The new social entrepreneurs: introduction
Charles Orton-Jones, RealBusiness.co.uk
Entrepreneurs turned philanthropists. Ethical retailers. Not-for-profit game-changers. These entrepreneurs are running ground-breaking, profitable businesses – with a difference. This new breed has a social conscience.
In the old days, when life was simple, you had businesses and you had charities. The two were completely different. Charities relied on donations for income; businesses sold goods to make a profit.
Then, something beautiful happened: a third, hybrid category emerged called the “social enterprise”. These curious entities operate as businesses. They compete in the capitalist marketplace to make a profit, but they also have a mission to do good in the world. Like charities, social enterprises have a strong ethical dimension, typically reporting a triple bottom line of environmental, social and economic results. Here’s the twist: social enterprises work, both as forces for good and as businesses. The hybrid isn’t a compromise; it’s an advance on both fronts.
The 12 social entrepreneurs profiled here prove the point – they all run businesses that make money in the open market. Duncan Goose sells One Water in competition with Evian and Perrier. Robert Matthams’ logistics firm goes head-to-head with FedEx. Both generate handsome profits, while supporting their chosen causes. In fact, the social agenda gives them an edge, endowing them with a series of advantages over traditional businesses.
Running a social enterprise means your strategy is rarely in doubt. Karen Mattison of recruitment dotcom Women Like Us, explains: “The social enterprise helps us keep our focus by ensuring every decision we take is in the interest of the women we are trying to help.”
Funding may be easier to find if you’re a social enterprise. The foundation for social entrepreneurs, UnLtd, received £100m from the Millennium Commission in 2000 to kick-start the sector. UnLtd has made thousands of grants, from a few hundred quid to £15,000. There are dozens of other funding sources for social enterprises. Bikeworks has received help from 21 organisations, including Tower Hamlets Council and manufacturer Park Tools.
Staff are more motivated at a social enterprise. The feel-good factor radiates in all the social enterprises featured here. Dan Miller, founder of Bikeworks, says he gets a helping hand both to run the business and from customers who love to feel they are helping a good cause.
Convinced? The dozen social entrepreneurs we’ve selected ought to quell any doubts. Each operates in a different niche of social enterprise, from environmental activism to education. The variety of their work and the diversity of their approaches demonstrate how versatile social enterprises can be.
And what of the chances of social entrepreneurs making a few bob? Social enterprises are profit making. You can make as little or as much as you want. The primary legal entity for social enterprise, the Community Interest Company (CIC), was formulated in 2005. Today there are 3,594 CICs.
The format imposes few legal restrictions. CICs are free to operate commercially. Dividends are capped at 35 per cent of profits and loan interest to investors has a ceiling of ten per cent of the value of the loan. Salaries to employees and directors are unregulated. Not that you have to incorporate as a CIC. Social enterprise is a state of mind, rather than a legal concept. It’s about marrying a commercial idea with an altruistic goal.
Take JustGiving, a website that revolutionised the way charities raise money. It is also a profit-making limited company, generating income for shareholders. A contradiction? Not at all, as the thousands of charities funded through donations processed by JustGiving will point out. Profit-making and helping good-causes are complementary activities.
Even private bank Coutts is getting in on the action. Working with UnLtd, Clearly So and the School for Social Entrepreneurs, it has launched an advisory service aimed at clients who want to support social enterprises but don’t know where to begin. “This is a two-way street,” says Andrew Haigh, managing partner for entrepreneurs at Coutts. “Our clients benefit from getting involved in philanthropic activities, and social entrepreneurs benefit from access to a group of business-savvy mentors.”
Your own firm might already be a social enterprise. A study by Delta Economics and IFF Research found almost half of UK entrepreneurs set up their business with the aim of making a social impact. Money was a secondary concern.
You can read our profiles of the new social entrepreneurs online: