How capitalism got a conscience

How capitalism got a conscience

The third sector, which ploughs profits into social goals, is worth £8.4bn a year

Marianne Barriaux
The Guardian

Fairtrade coffee, reconnecting people with the environment, helping the homeless and training disadvantaged youngsters as chefs – all laudable projects, some might even say charitable endeavours. But few might regard such enterprises as forming the basis for a viable business.

Nevertheless, Cafédirect, the Big Issue, the Eden Project and Jamie Oliver’s Fifteen are social enterprises – businesses that make money and plough it back into social or environmental goals. They are all fully fledged companies and not just organisations that rely on donations.

This is the message that government policymakers and social business leaders attempted to convey yesterday with the launch at the Oxo Tower of the Ambassadors Programme, a government initiative that aims to raise awareness of the social enterprise sector. As Penny Newman, chief executive of Cafédirect, said: ‘Social enterprise is first and foremost an intrinsically sensible business model. But secondly, from a personal perspective, I can’t imagine a job that could be more enjoyable.’

To launch the programme, Ed Miliband, minister for the cabinet office, and Phil Hope, minister for the third sector, came together with Ms Newman, John Bird, founder of the Big Issue, and Tim Campbell, winner of BBC TV’s first Apprentice programme, who has set up the Bright Ideas Trust, an organisation that advises budding entrepreneurs.

Jonathan Bland, chief executive of the Social Enterprise Coalition, also met the prime minister, Gordon Brown, during the day.

It is estimated that only a quarter of people in Britain are aware of social enterprises, yet there are about 55,000 such organisations. They range from the large, famous companies such as the Co-Operative Group, to smaller, lesser-known organisations. The Coin Street district in London, for example, which includes the Oxo Tower restaurant and Gabriel’s Wharf, was built by a company founded by local people to regenerate their area.

According to recent government figures, social enterprises account for 5% of all businesses and contribute £8.4bn a year to the UK economy – almost 1% of annual GDP.

As part of the Ambassador’s Programme, 20 social entrepreneurs around England will be recruited. They will have to spend at least 12 days a year over three years as ambassadors for the social enterprise movement, sharing their success stories with the media, attending promotional events and persuading key professionals about the viability of the social enterprise model.

In addition, 10 more high-profile social entrepreneurs have been recruited to give the programme momentum. These include Mr Bird and Ms Newman, as well as Liam Black, chief executive of Jamie Oliver’s restaurant group Fifteen, and Tim Smit, the co-founder of the Eden Project.

Mr Campbell said: ‘Business is the motor of change and the best way to solve many of the social issues we face in this country.’

Mr Bland said there had been a huge growth in interest in social enterprise in the past 18 months – much of it coming from the City or companies. ‘There are a number of people who have spent a bit of time in the City or in private businesses and want to do something more. Social enterprise is a very exciting way to really make a difference.’

Investing for Good

The number of former business or City people joining the social enterprise sector is growing. Geoff Burnand, co-founder of Investing for Good, is a case in point. He spent 12 years at Merrill Lynch as one of their top performers managing the portfolios of the wealthy.

In 2000, he left Merrill to run the emerging global wealth management business at Ansbacher but left a few years later to create Investing for Good, a profitable social enterprise consultancy for professional advisers who help their clients to invest in good causes. He said social investment was a growing asset class, and predicted that a number of advisers would soon have a social investment fund.

The top 20% of earners in the UK only give away 1% of their earnings, he points out, and the bottom 20% give 3%. He said: ‘If every adviser encouraged their clients to give 1% to a combination of a social business or a charitable endeavour that fits their profile, the figures will be transformed.’

More importantly for some, social enterprise has emerged as an area that offers the potential for a successful and fairly lucrative career, with salaries that try to match those in the private sector.

Stephen Mason, the former finance director of Rentokil Pest Control in the UK, for example, came across the position of finance director at HCT Group, a social enterprise.

The salary, he said, was a 10% increase to what he had been paid at Rentokil, although still in five figures. ‘In order to have a sustainable enterprise, you need people to know how enterprise works, how to manage resources. The private sector trains its people to do the job that needs to be done. The third sector is too young to have that sort of infrastructure. It needs to pool people from outside.’

Although bonuses and share options may not be on the cards, the message is clear: social enterprise is an area where hard-nosed business types and budding entrepreneurs can thrive, just as much as stereotypical do-gooders.

Mr Hope adds: ‘With role models and champions like Tim Campbell, John Bird and Penny Newman – in addition to the 20 Social Enterprise Ambassadors that we are starting the search for today – I believe we can create a culture where social enterprise becomes a mainstream option for anyone thinking of starting a business.’

Case study

HCT Group is a social enterprise, founded in 1982, which aims to make public transport available for all.

Structured as a holding company, HCT is expected to turn over £15.5m this year – a jump of more than 50% in the past two years – and has commercial activities that include four red bus routes in London and yellow school bus routes in Yorkshire.

The company, which employs more than 400 people, competes with the likes of Stagecoach to get these contracts. The surplus generated from these operations is ploughed back into the group’s community transport services division, which includes ScootAbility, an electric wheelchair-hire service in Camden, London.

The money is also used for the group’s training division, which aims to help mainly unemployed people get jobs in the transport sector as bus drivers and passenger assistants. It also teaches people with learning difficulties how to use public transport to boost their independence.