Overview:

The ICT Hub's Unmet Need Fund has funded research into the work of social enterprises that deliver IT support to the sector. It includes case studies of ten existing social enterprises and helps identify key ingredients and good ideas for developing your own social enterprise solutions. Come and hear more about what we're learning and tell us how we can make it useful for you.

Session Facilitators:

Simon Duncan, COSMIC (www.cosmic.org.uk)

Rob Gentles & Marcus Pennell, SCIP (www.scip.org.uk

Session Notes:

Participants and their expectations

• Providing support service – previously wholly funded but transition to SE. Find out how easy to sustain project as SE. Feel only way for project to go.
• Domain name and one person! – starting out. Hear experiences. Some say SE doesn’t mean anything is just a legal structure. Hear from people really doing it.
• Recently trained as circuit rider. Here to learn.
• Nor from a SE - SE vs co-operative. Differences.
• IT project. Interest not to do with work but a lot of areas where the provision of quality service via model, maybe a mix of SE, provate business, direct provision through sector.
• Co-ordinator of circuit riders. What models – different flavours. Interested in examples of how an ICT SE functions.
• CVS – had fully funded CR project. Groups back for help and looking to move to a paying sustainable model.
• SE – ESP – turnover £5 million. 9 staff. Started from nothing 5 years ago
• COSMIC – 10 years SE – set up and turnover similar to ESP. Mixture of funded work and commercial work
• SCIP – SE -
• COSMIC introduction to Social Enterprise – Simon Duncan
• 55K SE in UK

Key issue – profit making. Often do a mix of funded and commercial

• Who benefits?
• Community - often local
• The people whom they work with – collaborate with . Partnerships Organisations with similar values
• Employees – must be behind the values.

Examples

• Setting up – mission - what org is ultimately trying to achieve.
• Values – link to mission – ethically, morally driven often. Change the world?
• Social Objectives – where benefitting society, who, where, how
• Social Accounts – measure your objectives. Assess social objectives. Measure benefits. Careful about what your benefits will actually be.
• What Legal structure – Ltd, charity, CIC, Co-op, community business. or anything you like and be a SE. Social objectives in constitution etc…How run the org. Type of business will dictate the legal structure.
• Have to be benefitting society in the way you have laid out. Most reinvest the profit. Back into the org or to fund another project.
• Profit making is different from profit distribution.
• COSMIC has a strong sense of ethos and values. The social objectives are training and employment. Help local orgs, people make most of ICT.

See presentation from Cosmic for contact details Transition process – if becoming a SE will effect org when trying to get more funding. Yes it will. Where are on spectrum will affect funding streams. There are specific funding streams and may take a different view than other funders. There is a spectrum of types of SE

Funded

If no private ownership in the SE it will be easier to get funding. ESP “A Successful Social Enterprise” Morgan Killick Story of ESP – Profit motive – private gain public good Wanted to do a combination. Nothing to say businesses must maximise profit.

• SE development unit – took risk on private individual expressing aims.
• Gave help to be a SE.
• Model – shared capital model – private ltd company – tweaked to be 3 categorises of shareholders
• Private individuals
• Employees
• Not profit orgs

Social aims and mission in memorandum & articles. Allows the efficiency of private org but if profit then pro rata share of profits are shared out. Orgs can be part of ESP and may also get some money. Private good and public good driver. ESP Grown quickly. This year looking to put 10 – 15 k back into community through orgs with shares. A number of community orgs bought into ESP. Where do they get the money from? funding? They buy shares at £10 each so minimal financial risk to org. Success Run efficiently with committee baggage Pitfalls Shares are locked and if problem with org – not participating just want money. What can we do? No mechanism to take them back. Only get back if agree to sell shares. Issue of shares can be restricting. Can look at preference shares – invest in short time. Lots of complexity around legal aspects. Speak to qualified people. Research can help you find any model you want. Usually an area to help you grow SE and develop. Social enterprise coalition. ESP has an accord on salaries – they are capped. Has to be agreed by board so can’t go against spirit of accord. Any SE model will have room for both good and bad practices. How guarantee that deliver real social value? Same as applies to a funded body. Board – to check. Annual social audit – look at things do which contribute to the social objectives. Transition from grant funded model – money to provide services. In SE commissioning and tendering for org. there will be VAT implications to add in. Difficulty moving from grant funded to SE. Meeting needs of funders and turn into something completely different. Try to get best bits of each. SCIP – “another social enterprise” Mixture – initially primarily grant funded and charity based model. In model some charging and recover costs to now – mish mash. Company by guarantee. No money to shareholders. Memorandum & Articles include that any profit back into org. Board unpaid. Gives best of both worlds but there’s complexity. Mixture of services – 7 depts of 1 person. 400k turnover. Funding streams – most of them contacts with public sector for service delivery. Philanthropic sources for social benefit services BLF – partnership working Grants within national, regional infrastructure funding Money from services SCIP sell Expand? Trade commercial as well as 3rd sector? Currently not able to sell to non 3rd sector. Difficulties of clarity about what trying to do. Pricing – pitfalls revenue generating – hard headed right pricing, costs covered etc., Social benefit to groups by making money from groups who are providing social benefit. Key – social part of model. Enterprise – tricky to do but easy to understand. Is it making revenue? But are you actually providing benefit – much harder to measure. Would the orgs getting services be better those from elsewhere – commercially? CR ethos – what it’s about with diff models Grant funding – clear about what for! Using for particular things and deliver them. Regulatory framework. Minefield – tax etc. partial VAT exemption. Part corp tax. Keeping pots of money separate.

Any aspect specify to ICT? How SE and ICT fit together?

Advantage is that SE that can complete with private sector. Purchasing power (charity discounts etc) and expertise is often better than some commercial businesses providing IT support. Example of Circuit Rider standard settings session – everyone had as priory that CR should understand of working with orgs to provide with most appropriate according to their needs. Get to know them first then understand and then recommend app IT solution or not a solution based on IT. Success Factors

• Having profits to put to social purpose
• Making as much profit as a commercial company
• USP – community sector to community sector business
• Getting hold of the business support to be a SE – external advisors
• Starting afresh
• Cost/pricing understandings
• Excellent cash flow management

Pitfalls

• Sell services too cheap
• Getting pulled away from cause
• Over regulation by stakeholders
• Belief that just by being a SE will get you business
• Social aims impact on the capacity to deliver services that would support social aims. Free work can take you away rom paid work.
• How do we know we really have made a social change – who monitors it?
• Chasing sales can dilute mission

What next for you?

• Do more research
• Google map of CICs in London
• Seek specialist help
• Business planning for cash flow management
• Drafting refined contracts
• Seek mentoring from business