set goals. Now, deciding on the entity you decide to choose (the vehicle you chose to help you meet you vision IE: Business, SocEnt or Charity) doesn’t make you a good or bad person, it also doesn’t define you a socially driven or profit driven; I have met good and bad people in both.

Let’s stop focusing on the personalities and let’s keep this on the topic. Let’s learn to work together and create a society where everyone has the opportunity to live a fulfilling life and even cats, dogs and donkeys get help and our economy recovers. There is plenty of room in the market place for us all and together we are stronger. Come on guys stick to the point......soap box is now away.”

In business terms what struck a chord most strongly with me was the comment from Mike Jennings which I quote in full

“Interesting blog Sarah. Like you (I think) I am not interested in the legal entity as a way of defining enterprise. The difference for me is 'purpose'. All organisations have to produce income (even charities nowadays) and have costs. All organisations have to make sure that the costs do not exceed income, at least on a regular basis.
So the only difference is whether a Company has a social purpose, or is profit motivated.

In my view most small businesses are socially motivated, but they just don't know it. I know that sounds radical, but my experience has been that most owner-managers, at least when they are earning a living, are much more likely to treat people kindly, and get involved in their community. One of the things I have tried to do is to get them thinking about a purpose beyond making a profit. So a dance teacher I know has a purpose to "help youngsters grow in confidence and self-belief through the medium of dance". That is a beautiful purpose which drives her passion, and drives commitment from all who work for her.
We have a duty to explain to small business owners and those thinking of starting a business that it does not have to be about making money. That it is acceptable to have passion for what you do because it does something to improve humanity. And the more you shout to world that you are doing it 'your way' the more likely you are to attract those around you who agree. These are the true leaders in our society.

And Sarah, your friend is one of them. Happiness springs from a sense of fulfilment, not from making money.
The legal entity is simply a distraction.”

So there you are, a month on and it is still no clearer, I hesitate to ask, but what do you think? Do join the debate.

Tags: charity social enterprise entrepreneur community interest company

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