reporting social impact - 150 years in, and 8,000 to go...

If you're getting involved with starting to report social value/impact, and find yourself confused about all the different models, standards, bodies, and approaches, then don't panic - you're right where you should expect to be!

Preparing 'social accounts' is often likened to the preparation of a set of financial accounts - tracking what resources have been used, and what's changed (good or bad) at the end of a period.

However - as a species, we've been collectively agreeing how to 'do' financial accounts for about 8 millennia (the earliest reference I can find dates back to about 8,000BC in ancient Sumeria...). But we've only really been doing 'social' accounts for about 150 (the earliest references I'm aware of are co-operative societies in the mid nineteen century sharing how they were impacting on their members and communities).

So if we've been working on agreeing consistent standards and approaches for financial accounts for this long, why is there the sense of urgency and panic to nail the way in which we report the social value and impact alongside the financial stuff?

And just to add to the complication, financial accounting had only a few key audiences who were interested that it was gotten 'right' (investors, regulators, government), whereas social value and impact has far wider groups that it needs to satisfy (providers, commissioners, communities, employees, beneficiaries, customers, grant making bodies, policy makers, and so on and so on...)

So isn't it about time we stopped panicking that we've not yet reached a global consensus on the measures we should all be using when we talk about our value and impact..?

(Unless you're the Bank of England, who've just set a 2 year deadline on us all to figure them out before they make up and impose their own!)

the problems with prioritising social value maybe aren't that straightforward...

Having worked in the 'social value' arena for about 20 years now in guises ranging from developing reporting toolkits for national sector bodies, supporting national programmes from the likes of nef and Social Investment Business, and delivering masterclasses with commissioners and individual groups, there seems to remain a widespread frustration as to why more charities, social enterprises, businesses, and others simply aren't getting on with just (fukcing) doing it...

And I have an idea (well, several in fact) as to why despite the rhetoric and good intentions, it's proving so hard for so many to start with even the first steps of starting to think about how they capture and report the impact they're already making, let alone start to grow it to benefit more people and communities in need:

1) most groups and businesses face a daily trade-off between investing in systems and processes, and being able to 'keep the lights on' - until we can find better ways of presenting the imperative of social value reporting in the context of their current operating pressures and immediate consequences, then it'll always be being put off to the next month...

2) despite social value now being a compliance thing for charities, companies, and even societies (public benefit reporting requirements, legal responsibilities of company directors, and such like), there's little by way of enforcement by these respective regulatory bodies - so if there's no stick, then what's the motivation..?

3) the introduction of the social value act in 2012 was going to herald a new era of social value in public procurement - except it's not that obvious or widespread yet (with most contracts only giving a 5% weighing to social value)

4) we see grant making trusts and bodies seemingly at odds with each other in how they're prioritising social value and impact, with some being so vague as to leave the applying groups more confused, and others contradicting each other, so is it any wonder that charities applying to them are focusing more on outputs and budgets than outcomes..?

5) and the 'professionalisation' of reporting our social value (despite it originating within the social enterprise sector) is starting to see our own people becoming disenfranchised and demotivated when they're asked to start to report and manage it, according to recent research papers...

So is it any wonder why despite the efforts of nationally funded programmes, sector bodies, and rhetoric of others, that 2 decades in, we're still seeing so many groups struggling to begin to even engage with social value, let alone report, manage, and develop it..?

Maybe we need to create more carrots to incentivise and nudge behaviours and thinking, rather than relying on an approach of 'tell people why it's so important, and they're bound to come round...' (after all - how many of us actually manage our recommended '5-a-day' of fruit and vegetables, or religiously floss after every meal, despite knowing how important both are...?)

why I don't go to awards ceremonies (despite winning them!)

I seem to be developing a reputation for winning awards (and as with most of my other reputations, is not something I purposefully set out to achieve...); but thought it might be time to reveal why I'm usually pictured in my office with all the paperweights and wall hangings that I seem to be amassing, rather than being suited up at official awards ceremonies:

1. they're usually in London or major cities that aren't that easy for me to get to (I live in the Pennines where the quality of views, walking, and beer are offset by years of under-investment in public transport links...)
2. Despite all my bravado and pomp, I think that my factory default setting is far more introvert than extrovert, so if it's all the same, you can post me the paperweight and I'll stay at home to watch TV with my girlfriend and a glass of wine;
3. But perhaps most importantly, not going in person creates an opportunity for me to be able to help other people get a 'leg up' as they're starting their careers and adventures - at the IOEE awards where I was named 'member of the year', I orchestrated it so Harsha Patel would be 'me' at the House of Commons to accept the accolade on my behalf: she was in the process of founding Doing Social at the time, so this meant she had opportunity to network with people and agencies more quickly and easily than she might have otherwise, meaning she could get her new venture 'out there' more powerfully than she might have otherwise. (She also looked better in a dress than I could ever hope to when on the podium giving the acceptance speech...)

So that's the reasoning behind why, in my business model, I seem to be once again going against conventional wisdom that says I should be revelling the in the validation that having awards bestowed on me offers..,

why ducks are better than dolphins

Anyone familiar with the Hitchhiker's Guide to the Galaxy will know that since time immemorial, it's been dolphins (not us) who are the most intelligent life form on our planet.

But I've started to wonder recently if they've only gotten this position thanks to some crafty PR on the part of the late Douglas Adams, and it's actually the ducks that are the ones we should all be looking to... 

(the precedent for this being within the co-op movement where the 'Rochdale Pioneers' are oft cited as the fathers of co-operatives thanks to some clever PR on their part back in the day, despite there being lots of co-op societies in England that were already well established before they came together - and some of which are still trading today!)

- It's ducks who are favoured by surrealists

https://arthive.com/salvadordali/works/315568~Duck

https://parkzer.com/2009/04/17/whats-the-difference-between-a-duck/

- It's ducks who helped me convey to a national festival my identity as being NOT that of a social enterprise/entrepreneur

https://thirdsectorexpert.blogspot.com/2015/05/i-came-i-saw-i-possibly-embarrassed.html

- It's ducks who avoided becoming weaponised in warfare (unlike their porpoise counterparts)

https://en.wikipedia.org/wiki/Military_dolphin

- and it's ducks who can best help us get fully to grips with themes of equality and diversity... 

https://charteredabs.org/what-makes-a-duck-a-duck-a-playful-introduction-to-equality-diversity-and-inclusion/

But is there a hidden moral or meaning in this seemingly random and off-beat post... well, I think there is, and I think it's this - 

in the words of Public Enemy, "don't believe the hype": just because something seems insignificant and commonplace doesn't mean it doesn't have the potential to usurp the leading authorities on any given matter.

how the CIC Regulator protects people's trust in social enterprises by not telling anyone anything about the complaints or concerns we make to them...

If the title of this post sounds counter-intuitive, that's because I'm still struggling to reconcile the inspiration for it: a statement by the CIC Regulator in their latest annual report about how they strive to help protect the CIC brand:

"our approach is to neither confirm nor deny whether an investigation is taking place...to protect the integrity of the CIC." (p.12)

and if you follow this through to the CIC Regulator's published guidance on making complaints about CICs, you'll find that if you do raise a concern, you'll find that this opaqueness goes ever further in that they won't "publish or tell the complainant about the outcome." (p4)

This seems to be a little odd at best for a number of reasons:

1) all other regulators are usually transparent about investigations they opened and reached a decision on (unless there are over-riding legal reasons or concerns);

2) a 'back of the envelope' study I did into CIC complaints a while ago found that we, the general public, were increasingly raising concerns about them to the Regulator, year on year - and...

3) ...as most complaints received by the Regulator relate to a CICs governance, then why not share some of the details of these with us all, so we can better structure and manage CICs to avoid common pitfalls and mistakes in better protecting the shared brand and respective integrity of the wider CIC community..?

Worryingly, the CIC Regulator also reveals in this latest annual report, that for the first time since CICs were introduced (14 years ago) they've actually acted on a complaint to investigate the affairs of a CIC. (Although they don't disclose any details of this, so we can't learn from other's mistakes in strengthening our own respective understandings and practices).

There's a relationship between trustworthiness and transparency, and if the CIC Regulator isn't being transparent about how they're handling the concerns people are raising about individual CICs, then there's a limit to how far we'll not only be able to feel we can trust them to protect the reputation of the social enterprises they're responsible for, but also how much faith individual CICs will have in them to act with any integrity themselves as their regulator.

All of this isn't meant as another CIC-bashing post (goodness knows, I seem to make enough of those already!), but part of my questioning aloud about some of the wider practices in the social enterprise sector that more of us should surely be aware of and asking about, if we're to make sure that as a movement, we're as credible and impact-ful as we have the potential to be.

But, all in all, I'm reminded of a post I made about the CIC Regulator a few years back, wondering aloud why it was that they were giving away so many free branded air fresheners...

the tension of being British and winning business awards

Anyone who's snooped around my website, or followed some of my social media feeds, will likely have noticed that from time to time I'm fortunate to be recognised through receiving various national and international awards.

As a sole trader, such recognition is really valued: I don't have a line manager, team of colleagues, or regular gang of work mates whom I go out after work with that would otherwise help reassure me in those moments where I doubt myself, and wonder if I really am as good as I seem to be (hint: impostor syndrome is much more common amongst freelancers than people like to publicly admit). So such validations are genuinely welcome, and hopefully also an encouragement to other fellow freelancers and self-employed, that we really can achieve great things despite sometimes feeling like a flea when compared to the likes of larger firms and companies.

But recently I've started to notice that there seems to be something 'a bit British' about such business awards: whenever I learn I've been shortlisted for something, I'm keen to share that news as encouragement to others (and also reassurance to clients that they've commissioned the right consultant!). And if I'm fortunate enough to impress the judging panels sufficiently for them to put my name on the trophy, there's a similar post (although not always traditionally posed...) to share my excitement. And what I'm starting to notice is that there seems to be more interest and 'well done' messages when I share news of nominations and short-listings, than there is if I get to subsequently add another 'paperweight' to the trophy cabinet.

And I'm wondering if this is a reflection of our culture as Brits - try hard, strive to succeed, always root for the underdog (in this case, the sole trader who's up again international consultancy firms), remember it's more important to take part than to win, and don't get too cocky... 

But is that a bad thing? After all, it's complacency that is usually at the root of businesses that start to struggle and fail, and that's something I'm very keen to avoid (even though I've managed to remain self-employed for nearly 15 years now, I still fret about being able to find the next paying client or that my invoices will be able to be paid...)

So maybe we should focus more of the celebrations not on the winning of awards, but on those who get nominated and shortlisted (which is often no mean feat to achieve in itself). 
As for me? I'll still keep sharing news of awards nominations and additions to the mantelpiece, but won't be upset if you decide not to comment or like the posts I make when I share the news of it as encouragement to others.

why do we keep insisting on keeping social and 'regular' entrepreneurs apart, when both have the same sh!t to deal with..?

In my experience of supporting various start-up programmes throughout the UK over the last 20 years, and having walked alongside many for part of their journey, most entrepreneurs don't call themselves that. 

They're simply people trying to make a go of an idea to either help them fix a problem they see in their community or help them get a bit more financial security for themselves (usually both).

So I'm increasingly frustrated when I keep seeing national sector bodies re-enforcing a narrative that social and non-social entrepreneurs need special treatment that somehow doesn't seem to apply to the other:

• the School for Social Entrepreneurs recently posted about the 5 ways that social entrepreneurs best learn - but if you took out the 'social' in the title, you'd instantly recognise them as being exactly the same way that any non-social entrepreneur prefers to learn too...

• and the recent Good Deals conference emphasised the impact that being a social entrepreneur has on their mental health - echoing the findings of the World Economic Forums' own research into the mental health of all entrepreneurs around the world... (but not seeming to make any reference or links to this...)

It therefore seems that if you identify as social or not as an entrepreneur, you're probably going to be sharing the same needs, concerns, and preferences for how you access the support you want - and this isn't anything new either: cross-sector research I did into social enterprises, charities, and private businesses all the way back in 2003 (an era of dial-up internet!) found that regardless of which sector people identified as being part of, they all had the same development needs and shared preferences for how they accessed learning and training.

And to my mind that suggests that we're continuing to miss a trick in amplifying the impact that entrepreneurs could be making on society's problems, and the wider economy - why are we creating this artificial segregation of entrepreneurs based on their founding motivations, when the support they need is the same.  And surely by learning and growing together they might better encourage, inspire, challenge, and ultimately "be" more than the sum of their respective camps..?

In the enterprise programmes I've been fortunate to have been able to manage and lead over the years, I've always sought to encourage such a 'mixing it up' philosophy, and although none were ever evaluated on the grounds of it being mixed-sector entrepreneurs, no-one in them seemed to have any problem in undertaking their journey as an entrepreneur with the others who had differing visions or motivations to their own.

So when we will we start to see (social) enterprise support agents admit that these divisions between sectors aren't really that valid or justifiable, and in doing so, be able to be more inclusive in releasing support into our wider communities and economies for the benefit of all..?

a truly 'out of this world' consultant..?

I've always prided myself on trying new approaches and ideas in not only how I manage myself as a provider of enterprise support, but also the ways in which I offer that support.

But I think I may have just overreached myself, and signed up to something that I can't see how I can ever 'top' - being the first freelance enterprise consultant on Mars from next year!

Those lovely people at NASA are planning their next Mars Rover trip for 2020, and as part of the kitting out of the equipment, have offered to engrave my name onto it - so from next year, I'll have a physical presence on another celestial body (although if any would-be interstellar clients want to try and call me, I'm not quite sure what the prefix code is for earth, nor what the roaming charges would be...).

Conventional business wisdom always argues that in order to be successful, you should not just aim to excel at what you do, but be the only person who does what you do. Well, my list of being the only person in the world who does what I do seems to be growing - 

1) the only business consultant to openly publish an annual social impact report on myself;

2) the only business that's deliberately chosen to remain a sole trader to maximise (rather than minimise) the tax that I pay on my earnings;

3) the only adviser who regularly asks for 360 degree feedback from clients in the form of pictures and asking to be likened to superheroes;

3) and now the only freelancer to have a presence on another planet.

Where do I go from here??

will current trends in csr ultimately see charities and social causes losing out..?

Corporate Social Responsibility ("csr" - or also, 'not being a d!ck') has been around for as long as there have been businesses : it's the equivalent of what companies do against our giving to charity or volunteering for causes important to us personally.

It's also something that can be mired in suspicion, scepticism, acclaim, legislation, policy, and so on - although interestingly, recent research by the Institute of Business Ethics finds that our trust in businesses to 'act ethically' is at all time highs (despite high profile backlashes to do with tax, and workers treatment, by some global firms...).

But in the main, the csr initiatives that companies 'do' (either gifts in kind, sponsorship, corporate volunteering, and such like) are at the direction of the business itself that's doing the giving - in much the same way that we as individuals decide which charities we want to give money to, or which causes to volunteer with.

A few years ago, a company in America called Tom's Shoes refined this csr model into a key plank of its marketing strategy: 'buy one pair of our shoes, and we'll give another pair to someone in need of shoes who can't otherwise afford them' (aka 'Buy 1 Give 1' - B1G1). This model of csr offered a way that we as individuals could more easily assuage any concerns that we have personally that we should somehow be trying to do more to give to those in need, without having to actually give anything, or make any effort beyond our usual consumer purchases (some might say, a very effective way that the private marketplace has made it easier to be philanthropic painlessly).

Subsequently, this model of B1G1 has been adopted by lots of other companies and platforms, even though studies suggest that this model of philanthropy may ultimately actually do more harm than good.

But Tom's shoes has now revisited it's csr model in a way that makes me think that we may be starting to see a sea-change in the face of csr (and possibly to the detriment of the charities and causes we want to try and support) - the company is now offering customers the choice over what the value of that other pair of shoes that are being gifted should be used for: either giving a pair away as before, or contributing to a choice of social causes that the customer can pick.

Now, this model of customers choosing the recipient of a company's philanthropy isn't entirely new: the Co-operative Group, and Tesco stores invite shoppers to vote for which local charity should receive a financial gift from their trading (albeit as part of a wider csr programme).

But it marks the first time I'm aware of, a company changing the way it does csr because of what it's customers are telling it - in effect, it's co-producing it's csr with its customers, being increasingly led by our personal interests, whims, and fashions.

And is that a good thing? Well, it fits with classical marketing strategy of responding to/being led by customers, but if more and more companies start to follow this lead (as they did with the B1G1 model), then we start to risk some causes and issues 'losing out' because they're not as visible or popular as others, but are nonetheless equally important.

Csr plays a distinct role in the wider fabric of community and voluntary support, but supplements what we choose to do as individuals. If we as individuals start to direct the businesses we buy from as to the causes we want them to support, then we're likely to give less to those causes ourselves: after all, that cause or group will still be getting something from our purchase price, right? 

But it's unlikely that any private business's csr will ever equal what we collectively give individually, so this crowdsourced approach to csr may ultimately start to see more of us giving less to charity, and spending more as consumers... 

A question of grace and bad debt...

I've recently published my 13th annual social impact report on myself - and as with previous years, continued to 'evolve' the framework by adding further indicators (specifically, in relation to how far I'm adopting working practices that reduce environmental impact). 

The framework I've developed is overall designed to reflect my values, but I'm wondering how far I should include additional indicators relating to 'grace', and more specifically, 'forgiveness'...

You see, businesses of all types will, at some point, face the prospect of having to deal with bad debt - a customer or client that either refuses to pay, or whose venture has become insolvent. In such circumstances, conventional wisdom decrees that we (as the people the debt is owed to) enact recovery processes: debt collection agencies, applications for court orders, striking them off our Christmas card lists, and such like. 

But sometimes, the people we've worked to support and now can't make good on the payments we've agreed, haven't made a conscious or deliberate choice to run their businesses into the ground, or to happily walk away from their dreams and ambitions with little care for the consequences. They're just as, if not more, upset than we are that circumstances have played out as they have and are simply trying to minimise the fall out (albeit that usually means by 'doing an ostrich' and hoping it all goes away by itself...).

In such instances, grace would seem to require that we at least consider the option of forgiving them their debt - not as a 'carry on and mess up other businesses' type approach, but rather as a measured and reflective conversation about how working relationships have been bruised, and helping all involved understand the cost that such a forgiveness of debt will entail (but the benefits it could also offer in the longer-term to all concerned as well). 

As a sole trader, my experiences of exercising grace in this way is 'quite painful' as I've no larger company or wider team of colleagues to help soften the hit of not now receiving the income I'd anticipated. I also need to work at least doubly hard to find additional work to replace the earnings I've lost and budgeted to receive, (earnings that help sustain my family, home, and other commitments).

So the question I'm grappling with is - when I exercise grace in this way, should I record and report it, as I do with other workings out of this value (such as the extent to which I currently report on the pro bono support I've given to various people and groups).

Would such open reporting simply encourage a culture of clients 'crying off' when they see that I'd be willing to forgive them their debt, or would it mean we can all start to have more grown-up and mature adult conversations about money, and the way in which we recognise and have responsibility for others through ensuring that we pay them what we owe?

accelerating to 'Launch' speed...

I've always been a keen proponent of enterprise education in all its forms, and for all ages too - not just for the sake of encouraging more start-ups, but because I think it can offer genuine benefits in whatever we choose to (or find ourselves doing) in the future.

As part of this, I've always sought to work with Schools, Colleges, and Universities - one of which is Salford University, with whom I seem to have built something of a long-term relationship, as I'm now well into my 7th year of them asking me back to work with their subsequent intake cohorts of undergraduates.

The design of their offer to students who are interested in exploring and launching their own enterprises has changed over the years - including seeing more leaders of courses and schools within the university becoming more interested in 'exposing' their students to speakers like me to help them better understand 'the enterprise option'; (I've always especially liked it when the drama school asks for these as it means I can perform my 1-man startup show on a proper stage!).

But perhaps most excitingly, the university's enterprise team has recently launched a dedicated accelerator on campus, branded 'Launch'.

And rather than assume that just because they have a business school and an MBA programme they know what the best content to teach and offer through it would be, they've linked in with the Growth Hub, Santander, and others to offer students a more rounded, complete, and stronger support offer.

Fortunately for my own enterprise practice, they've asked me to reprise my role as a mentor and adviser to some of the latest cohort in the accelerator, to which end the University recently invited me to the launch of their latest Launch programme.

And it was at this launch that I was inspired to jot these thoughts down for my blog for 2 reasons - what undergraduate students want to get out of being part of an accelerator, and the key message that seemed to be being broadcast to them:

in contrast to what we seem to hear from other national and international accelerator programmes who laud themselves on the investment they help start-ups to gain, students motivations at Salford's Launch feel much more 'earthy' and 'real life':

- people are wanting better clarity over the future of their business

- people recognise that being part of a peer community can offer them the confidence and accountability structures they know they'll need to see their ideas through

- some people feel they's lost their mojo, and the accelerator is a good opportunity to find it again

And as for the key message to these start-ups: "be a sponge (of knowledge and ideas), rather than a sponger".

As to the journey that this cohort will be taking, and what their experiences of it will be - well, I'm going to be fortunate enough to walk alongside some of them over the next few months, so I'll try and check in later this year with some thoughts of what happens at the other end...

the joy of lunchtime lectures

I recently attended a lunchtime lecture - now, don't run off just yet... I know it's not the most thrilling of openings, but bear with me as I think I may have an important idea about why they're better than podcasts, webinars, and MOOCs as a format* - 

I've always been a fan of lifelong learning, and recently being able to spend an hour, immersed in the stories and ideas that surround the topic of "working class writing and publishing in the late twentieth century" (there's even a book published about it!), I was reminded that learning for its own sake can be of as much value as gaining knowledge and skills needed for an exam or particular workplace task. Learning doesn't have to be tied to pre-set outcomes, qualifications, or career progression, to create enjoyment and further our understanding of, and thinking about, the wider world around us.

Historically, adult learning would be only available in such formats: guest lectures at reading rooms and museums, but today technology widens their accessibility through webinars, podcasts, and the like.

But in making such opportunities more accessible to all, I wonder if we haven't lost something along the way - being in a room reduced the distractions to my being able to retain interest and focus on the subject matter. Physically sharing the experience with a roomful of other 'real' people (rather than avatars) re-enforced the value of being there by being part of such a tangible peer community. Needing to invest time to travel to the venue (the impressive and under-recognised Working Class Movement Library) made it more of an occasion - further adding to the experience and my subsequently being a in a head-space that made it far more enjoyable than listening in on a pair of headphones... And the fact that there was tea served afterwards for us all to further reflect on the questions the lecture had started to raise within us was halcyon!

So next time you see a lunchtime lecture (or similar) advertised anywhere, and you the subject matter briefly piques your interest - I'd urge you to make every effort you can to get to it.

(*Of course, I recognise I may be a little biased in having delivered lunchtime lectures myself in the past...)

a 10 year landmark

10 years ago today, I started this blog.

Not because I thought I had something to say, but because lots of other people kept encouraging me to do it - and that's what kept me coming back to keep posting here. 

The web is being increasingly littered with blogs that people start with good intentions, only to let them lapse, but if other people think I have something of value to share, then surely I should keep starting conversations, provoking others, and challenging 'accepted wisdom'?

And it's the comments people have made to posts, and the emails that they spark, that help reassure me that this is something that's still worth continuing (not the analytics - thanks to vooza, I've always been wary of 'big data' numbers...)

• Over the last 10 years, I've posted about a number of things:
• my apparent divinity
• why pubs are better than community centres
• how I changed company law
• pornography, S&M clubs, and male strippers
• my kids
• libraries
• my relationship with U2's Bono
• the medieval internet
• how I make clients faint
• why people shouldn't trust me
• sexism
• making perfect cups of tea
• gold clubs
• disco balls
• playing spin the bottle with Boards of Directors and Trustees
• fezes
• tap dancing in front of armed police in the House of Commons...

as to what might come in the next 10 years - who knows, but hopefully it'll remain as entertaining..!

is 'responsible lending' starting to mean investing in private businesses more, and social enterprises less..?

Since what seems like forever, there has always been the provision of 'alternative finance' - people and communities coming together to support each other financially when either the banks said "no", or because they wanted better terms than mainstream lenders were offering them.

Over time, this has led to the creation of what's now named and recognised as 'alternative finance' - pioneered by early co-ops, community businesses, and charities through things like credit unions, the formation of the Charity Bank, and such like. And then attracting global interest through the rise and populism of 'micro finance'.

But this isn't a post about the history of this sector (although there are some good stories to tell - like what happens if Quakers set up a bank to offer a more ethical alternative in the 17th century, only to have it suffer 'mission drift': we know it as Barclays bank today. And what happens when all the studies and research starts to show that micro finance doesn't deliver on its promises to lift people of of poverty?).

Instead, this is about my wondering if the recent performance of alternative finance providers, as reported by the sector body, Responsible Finance, is showing that social enterprises are increasingly moving away from such ethical alternatives, and that we're seeing private businesses making better use of these lenders designed to step in when mainstream banks and lenders said 'no'. And in doing so, are we also starting to see an evidence base emerging that shows private businesses are better at creating social impact than social enterprises...?

As readers of previous posts like this may recall, I don't claim to use any statistically significant variance analyses - I try and take a simple layman's approach: looking at the data as it's been published, and sticking it into some simple charts.

To do this, I've drawn on 4 years of annual reports published by Responsible Finance, and also one of Social Enterprise UK's 'state of the sector' mapping reports too.

And to try and break the flow of this post, I've copied these charts below, with some summary observations further down:

Now, taking a 'layman's approach' - these charts seem to indicate some trends. Namely:

• social enterprises have been more volatile ('bust and boom') in their performance in comparison with private businesses ('slow and steady')
• the private sector offers better value for money in creating and sustaining jobs (but it's been argued elsewhere that this is because social enterprises tend to employ people with higher needs than a typical company would be willing to invest)
• responsible/alternative lenders don't seem very keen to lend to start-ups if they're a social enterprise, but are far more willing to do so if it's a private business

Now I mentioned having also looked at another data source - Social Enterprise UK's mapping of the sector. In 2017 this reported that nearly 1 in 4 of all social enterprises were actively seeking to take on a loan of some type (with 83% who applied to do so, receiving an investment = approximately 14,000 enterprises), and those that did were able to secure a median amount of £60,000. But against the comparable year from the responsible lenders, the average amount was £391,185, against 363 borrowers. Which suggests that most social enterprises are NOT going to alternative and social lenders to raise investment, and those that are, are far larger than the typical social enterprise is.

All of which seems to paint a picture of responsible/alternative finance being a good thing if you're a small private business looking to start up. And for these lenders themselves, private businesses would also seem to offer a more stable client base to build on in the future too. These private businesses would also be good to show to policy makers to boot, with their offering better apparent value in helping to create and protect jobs in the wider economy.

But there's lots of other data in these annual publications too, which suggest that there's other things going on around responsible/alternative finance too, not just this dichotomy in performance between social enterprise and private businesses who take loans: 

• the total number of borrowers has fallen by over 50% in the last 4 years 
• the average loan to a private business is up by nearly 90%; whilst to social enterprise borrowers it's only up by 5% over the same period

All of which makes me wonder if alternative finance has gotten too good at being 'alternative' - in evidencing to the wider marketplace of mainstream lenders and high street banks, that those enterprises and people who they previously said "no" to, can now be said "yes" to?

But this is a layman's take on annual reports published by industry bodies. As with my previous posts like this, my hope is that rather than start a revolution and change the system completely, is will instead provoke some further reflections and conversations, and help contribute to making sure that the support and services we offer to businesses (be they private or social), can remain most relevant and current in meeting their changing needs, and by association, the people they employ and the communities they serve.

All I've done here is what I don't see happening that often amongst policy makers and sector bodies - looking at trends over time, and starting to cross-reference other data sources to try and better understand the picture.

are community businesses starting to fail, or are we simply becoming more honest about the true nature of them..?

A few years ago, there was a jamboree around 'community businesses' - enterprises that are led by the community they're based in; operate and trade to meet the (social and health) needs of those local areas; and generally make that area a better place for everyone to live and work in it.

This was precipitated by the formation of Power to Change - a charitable trust whose remit is to nurture, encourage, and support the growth and impact of this sector of businesses.

Over the last 5 years since it's creation, Power to Change has initiated a range of programmes and support, which have, in turn (and to me at least), seemed to also catalyse a range of other good things starting to happen through other support bodies to the sector.

However, one of the things about Power to Change that's impressed me most, is its commitment to research, data, and openly sharing it's findings. I've drawn on some of these published findings in previous blog posts, in exploring what they can add to other researches and data from other bodies in seeking to better understand specific themes, but this time thought I'd look at their own data on the community businesses they exist to support, from a longitudinal perspective.

I've always thought that having more than a "this year vs. last year findings" is important in any context as it means you can better start to identify trends, blips, and other happenstance events (last time I did this it was on complaints received by the CIC Regulators against individual Community Interest Companies, the findings of which still cause shock amongst people I share it with...)

And when I look at the 4 years worth of 'State of the Community Business Market' reports that have been collated and published to date, I can't help but wonder if we shouldn't be making more noise about the general state of community businesses, and in particular, how the sector appears to be worsening...

As some who've read previous blogs of mine may recall, I don't claim that analyses like these are based on sophisticated or technical regression techniques and other sensitivity analyses in data sets, but merely what a regular lay-person might find if they were to apply some basic maths to the headline figures reported.

In this instance, I took the figures from the last 4 years of reports, and worked out the average (mean) figures of what a typical community business looks like from the headline figures in each - the charts highlight the story, but in summary:

1) there seems to be a general overall increase in the numbers of community businesses (up 2,000 over the last 4 years), but...

2) the average income of community businesses has fallen by nearly £20,000 (roughly 10%) over the same period;

3) the average value of assets they hold each has fallen by over £150,000 (roughly 60%);

4) they're employing 20% less people, and, before anyone points out that that's because they're making greater use of volunteers - the number of volunteers has also fallen too (by around 50%)...
5) they're also becoming more reliant upon grants over trading to help sustain themselves, and continue their activities into the future

Now, it may be that this is all easily explainable: in the reports themselves, Power to Change are very clear and open that each year the methodologies used to research and generate the data are changing - so there's a strong argument to debunk the above on the basis that I'm not comparing like-for-like. Except... for the figure about the overall number of community businesses which seems to be on an upward trend - if anything, this would suggest that the methodologies are actually getting more effective and precise in identifying and profiling community businesses. 

And if this is the case, then that surely means that a combination of things may be going on:

1) the strength and scope of community businesses, upon which national policy and investment programmes have been based, have been over-estimated, which means that the support now available isn't actually what's most needed...

2) Power to Change has been 'too successful' in inspiring a faster than historic growth in the sector of new community business start-ups, whose financial and operational standings will be far more immature (weaker) than their more established counterparts, and this is skewing the overall averages - although the age of community businesses isn't something that's closely monitored in these reports, parallel mapping by Social Enterprise UK highlights that most of the wider social enterprise sector (of which community businesses form a part), are disproportionately 'young' in comparison with private businesses).

So - all in all, a false alarm for community businesses after all?

Maybe, but as I pointed out earlier, I've done this rough analysis on the basis of how someone taking the headline figures from these annual reports might look at them (and perhaps be unwitting misled?)

And given that other national support initiatives, investment, support, and funding programmes usually take a year or two to 'roll out', in light of them being potentially based on flawed assumptions and data, will this mean that they 'miss their mark', unless they regularly pause to reflect on findings such as these about the wider sector that they're working in, and respond accordingly..?