Revving the trust engines?

Revving the trust engines?
Beanbags and Bullsh!t
27.05.14

In a period where social sector policy ideas increasingly seem as disposable as the managers of struggling premiership football teams, many more casual observers of developments in social enterprise wonkery may have entirely missed ‘Trust Engines’.

In August 2013, social entrepreneur support organisation, Unltd, was plugging the concept of these ‘mechanisms that allow social entrepreneurs to articulate, evidence and then protect the social value and social purpose of their organisations’ with zeal and purpose. 

Unfortunately, a read through Pushing Boundaries, the organisation’s recent publication on ‘Why some social entrepreneurs are using a for-profit form and how they are embedding their social mission’ suggests that it’s all gone wrong ‘Trust Engines’. The idea is as prominently featured as David Moyes in next year’s Manchester United team photo.

On reflection, ditching ‘Trust Engines’ may have been a mistake. It is a silly name but the things that it’s a silly name for, the mechanisms for articulating social value, are potentially interesting enough to write a 48-page report about.

Unfortunately, the vast majority of Pushing Boundaries is not about that. The starting point for the research is that ‘A growing number of social entrepreneurs are choosing for-profit legal for their social ventures‘.

Based on that starting point, there’s at least three interesting angles worth exploring:

(i) to ask whether an increase in numbers of for-profit social ventures is a good thing – why it might be and why it might not be

(ii) to look at why there’s an increase in numbers of for-profit social ventures – is it because markets are changing? is it because funding is changing? is because attitudes are changing? is it because different people are starting social ventures?

(iii) to explain how for-profit social ventures are combining meeting the needs of shareholders with delivering a social mission

Pushing Boundaries deliberately avoids (i) and attempts to cover (ii) and (iii) solely by asking 25 (mostly early stage) social entrepreneurs who use a Company Limited By Shares (CLS) structure what they think.

As someone who spends a considerable part of their professional life asking social entrepreneurs what they think and turning it into blog posts and publications, I’m a big supporter of the practice but it’s difficult to learn much from anyone’s personal opinions about anything unless you put them in some sort of context.

The lack of context in Pushing Boundaries isn’t a mistake, it’s a position of principle, as the conclusion explains: ‘The key focus of this research has been on social entrepreneurs’ voices rather than on external assumptions about how organisations should act‘.

The problem is that unless you engage with the ‘external’ arguments about why you didn’t chose some other structure that someone else might want you to, or the particular market or funding situations that have motivated your decision, there’s nothing very interesting you can say about ‘motivations for choosing a CLS’ (which is the focus for section 1).

With the exception of one entrepreneur who made the choice based on a principled belief in demonstrating that profit and social purpose can go together, all the others apparently chose the form either based on it being simple and/or the best structure for taking on investment. Fair enough.

The section on ‘Attitudes to securing social mission’ doesn’t deliver many surprises either. Some of the entrepreneurs think legal locks and guarantees don’t matter because it’s what you do that counts, others worry about ‘further down the line’ when ‘suddenly people start rubbing their hands together’ and prioritising profit over social mission. Fair enough. Maybe we could compare some examples of where for-profit social ventures have scaled up and protected their mission and where they’ve been unable to do so?

The section on ‘Embedding Social Mission in Practice’ is the only section that amounts anything other than ‘this is what some entrepreneurs think about their business’.

It outlines some of the approaches interviewees have used to embed their social mission:

– structure-based approaches – such as putting the social mission in your articles of association
– legal models such as golden shares held by charities
– publishing evidence of social impact
– commitments to profit distribution

A table at the end of the section shows some of the interviewed organisations are using two or more of these approaches while others aren’t explicitly using any of them but may be amongst those believing that social impact is ‘in our DNA’.

In the final section, ‘Experiences of Being a CLS’, ‘external assumptions’ get a look in on the basis that they might have a negative impact on an organisation’s ability to get grants or generate sales. At one point, one entrepreneur reflects: “It would have been a lot easier to set this up as a charity with no commercial purposes – there’s just something in the word ‘charity’ that makes people very comfortable. And I think that’s fallacious – that’s just a matter a perception.“

Believing that it’s better to buy from a charity is a matter of perception but it’s a perception based on a legal registration process and an ongoing system of regulation, and possibly on that customer’s beliefs about what it means to do social good.

Pushing Boundaries primarily consists of Unltd getting some social entrepreneurs to tell their customers and wider society (at great length) that the way they structure their organisations is none of anybody else’s business. Not many of those customers or members of wider society were interested anyway. The message to anyone with any ‘external assumptions’ is sod off.