Enhancing the social value of social enterprise

On Monday I chaired an interesting and lively seminar, sponsored jointly by the Transition Institute (which is currently residing at the RSA) and the Guardian. The focus was social enterprise spin outs from the public sector and how to encourage them.

There was a wide ranging debate involving people running social enterprise, from central and local government, academia and think tanks. Unusually, for these kinds of events a specific approach emerged, which seemed to have quite wide buy-in.

In the light of evidence from the University of Northampton showing, to the dismay of some social enterprise idealists, that only about ten per cent of social enterprises have users involved in their governance, there was a recognition that arguments based on the inherent characteristics or goodness of social enterprises are neither valid nor helpful. There is a more general argument about the value of pluralism in the market but this is hard to turn into criteria that apply in specific cases.

A different approach focussed on the Social Value Act. Apparently public authorities are finding it hard to know how to interpret and operationalise the Act and its requirement that they give consideration to:

‘how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and how, in conducting the process of procurement, it might act with a view to securing that improvement’.

From this we identified an initial list of positive externalities, things which could legitimately be considered alongside the cost and core service offer of a bidder, and which it might be argued that social enterprises have a greater capacity to deliver than either traditional public or private sector providers. These included:

Ability to innovate and to share innovation

Engagement and empowerment of clients and citizens

Engagement and empowerment of employees

Commitment to reinvest surpluses in service improvement

I am sure people will have ideas about this list but perhaps the most interesting suggestion was that – unlike commercial information - this bit of the bid could be required to be in the public domain and made easily available.

For this device to increase the chances of social enterprise spin outs winning contracts involves three elements:

The social value criteria need to be spelled out in ways which can be validated by useful facts and figures not warm words.

There needs to be some ‘armchair auditing’ of the claims being made so, for example, staff can whistle blow on bad employers claiming to be champions of staff engagement.

And, more fundamentally, social enterprises would need to show they are the best vehicle for the achievement of these externalities.

Perhaps as the chair of the seminar I am biased but this seems like a cheap, simple idea which activists could gradually make more powerful as it was taken up.