a taxing question for social impact reporting

Some of you will be aware that I recently made my debut appearance on the stage of the Comedy Store in Manchester - sadly not to tickle peoples’ funny bones (well, not purposefully), but to speak at the national Social Impact Awards. And as part of my encouragement and challenge to the participants, I took the opportunity to share and publish my annual social accounts for 2012/3 (don’t worry, if you weren’t there - they’re on line now).

The reasons why I’ve committed myself to this annual report on my social impact / value / achievements are written about elsewhere, but I wanted to share the reasoning why I’ve decided to start monetising one of my measures - specifically the cash value of the pro bono support I offer.

Like many other businesses that offer professional services, I offer some of my support on a pro bono basis because, well, because it’s the right thing to do: why should people be denied support and advice on the basis that they’re not in a position to be able to pay for it (or have it paid for)?

For the last 2 years, I’ve struggled with if I should track the extent of my pro bono work, and if so, for what reason - after all, as a freelancer I only have so many resources I can devote to monitoring and evaluation so I need to know that there’s a valid benefit from what I invest resources in measuring and reporting against.

And I’ve decided that I should measure it - to help me reflect on how much support I am able to offer to people who would otherwise ‘go without’, and to make sure that I’m keeping this in balance with my need to make sure that I’m still earning enough to pay the bills. Given that this pro bono can take many forms, but all are based around time, I decided that the best way to track this would be by monetising it. That then raised the question of what should I use as my proxy value? After all, different services can attract different fees and what I charge can vary according to client … so in trying to keep it simple and transparent, I’ve taken a national proxy from a survey of other consultant’s fees.

It’s too soon to say what the effect of this new measure in my social accounts will be in how they (and I) are subsequently received and perceived, but I’m already considering another indicator - that of tax.

Private businesses are facing increasing demands for transparency in their tax affairs, and I realise that my current measures don’t have anything that allows me to reflect on the extent of my impact on wider society (I’ve already got the local economy, environment, and 3^rd sector covered). The proportion of my sales that are subsequently paid in taxes seems to therefore be a simple and effective way of strengthening my transparency and also reflect on how much I’m contributing to the benefit of the wider society in which I live (assuming that the bulk on my taxes and being spent on beneficial things such as training teachers, paying for healthcare, etc).

But what do you, dear reader, think? Am I right to be valuing my ’corporate love’ (pro bono), and should I really be talking about how much tax I’m paying with anyone other than the tax office given some of the cultural taboos we have in the UK around talking about how much we earn and pay in taxes…?

new support for local communities to raise startup finance from their neighbours

The consultancy.coop, a small Co-operative Development Body (CDB) based in south Wales has recently set up a new website aimed at helping new and growing co-ops with their Community Share Issues.

Alex Bird, one of the partners in the co-op, realised after working with a number of community co‑ops trying to finance projects through share issues, that whilst they could market themselves easily to local people, communicating to the wider public wasn’t easy on a small budget. He and his colleagues have worked with community shops, community centres, pubs, football and rugby clubs, festivals, food co‑ops, bike shops, off-road cycle centres, recycling projects, gyms and energy co‑ops, and all had difficulty marketing their share issues. Many didn’t proceed with a share issues because they couldn’t see how they would get sufficient share sales and the activists involved looked to other sources of finance such as grants and loans.

Some projects they’ve worked with have been very creative in their share issues, linking up with credit unions and CDFIs to enable people to get lines of credit or save up to buy shares, but they still find it difficult to contact their diaspora, and you can only raise so much from local people.

Many projects have a wider appeal than just their immediate neighbourhood, and there is a large body of people across the UK and further afield who don’t have a project nearby but would like to support one.  Real ale pubs, vegetarian and vegan shops, football clubs, and of course ecological and green energy projects are examples of projects with a broader appeal, but many such projects weren’t getting through to their potential share buyers, and at times weren’t hitting their finance raising targets.

After many discussions about who wasn’t doing what and whose job it was to sort out this problem, and why “they” should be doing it, consultancy.coop did what co-operators always do in the end – got on with it themselves. Using the well-known open source software from WordPress and with the help of Co-operatives UK Internet Services they have set up a .coop site from their own resources.

The new website is up and running at www.shares.coop and features all the Community Share Issues they know about free of charge in a classified style listing, plus lots of advice and guidance. The site is presently entirely self-funding, although as it develops they hope to bring some sponsorship on board in order to raise income and grow the site, so they offer paid for features as well as the basic free listing.

why being a charity isn't always the best way to 'do good'

The recent news about Charity bank giving up its charitable status to better allow it to gain access to investment in pursuit of its social mission caught my interest - it challenges the accepted norm that charitable status is always the best form to adopt to gain revenues in pursuit of achieving social goals.

I’ve always cautioned start-ups with a social mission about the risks associated with charitable status: it can be limiting in allowing you the flexibility to change your focus and activities in response to changing needs (owing to the strictures of charity legislation); it enforces limits within your governance that prevent you being able to be led by beneficiaries or employees; and as to the argument that you have to be a charity to access grants - many grant making trusts and public funding programmes aren’t concerned about your having a charity number. 

Finally, some feel that being a charity is a vital part of their business model in allowing them to gain business rate relief, but I’d suggest that any business model that is dependent upon securing rate relief is perhaps far too fragile to be able to survive in an increasingly competitive environment.

So - well done to the Charity Bank for recognising that being a charity isn’t always the best way to pursue a social mission: a salutary example to the wider sector.

when email accounts get hijacked...

It transpired that earlier this week, my yahoo email address (which I’ve been using for well over 10 years) got ‘hi-jacked’ by a ‘spambot’ – an automated programme that seems to have it in for yahoo by the looks of how many other yahoo mail accounts have also recently started to send out ‘spam’. Fortunately I noticed it within a few minutes as was able to quickly reset all the security stuff on the account which seems to have stopped it. But not before it sent an email to several hundred email addresses that contained only a cryptic link to an usual looking web address.

Now, I know most people are pretty sensible and will have recognised this for what it was if they received it, and happily deleted/ignored it (I once received a spam email from the then chief executive of what is now Social Enterprise UK!). But I appreciated those who got in touch by email and phone to check I knew and was OK.

It happens all the time: we get odd emails saying we’ve won the Nigerian lottery, promising miracle weight loss, or from people asking for help as they’ve been mugged on holiday and asking to wire money to an offshore account to help them out... most of the time our email programmes filter them as spam, but when they come from email accounts we know and trust, they tend to land in our inboxes.

It seems to be a symptom of living in the modern technological age that sometimes despite best efforts, things go awry – twitter was massively ‘hacked’ a couple of years ago, facebook got ‘turned off’ once, and a certain high street bank’s system shut down unexpectedly leaving its customers unable to access their accounts, make any sorts of payments or withdraw cash for several hours...

I’ve heard of lots of people who are now giving up on yahoo and moving their email accounts to other providers. But I think that in doing so, they’re missing an opportunity to show some solidarity and support for a service provider that offers us access to some of the joys of the World Wide Web without asking us for any payment as its users. Just about every email provider suffers problems at some point from attacks by hackers and ne’er-do-gooders, but it we all bolted at the first sign of trouble from any group, organisation or person that caused us embarrassment or upset, without offering them the benefit of the doubt and a trust that they’ll make things better next time, we’d very quickly all end up living as hermits in caves.

My yahoo email account being hi-jacked was an annoyance and slight embarrassment. But it happens to people all the time. We have a choice for how we respond – get angry with the wrong person who’s suffering with us, or stick together to try and ride it out, creating some more trust in an increasingly fragmented world.

an uncomfortable truth: bad businesses are just as successful as good ones

Many people argue that businesses should be ‘a force for good’ - adopting behaviours and practices that would be widely recognised as ‘good’: minimising environmental impact, being generous employers, supporting local community initiatives, and so on. But research from the US would seem to suggest that the correlation of doing good on the success of any business is…zero. In order words, it doesn’t matter how ‘good’ you are, ‘bad’ businesses are just as likely to prosper (and they’ll likely spend a lot less money in the process too).

Now, when I shared this research finding on twitter recently, lots of people responded with alarm, suggesting that the research must somehow be flawed, that it didn’t ask the right questions, or that it somehow doesn’t matter because it looked at US companies only.

I took a different perspective on the findings of this research: I used it as an opportunity to reflect on the way that I try to do business in an ethical and values-based approach, and if/how its worth the effort of my continuing to do so.

I know from surveying my clients that my business practices make no difference in their decision to award me contracts - my (professional) attractiveness is perceived through the lens of the quality of the service being offered, not the ethics of the enterprise offering them. However… I also know from the same surveys I undertake that clients tend to maintain the relationship with me because they like what they see and hear about me (which ‘doing good’ helps to re-enforce). And, as a micro-enterprise, knowing that I’m making a positive impact helps to assure me that I’m ‘living out’ the values I ascribe to, and so keep me motivated.

The real benefit from this research from the US is therefore perhaps an encouragement and reminder that we shouldn’t be ‘doing good’ in our businesses to make us more profitable and commercially successful, but to ensure that we remain honest with ourselves (both our strengths and our weaknesses), and we’re able to continue contributing to a generally shinier, fluffier, lovelier world for all of us.

Why pubs are the best place to grow your business

Most of you will already know that I offer support to enterprises, charities and individuals through a range of services and programmes (- my favourite of which is probably ‘beer mentoring’).

What many probably won’t  know is that I used to manage a loan fund for local co-operative enterprises, and am regularly invited to sit on panels to assess applications from start-up and growth businesses to decide whether they should be invested in.

As such I have a perhaps uncommon insight into financing issues as a business advisor, and find myself being asked to speak at various events on alternative sources of finance to the traditional high street bank for business start-up and growth. And it struck me recently that most of these alternatives might be best pursued not in an office, or over the internet, but in the pub as they’re all based around relationships and local knowledge, rather than institutions and ‘risk ratios‘:

• Angel Investors (think dragon’s den but without the scathing comments): people who are going to invest their money into you and your idea. They want to be assured that its not only your idea that’s a great one, but that you’re the best person to be leading on it - they want to get to know you. And what better why  to do that than over a drink?

• Loan stock (think interest only mortgages): this is where other people and businesses lend you their money with the expectation that you’ll pay them back at an agreed future date. These are effectively ‘private loans’ so you can choose where you discuss and agree them - and what more conducive environment could there be to negotiate terms than in a friendly pub?

• Community shares: where local people in a town or village all invest their own money in a common cause (usually buying the post office to keep it open, or installing a wind turbine to create free/cheap electricity for everyone). It can take a long time to knock on everyone’s door to make your pitch to them, so far better if there were a communal place where most of them are regularly assembled…pub?

All these ‘alternative’ forms of finance are based on people investing their own money (not someone elses') and as such there’s a different criteria that these investors are using: they’re interested in you, in building a relationship with you. And that’s something that’s hard to do in a posh office, but far easier over a drink… but they’ll still want to know about your business and be assured that they’re not going to be wasting their money, so you still need to know your numbers - however in a pub setting, you need to know them even more intimately than for a bank: a bank manager will expect you to have lots of notes with you, spreadsheets, etc. But in a pub, if you can’t give people an answer straight away off the top of your head, you’re sunk.

So, pub finance - perhaps a better alternative to the traditional high street bank? but it’ll demand that you know your businesses figures and detail inside out, and able to cite them more instantly than a bank manager would expect… On the up side, all your investors will be rooting for you and doing whatever they can to ensure your success (as its their money at stake!) and the interest you’re paying on the money is going back to other local people and fellow businesses, rather than in bonuses to  bankers…


UPDATE - 04.01.2013
my local paper, the Todmorden News has also just written an article based on this idea  - and in any of you are wondering, yes: I did buy my own pint!
http://www.todmordennews.co.uk/news/local/looking-to-grow-your-business-go-to-t-pub-1-5364076  

Why everyone needs Thomas the Tank Engine to help them manage their enterprise

I was recently invited to speak to a roomful of small business owners about the various options open to them to finance their ambitions for growth. One of my fellow panelists  John Daly stressed the importance of good robust financial management reporting. He argued that all enterprises needed sound financial reporting to support their success that should fulfill 3 specific criteria.

As I was listening, I realised that I knew these criteria already - not from any text book, or discussions with finance directors, but from one of my kids’ favourite TV shows: Thomas the Tank Engine. Thomas always introduced himself as being 3 things that made him the best and most successful engine on the island of Sodor: “I’m really useful, really reliable, and always right on time”: the same criteria that John argued that financial management needs to be: relevant, reliable, and regular.

So next time you think you see the Fat Controller at a business seminar, look again - it might be John Daly marshaling the trains; as for me - I’m off to watch TV with my boys to brush up on my management skills!