Anyone who’s worked in the third sector for some time will well understand both the value and challenges of third sector infrastructure organisations. On the one hand, they have been critical to the success of the sector over the years; campaigning as the advocate and voice for the sector; levering vital resources and funding; providing for peer learning and affirmation; and delivering for the really practical, from work space to training, from business advice to marketing.
On the other hand, when they go wrong, wow, do they go wrong. Sometimes with a spectacular bang, but more often incrementally over time, in a barely discernible way, until they become as much the problem than the solution.
The root of these challenges tends to lie broadly in two places; firstly, the issue of business model and secondly, issues more associated with wider human motivation and nature. This is how things so often play out.
Adam Smith characterised business as a great act of human cooperation and all around us we see the explicit embodiment of this, for example in Chambers of Commerce and organisations such as the Federation of Small Business, these are well established and generally well regarded organisations operating largely on a traded membership model. In any given area, there are plenty of customers, often with the income to well afford an annual membership fee. But when it comes to the third sector (and this is the ‘sweat’ bit) the numbers are different – fewer customers and less disposable cash. Hence third sector infrastructure organisations serving a range voluntary and community groups and/or social enterprises, that rely wholly on membership fees often struggle – its hard work. Though some, particularly within the more business focused social enterprise sector do make it fly, the national Social Enterprise UK and Plymouth Social Enterprise Network, of which I am a director being two good examples – though none of us would claim that it’s easy.
It is for this reason – the challenges of making an independent business case stack up – that most third sector infrastructure organisations, historically at least, are in some way reliant of some form of service contract or grant funding.
There are many, possibly countless, examples of great infrastructure organisations across the country, that make a real difference to their members and subsequently the communities and beneficiaries they serve, but I bet you, we can all think ones that we view in a less favourable light (this is the ‘blood’ bit).
When fallings out and blood lettings occur around infrastructure organisations the origins are often associated with a perversion of incentives, driven by survival instinct and good old motives of money and power. The last two are more obvious so we’ll start there.
The episcopal high churches of old drew much of their power (and money) by being the link to, and, in practice, the barrier and gate keeper between the people and god. Similarly, within third sector infrastructure, this can translate to being the organisation between the members they support and policy, local and national government, in practice managing, if not controlling, the information and sometimes the money. It’s not hard to see that the incentive of working solely to support your members in this situation can, over time, begin to become perverse with the gaming of data and information and the top-slicing of funds – more one ring to rule them all, than one organisation to support them all.
The above is not hard to envisage, when budgets are tight and you need to survive. However, it is often when an infrastructure organisation establishes, with an initial healthy cash injection and they acquire a set of fixed costs – staff, offices, etc. that the root of the problem is seeded. These ongoing financial bottom lines can lead to incentives shifting from supporting members to the need to feed the beast. What has been seen (no names mentioned!) is that often on start-up, an infrastructure organisation wins, say a three-year contract to provide support services etc., and, as soon as any organisation or entity is created, being people driven, like all entities it wants to survive. What happens, in a cash strapped world, when grants and contracts dry up and income generation opportunities are limited? Something a whole lot more bloody – they start competing for work with their members – not just cannibalism, but infanticide.
Infrastructure organisations are both vital and desirable, and arguably should be properly funded, particularly in the case of more voluntary and community based organisations for the key public service they provide. But when, as we’re seeing, that is just not happening, how do we keep them from slipping into becoming the problem instead of continuing to provide solutions?
In the context of distinctly different social enterprise, and the now growing community business sector, something new is emerging.
For some time, social enterprises have become comfortable with the balancing act of holding the tension, and creating a synergy, between producing economic value (paying your way) and social return (having a positive impact on the world). Coming to terms with, in an honest way, this existential challenge – something for me and something for the world – has been one of the hallmarks of the social entrepreneur. Understanding the value of both cooperation and competition, or ‘cooperatition’ being a business and social purpose organisation has allowed for new thinking to develop.
The isolation of graphene – a new wonder substance – in 2004 and its subsequent journey into popular debate has provided some inspiration; what is learnt in science can so often inform society. Graphene is ultra-light, flexible and tough; it is flat, one atom thick, colourless and see through and; due to its structure – a hexagonal network of carbon atoms – it is also a great conductor of electricity. Isn’t this what we want from an infrastructure organisation: light touch, flexible and responsive; resilient, strong and non-hierarchical; transparent, well connected and highly networked?
Plymouth Social Enterprise Network (PSEN) aims to be a focal point for the social enterprise sector in the city. The network is a vibrant marketplace for exchanging information, ideas and expertise. It promotes enterprise, learning, collaboration and commercial opportunities for social businesses in Plymouth. It represents the interests of social enterprises and helps develop of the sector, everything you want from a sector infrastructure organisation.
To achieve this, form has followed function and now into its sixth year going from strength to strength, the network has managed to avoid many of the above pit-falls, in a large part due to what we call graphene management or graphene structure. Though graphene literally is rocket science, it isn’t when translated a management principle – but it is a bit different.
What this looks like in reality is a philosophical position, a legal structure supported by the right policies and a set of conventions and values.
PSEN is more a flat network between, than an umbrella organisation above. It is purely a sum of its members, recognised social enterprises trading within the Plymouth travel to work area, who annually directly elect a board from within its self to a core CIC structure. Coupled with a positive culture of ‘yes we can’ this has ensured that the network has remained non-hierarchical, grass-roots and hyper connected and networked with multiple access points.
Philosophically, being purely a sum of its members and for its members, PSEN only seeks to plug holes, never undertakes work that could be delivered by one of its members and this is further ensured by a convention of being asset free – having no fixed costs, no office, no staff. Having no set costs to meet every month, there are no internal incentives to potentially pervert and skew the mission – it can survive almost on thin air. This makes it flexible, resilient and responsive, it can be as quiet or as active as required in response to members or external needs.
This is not to say that the network does not take action, it led the successful bid that saw Plymouth recognised as the UK’s first Social Enterprise City. This is enabled via a set of policies, which help further lock-in this light touch, asset free approach. While the Network receives regular income via membership, this is topped up by sponsorship, contracted and commissioned work – running a festival, undertaking research, an events programme, international projects or acting in a strategic capacity for example. It is here that the dispersed nature of graphene really comes into its own. Through procurement policy and transparent practice all work, even key admin roles, are parcelled out to members as contracted, paid or freelance work. The staff are the members, the organisation is only the members, in practice there is no third-party organisation and no fixed overheads. There are no perverse incentives. Not an organisation, a genuine network and, if you spent much time in Plymouth you’ll know, increasingly a movement.
Ed Whitelaw is a director at Plymouth Social Enterprise Network and Head of Enterprise and Regeneration the south west rooted social enterprise group Real Ideas Organisation RIO.
Plymouth Social Enterprise Network believes that social enterprise is a fundamental way to help Plymouth become a better city to live and work in. This means a Plymouth where:
- Wealth is generated sustainably and stays here to improve the quality of life for all
- Everyone has access to meaningful work – work that they can see makes a difference to their community, the environment and the world
- Good ideas are generated and entrepreneurialism encouraged
We want to see our economy grow in a way that creates these conditions, not hinders them. Developing business that has ethics at its core and exists to improve our social and natural environment (social enterprise) – rather than personal profit – is needed to make this happen.
If you also share these ambitions for Plymouth, please join us. We can only achieve this by working together.
Not sure? Let us tell you more.
Plymouth’s historic dependency on the defence, manufacturing and construction industries has created challenges for the city. Plymouth was heavily impacted by the recession – losing, for example, 6,400 jobs between 2008 and 2010 (The Plymouth Fairness Commission Final Report March 2014) – and despite many positive developments, Plymouth has been struggling to sustainably generate wealth; GVA has been around 84% of the UK average for many years. (The Plymouth Fairness Commission Final Report March 2014) Where wealth is created, it is distributed unevenly across people and areas. For example, in Peverell, Widewell or Compton only 5 – 10% of families are on low incomes; in Devonport, St Peters and the Waterfront or Ham this is 43%. (The Plymouth Fairness Commission Final Report March 2014)
Unlike traditional businesses – social enterprises by nature generate wealth that is used to improve conditions in the city. Moments Cafe, for example, uses its profits to support people living with dementia. Bikespace uses income from bike repairs and other services to train young people struggling with mainstream education as bicycle mechanics. Plymouth Credit Union offers financial services including savings, affordable loans and budget accounts including for people who have been excluded from traditional services.
Social enterprises in Plymouth are growing in size and their contribution to wealth generation: they currently bring in an income of £500 – £600 million.(Plymouth Social Enterprise Network Survey) We want to see this continue to rise so that wealth can stay in Plymouth and benefit all.
A strong and content society goes far beyond income. We see wellbeing as critical to a better city, and meaningful work can contribute significantly to our wellbeing. “When the work is perceived as meaningful, people have a sense of fulfilment and purpose that provides a psychological sense of well-being. The experience of meaningful work and well-being then spills over into the other life arenas and contributes to the overall sense of an individual’s life purpose.”(Meaningful Work and Wellbeing by J. Lee Whittington) We want to see work for Plymouth citizens that is meaningful for them and wider society.
Social enterprises are businesses that exist to make a positive impact on others; they provide work that has meaning and purpose to employees. Social enterprises are also more likely to offer fair pay, involve their staff in decision-making and employ people from specific vulnerable groups. (The Future of Business: State of Social Enterprise Survey 2017 by Social Enterprise UK)
According to their employees, PSEN member social enterprise Real Ideas Organisation provides a “strong sense of ownership and democracy” to its team because “everybody gets a say”; team members say that working for RIO is “incredibly purposeful”. (Real Ideas Organisation website)
Social enterprises currently employ over 7,000 people in Plymouth and we want to see this grow.
“Due to the domination of Plymouth’s historically large employers, both the culture and infrastructure for entrepreneurs lags behind many other cities”. Plymouth has historically had a low business start-up rate (e.g. 60% of the England average in 2011), but entrepreneurialism is on the rise. (The Plymouth Fairness Commission Final Report March 2014)
When it comes to community and social enterprise, visitors to Plymouth note the buzz in the city. Social Enterprise UK’s State of Social Enterprise Survey 2017 states that “Plymouth is now garnering global acclaim…as a leading place for social enterprise”.(The Future of Business: State of Social Enterprise Survey 2017 by Social Enterprise UK) PSEN’s successful bid to make Plymouth
the UK’s first Social Enterprise City in 2013 had a key role in this, attracting investment (such as Plymouth Council’s £2.5 million Plymouth Social Enterprise Investment Fund) and interest into Plymouth, where good ideas are abundant and social entrepreneurialism continues to grow.
For example, in early 2018 PSEN member Street Factory CIC crowdfunded nearly £50K to bring the UK’s first Hip Hop Theatre to Plymouth. The Entrepreneur Inside programme supported its first cohort of prisoners to build their own entrepreneurial business plans for their release. Nudge Community Builders has bought a disused pub in Stonehouse and is renovating the building to create two homes to meet local need and a mini market area on the ground floor.
We believe that if every business in Plymouth were a social enterprise it would transform the health and happiness of residents and workers in the city.
If you’d like to start a social enterprise, find out about support available here.
I attended the Plymouth Growth Board on Monday. The highlight for me was a presentation by the Local Enterprise Partnership (LEP) about the Productivity Plan for Devon and Somerset. As you know we submitted a response on behalf of Plymouth’s social enterprises. The LEP welcomed our submission and also suggested that whilst there is a need to boost productivity it cannot be at any cost. They seemed receptive to the idea we submitted about ‘good growth’. Positive news there but we need to keep bringing this up wherever, whenever we can. We need an alliance of social enterprises, Transition movements, ecological economists, Coops, Fair Trade organizations and more to keep making the case for the economy and society we want. Plymouth City Council’s response also referenced Social Enterprise City and inclusive growth.
The main focus of the meeting was on skills. How do we ensure we get the best, most skilled workforces to help us develop and grow our businesses and improve the economy of Plymouth? There was a focus on Plymouth’s STEM (science, technology, engineering and maths) strategy. The Plymouth Skills Analysis is being refreshed – make sure you contribute to this when the opportunity arrives. Tell us what skills and what workforce you need to succeed as a social enterprise. Also, it was apparent that continuing to develop pathways for people into work they want is crucial to increase social mobility and opportunity.
Professor Jerry Richards gave a good overview of the economic impact of Plymouth University – one of PSEN’s members and the first social enterprise university in the world. £300 million is spent by students in Plymouth each year and the university’s annual wage bill is £150 million. Thousands of jobs in the city are directly and indirectly reliant on the university. How the university stays competitive in the context of Brexit was also discussed. The danger is that Plymouth becomes a less attractive place to study and loses EU research cash. The need for cleverness, ingenuity and partnerships in response to this is obvious. The national government’s industrial strategy promises £4.7 billion for science, research and innovation. A great opportunity and we need to make sure Plymouth is in the mix for this.
You can contribute to the government’s industrial plan by clicking here. Social Enterprise UK is leading a national response which PSEN will contribute to on behalf of our members. Tell us what you think should be the priorities. Book onto the national events in early April run by SEUK on skills (Stoke) and on procurement (London).
Finally, I found out that Plymouth is one of the ‘Top 20 Coolest Places to Live’ according to the Times newspaper. Cool – but we already knew that right?
Gareth Hart is Chair of Plymouth Social Enterprise Networkand a Director of Iridescent Ideas CIC
It’s no secret that there are plenty of things wrong with the economy. Inequality of wealth and income and dependence on fossil fuels to create economic growth are my top two concerns, but there are many others, held by people much more mainstream and well-informed than me.
The OECD defines Inclusive Growth as growth that creates opportunity for all segments of the population and distributes the dividends of increased prosperity fairly across society. “Inclusive Growth” has become the thing to call for with statements from the World Economic Forum and the 2016 G20 meeting in Hangzhou. But, for many of us, these look like suspiciously like add-ons to a business-as-usual narrative.
As a director of PSEN, I believe that social enterprises create a better economy. Social enterprises are businesses which trade for a social or environmental purpose. Their profits are reinvested for that purpose. Like all businesses, social enterprises find opportunities to create value, they develop and sell products and services, employ people, make a profit, pay tax. But they differ from private businesses in two important ways. Firstly, the value they seek to create is more broadly defined than private businesses and includes social and environmental value alongside economic value. Secondly, and this is the real difference between private and social enterprise, is that private enterprise creates value in order to capture it for owners and shareholders. For example, of the £2bn allocated to social care in the March 2017 budget, £115M will go to private investors. Social enterprise creates social, environmental and economic value for the benefit of the community as a whole. It is for this reason that we think social enterprise is a radical alternative to traditional business and an important ingredient of a more inclusive and sustainable economy.
There are also hundreds of people, organisations and initiatives who are not involved with social enterprise, or who wouldn’t use that label, but who are also working toward a more sustainable and inclusive economy. These include local currencies, time banks, local food networks, community renewable projects, transition towns, worker co-ops, community businesses, socially engaged artists, digital inclusion and open data initiatives, social justice, fair trade and environmental campaigners, proponents of participatory democracy, you can probably think of plenty more.
These grassroots initiatives are supported by research from heavyweights such as the New Economics Foundation which has been developing policy recommendations since 1986, and the RSA whose work on the economy, enterprise and manufacturing includes the Inclusive Growth Commission and the Citizens Economic Council. The Transition Town movement which champions a community-led transition to a low carbon economy celebrated its 10th birthday this year and, more locally, the annual convergence of the Devon New Economy Forum has become a regular event. Good ideas have gained traction: wellbeing indicators are now part of the Annual Population Survey in the UK, providing a baseline against which initiatives can be evaluated. Universal Basic Income pilots in Scotland and Finland build on others around the world. The first local bank in the UK, the Greater London Mutual is due to open soon with a South West bank to follow. Cornwall LEP has put “inclusive growth” at the heart of its economic strategy. In Plymouth, academics, city and regional economic leaders are taking an interest in purpose-driven business. PSEN representatives chair the Plymouth City Council Inclusive Growth flagship and we have submitted our Good Growth plan to the Local Enterprise Partnership and the national government’s industrial strategy.
Over the next twelve months PSEN, will be holding a series of events to highlight some of the important themes around creating a more sustainable and inclusive economy. This will help explain the role that social enterprises can play and develop relationships with others who are working toward the same thing. The aim is to join forces to work more effectively together and see where the gaps are.
The events planned will focus on demystifying and democratising economics, rethinking the relationship between work and money, moving towards a more ecologically sustainable economy and exploring some of the ways in which open data can facilitate the transition.
In addition to the events I’d like to facilitate a conversation on social media and in pubs and cafes about what a more sustainable and inclusive economy will look like. If you would like to be involved, get in touch.
The first two events are now live…
Rethinking Work and Income, held in collaboration with RSA, will be on 20th June. For more information and bookings, please follow the link below:
Link to event: https://www.eventbrite.co.uk/e/rsa-sw-rethinking-work-and-income-tickets-34825500008?ref=ebtn
An Economy that Works for Everyone? is on 6th July, again in collaboration with the RSA. Information and bookings at: https://aneconomythatworksforeveryone.eventbrite.co.uk
The Social Enterprise for an Inclusive and Sustainable Economy project has been supported by a Big Lottery Fund Awards for All grant.
We welcomed a full house of local members to our AGM on Monday as well as speakers from across the UK, Europe and from as far away as Brazil. There was an unanimous re-election of the Executive board and Ian Smith from Food Plymouth joined as a director. Our keynote presentation from Manda Brookman of Coast:One Planet Tourism was inspiring and informative, you can download a copy of the presentation here. We also heard from Salford University, City College Plymouth, Power to Change and Exeter University. You can read the minutes and notes here.