the dirty secret about social franchising...

Most people tend to agree that social enterprise is generally a good thing because of all the positive impacts it can/does create, and that it would be great if that impact could be multiplied. Traditionally, the way social enterprise has done this is through ‘organic growth’ (slowly getting bigger, employing more people, selling more stuff, etc itself). But in more recent years, there’s been a growing interest in the concept of ‘social franchising’ as a way to grow impact more quickly.

It’s worth demystifying ‘social franchising’ at this point: it’s not the same as Costa, Subway, or McDonalds, but rather a more flexible way to replicate a model of social enterprise through either informal licensing agreements about sharing a brand to more formal ownership and shareholding agreements in each other. These guides from Social Enterprise UK (which I contributed to!) are good starting points:

http://www.socialenterprise.org.uk/advice-services/publications/social-franchising-manual

http://www.socialenterprise.org.uk/advice-services/publications/social-franchising-guide-for-franchisees  

But there’s a problem in the land of social franchising that few people seem willing to acknowledge or talk about: broken models. In the private sector, an enterprise model is replicated only when it’s had a few years of successful (profitable) trading to assure it and others that it’s sound. But in social enterprise land, there’s a push from the powers that be, sector bodies, government ministers, investors, etc to see more happen now... and that can create a problem.

As part of my support to enterprises, I’ve been involved insocial franchising in various ways, including researching several social franchises offers that groups were considering taking on. And you know what? Many didn’t work – looking at their finances, speaking with other groups who’d taken on franchises, etc showed that what was being offered wasn’t a ‘dead duck’ as such, but was being talked up a lot more than it was safe to...

Just as in other parts of the economy, enterprises fail. Market conditions change, people come and go, and legislation and copycats mean we can lose what was once our competitive edge.

It’s only recently that ‘failure’ in social enterprise is starting to be talked about more openly, but so far it’s only in relation to individual, stand-alone ventures. There’s a dirty secret at the heart of social franchising that not all of them actually work as business models, and that’s not something we seem to want to talk about, often to our (and our communities’) cost...

can we really trust people who tell us they do good things?

Having recently published my annual social impact report (still the only freelance consultant on the planet to do so...) I was challenged by none other than Liam Black, one of the godfathers of social enterprise, as to why it wasn't independently audited.

 

And rather than get upset and start to doubt the veracity of my findings, the robustness of the methodology, (all of which I've always been very open about), it gave me pause to wonder why, after 9 years of my reporting on my social impact that no-one has ever asked me who they've been verified by before.

 

After a morning of tweeting each other about this, I've come to the following position given that:

1) the vast majority of financial accounts of all types of enterprise (private, social, and charitable) aren't audited, and yet we accept them willingly enough;

2) the tax office and regulatory bodies accept our returns without question or asking for them to have been independently verified and audited;

so why then, should there be a different standard applied to our social impact reports (which are subject to far less regulatory rebuke if we're found to have 'cheated' on them)?

 

Audits take time and energy that might be better spent elsewhere (if we can even afford them in the first place!); and I've never know any commissioner to ever not accept a social impact report on the basis that they've not been independently audited.

 

 

So - should social accounts be audited before we can have any trust in them?

 

No - because we take far more important and risky things on trust all the time; with regards to social accounts, as long as they're transparent and open, then surely we risk losing our trust in ourselves and erode the value of that same trust that underpins everything we do and achieve if we can't accept them on the basis of our own judgement and common sense?

I dare you to go to a library...

Libraries are dangerous places...

They're full of ideas, inspiration, encouragement, excitement, reassurance, and comfort;

Full of stories of worlds that have been, could be, and are still to come;

Places for people to meet, to plan, to escape;

Shelves loaded with adventures, sadness, and hope;

Libraries are places of revolution and refuge - they allow us to redefine and reshape ourselves and our communities.

They are our stronghold against injustice and tyranny, our celebration of how far we've come.


When was the last time you dared to spend time in a library?

why social accounting encourages us to delude ourselves...

I've been thinking a lot about approaches and issues relating to social accounting/impact reporting lately – perhaps because it’s about that time of year when I publish my own latest annual report! (and to my knowledge, am still the only freelance consultant on the planet to do so...)

A regional enterprise support agency asked me in conversation recently about one of the measures I report on in my framework: the percentage of my turnover that I directly reinvest in my own CPD – they wondered why I'd measure that, rather than simply keep a log of all my CPD activity (which I also do!). And I think my answer surprised them: it’s so I know how well I'm actually doing in respect of CPD - keeping a log of activity only helps me understand what works for me, it doesn’t allow me to compare how I'm structuring what I do in relation to my counterparts – and in regard to CPD, there are benchmarks from bodies such as the CIPD who I can look at to consider if I’m investing more/less than the market norm.

Without being able to compare the findings of our social impact reports, how confident can we be in what we think they tell us about ourselves? I can create measures and standards that will generate what seem to be impressive figures and statistics, but they're only really impressive if I can compare them against other peoples'...

And that’s where most of the approaches to reporting social value/impact/accounting come unstuck – while there may be standardisations of overarching methodologies, the way they're enacted can vary incredibly between organisations who adopt them: I know of one instance where 2 homeless charities compared their impact by both using Social Return on Investment (SROI) – one seemed to be clearly outpacing the other in terms of the final calculated financial ratio, but in comparing their ‘workings out’ it became clear that this was because they'd not been consistent, with one counting far more stakeholders and outcomes than the other had...

Unless we use measures in our social impact reporting that have a consistent applied methodology and can generate data which we can directly compare against others' in the confidence that they've measured it in exactly the same way – any social impact report we create falls short of its true potential in helping us to decide how well we really are doing in the world beyond the inside of our own heads, and as such lacks credibility with others (such as commissioners, investors, etc...)

the paradox in exposing corruption...

I recently had the opportunity to hear a presentation fromLaurence Cockcroft, one of the founders of Transparency International, on the progress made over the last 20 years in exposing and challenging corruption around the world.

And while it was encouraging to hear about the introduction of various pieces of legislation, regulation, and how the rise and rise of social media has enabled instances of corruption to be highlighted much more quickly and easily, I was left wondering if the drive to expose corruption isn’t somehow normalising it...

You see, we increasingly hear of instances of corruption in business, government, and even charities, but the sanctions levied against them subsequently only seem to fuel our outrage further for their seeming insignificance in light of the original transgression. And that’s what’s concerning me – it seems that whenever an MP might fraudulently over-claim their expenses, or companies dodge their taxes, when they’re caught and exposed, their ‘punishment’ seems trivial of how much they’ve originally defrauded others by.

And that starts to create a wider narrative which says: if you cheat, you’ll be caught – but it’s OK as the cost of your punishment will be far less than you’ve gained by illicit means, so why not do it anyway?

Exposing corruption isn’t enough. We also have to fight to ensure that the punishments on those found guilty far outweigh what they hoped to gain by cheating others for their own personal gain.

 

 

Global Corruption: a lethal mix of politics, money and crime was one of a series of lectures organised by RSA Yorkshire

Do you really need to win an award to start your enterprise?

I was following an enterprise start-up awards ceremony on twitter recently that had sought applications from people who felt they had great ideas for a new venture, to be considered for being the recipient of a relatively small grant to support their start-up needs.

There are always programmes such as this running somewhere, all with different priorities and criterion for applicants and would-be entrepreneurs, but how much do they actually help?

 

Setting up any new venture takes time and involves risk – anything we do during this critical stage has to assure us of the best possible return for our investment of all-too-precious time: applying for a grant/award takes valuable time, and is inherently risky: not just in outcome, but also with the conditions that will invariably be attached to it.

By encouraging start-ups to apply for such funds are we therefore actually doing more harm than good? Not only will any such awards will come with constraints on their use, and have an economic cost of other options not pursued, they also engender a culture and mindset of 'handout': establishing a venture on the philanthropy of others means that it will ultimately weaken its ability to be sustainable and viable – always needing a crutch of some type, rather than standing on its own two feet as other enterprises who've bootstrapped their start-ups are subsequently better able to do.

But...

For some, such awards really do make all the difference owing to their personal circumstances: there's no way that they could afford, or be able to access the finance they'd need any other way. So such awards have their place – perhaps we therefore need to be more stringent in their application criteria, encouraging would-be award winners to explore other options first that they may have recourse to that others in our unequal society can't?

Why the government's latest scheme to encourage start-ups will lead to generation of failed entrepreneurs...

The current government seems to have a somewhat lopsided approach to encouraging entrepreneurship – while making speeches about how much they admire and how much they want to support people to set up their own businesses, legislation and policies are passed that make it harder for small businesses to be able to afford to employ people, for local authorities to be able to offer rate relief, and tax regimes that favour large international corporations over local enterprises...

 

But its their latest initiative that perhaps gives me cause to be most concerned – not because it affects 'us' (people currently setting up new enterprises), but our children: the next generation of entrepreneurs...

As a parent, I'm constantly trying to make sure my boys are best equipped to get on in the world, and develop resilience to be able to deal with the inevitable adversity and set-backs that we all face. Part of this is about appreciating the true value of money, and the need to earn it. But the governments' latest scheme is to offer primary school children 'loans' of £5 to set up their own businesses as a means to help them learn about being an entrepreneur – all well and admirable on the face of it, as it will offer some children an opportunity they might not otherwise have enjoyed, but there are 2 key issues with this that make me upset:

1)      in the 1980's, there was a short-lived scheme that gave unemployed people small grants to set up their own businesses as a means to move out of unemployment: 30 years on, and this government policy has so impacted the collective consciousness that most people I meet who are thinking of setting up their own enterprise expect that they're automatically entitled to such a hand-out without having to do anything to merit it – if this is the legacy of a scheme targeting unemployed adults, then this £5 'loan' will surely engender at least the next generation of entrepreneurs to expect that there'll always be government cash to help them out and so become less resilient...

2)      what about all the work of encouraging entrepreneurship amongst school children of all ages that already takes place through national bodies such as Young Enterprise and Live Unltd? Their approaches seem to work very well without the need to be offering 'financial incentives' to participants, and are based on developing long-term supportive relationships – much more beneficial to any enterprise than a quick cash hand-out...

 

If government really is serious about encouraging entrepreneurship amongst children, then it needs to make some more informed choices about how it does this: investing in existing, proven national programmes rather than wasting money on new schemes and managing them would be a good start; teaching financial literacy from an earlier age would be good too – I can't tell you how much I despair when start-ups I'm walking alongside deliberately avoid wanting to understand how the money in their enterprise is working and as a result, many I haven't been able to 'win over' have subsequently gone bankrupt, racking up greater personal debt and making people unemployed, and yet could easily have been prevented but for their being more comfortable with some basic financial literacy...

So – the government’s latest great idea to stimulate and encourage business growth and entrepreneurship seems to not only be doomed to fail (like so many before it), but will so do in such a way that it'll drag down the next generation and limit the future potential of our children.