This blog was written by Simon Lee, an associate solicitor at Hempsons. 

It was something I heard debated around the time the Social Value Act was being put together: an earlier draft of the legislation had included a definition of ‘social enterprise’ with the idea being that only social enterprises (with a capital ‘S’ and a capital ‘E’) could benefit. However, this was ultimately rejected in the parliamentary process leaving open the possibility that anyone who wanted to (even the private sector) could offer social value as part of a public sector procurement process and get the same credit for it as a CIC or a charity or someone else traditionally seen as part of the ‘not for profit’ sector.

Is that right? Is it fair?

These questions cut to the heart of a number of other things – Is there a level playing field for social enterprises? Is it appropriate for social enterprises to have a ‘leg up’? Should social enterprises have a monopoly on ‘social’? And what should (or should not) count as a ‘social enterprise’ anyway?

I had filed all this away in my mind long ago and moved on to other important things (like changing nappies) but, at approximately 7pm on Wednesday 13th September, I realised it had only lain dormant like a squirrel slowing its metabolism to survive the scourge of a snowy winter… or something like that. I was at the launch event for Cordant Group as a social enterprise. Cordant, as you may or may not know, runs a range of services and now stakes its claim as the largest social enterprise in the UK. And this got me thinking again.

I have seen (both at first-hand and at a distance) social entrepreneurs who have spotted a social or environmental need and created a business model to meet it (the Big Issue is a well known example of this). I have also worked with many who, whilst part of the public sector, saw the benefits of running their services as a social enterprise or charity and put significant time and effort in to ‘spin out’ and shake off those things which had made acting entrepreneurially (if that’s even a word) difficult in their previous environment. Each of these types of social enterprise is different, having its own advantages and its own challenges as compared with the other.

In recent years I have also seen (albeit on a much smaller scale than Cordant) those who have – in legal terms at least – a traditional ‘for profit’ business model but who want to build in social enterprise principles without going as far as – for example – converting to a CIC. This goes beyond mere ‘corporate social responsibility’ (though that too has a role to play in our society). What drives the people who think in this way, I wonder? Is it cynical business behaviour designed to cash in on social enterprise as the ‘flavour of the month’ (if indeed it is possible to cash in on a flavour) or is just people wanting to do ‘social’ in a different way?

It is here that the lack of a true, cross-cutting, legal definition of ‘Social Enterprise’ is both helpful and unhelpful. Unhelpful since, as a solicitor, I do like a good definition: knowing what’s in and what’s out helps keep me happy and in the wider sense we’d know (wouldn’t we?) which are the ‘real’ social enterprises and which are the charlatans. But helpful at the same time, as it allows others ‘in’ who might not have been let in otherwise and the chance for businesses like Cordant to challenge perceptions and make me wonder whether it really matters as long as there is more ‘social’ in the world than there was before.

So if we don’t have a legal definition to help us tell the difference, then what do we have?

‘Authenticity’ seems to be cropping up a lot at the moment: the concept that, almost, it doesn’t matter what you think or say you as long as you’re consistent and persistent in sticking to what makes you you. Surely then, our yardstick must be the ‘social’ bit – what are organisations that call themselves social enterprises (whether they have their origins as self-starters, public sector, or private sector) actually doing that takes them beyond private profit? Is it about making greater social impact? And how do we know that’s what they are doing?

I don’t think this measurement needs to have some formal metric attached to it, turning things in to a pounds and pence calculation (though it can do) but ultimately there needs to be enough for the average man or woman on the street to recognise the tangible difference that has been made without the need for spreadsheets, glossy brochures, or legal definitions.

When that happens, and the star of social enterprise rises, it will be well on its way to becoming part of the mainstream. And that’s when things will really start to get interesting.

 

Simon Lee

 

Simon is an associate solicitor at Hempsons where he specialises in advice to social enterprises and charities. http://www.hempsons.co.uk/people/simon-lee/