Social enterprise: sustainable funding for charities. Charlotte Chung – Policy and Research. What is Social Enterprise?. Social enterprises are businesses driven by a social purpose. They: Have a social mission core to their purpose (set out in their governing documents)
Charlotte Chung – Policy and Research
Changes to the public sector:
> trading with government - statutory contracts more than doubled from £4.5 billion in 2000/01 to £11.2 billion in 2010/11
displaced grants + result of the increased commissioning vs. direct provision
> trading with public more than 40% – or £2.3 billion in real terms
Fulfilling your social mission in a profitable and sustainable way:
The ‘p’ word: Profit
selling it to. A product is not necessarily a slice of cake or a t-shirt – it could be
12 weeks of mental health awareness training you sell to a local
It’s not completely different from a charity applying for a grant or launching a fundraising appeal for a new project. The difference is that your starting point is the market.
about selling things at a profit – or at a loss that you understand and have budgeted for.
= a transition to becoming more ‘enterprising’ will also require an review of what skills are available in the charity (e.g. Pricing, market research, marketing etc.)
A commercial mindset can actually enhance your social mission....
Traditional charity running nine small nurseries in the London Borough of Westminster
Dependent on a block grant from the local authority
2005 – June became CEO and decided that the charity had to become a social enterprise:
“I was determined to move us away from the charitable model. I didn’t want to ruin the ethos and the fantastic history the organisation had but I didn’t feel that if we were to rely on our charitable model we would survive.”
Challenge – move from grant dependency into a sustainable business while continuing to provide affordable service for children and parents
Renamed London Early Years Foundation (LEYF) in 2009
Opened nurseries in other London boroughs creating economies of scale:
“Our business model is quite simple: increase occupancy; increase revenue; reduce costs. That’s it. It’s wh at you have to do.”
Shift in culture and thinking to understand new approach and benefits
“What I had to explain to them is that we had to balance the business model so that way we would actually be producing enough profit to give many more children a free offer.”
with over 50,000 members and over 4,000 employees in the UK
Salvation Army Trading Company Ltd (SATCoL): charity shops, clothing recycling, a company selling brass band instruments, a bank and an insurance company.
“Their job is to sell stuff at a profit and hand the money over to the Salvation Army.”
Also run charitable services on enterprise basis....
• Employment Plus – a back to work service that receives 90% of its income from contracts, mainly from delivering the Work Programme as a sub-contractor.
• Homelessness services – which run 65 hostels + generates income from housing benefit and Supporting People contracts.
In 2011/12, market grew by almost a quarter to £202m through 765 deals.
29 active Social Investment and Finance Intermediaries
Increase in secured lending from 84% in 2010/11 to 90% in 2011/12, however greater diversity of social investment
Key sources of finance: majority from central government; a quarter from social banks (via deposits); <5% from trusts and foundations