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Minister: "Social enterprise can blaze a trail through tough economic times"

20 November 2008
CAB/109/08

Amid the vibrant hubbub of Social Enterprise Day, the Government today backed social enterprise as the model to show how business with a conscience can be done. The Minister for the Third Sector, Kevin Brennan, spent the day experiencing the energy and innovation of the social enterprise movement.

Setting out new milestones in government policy, he said:

"This government, from the Prime Minister down, is passionate in its enthusiasm for the social enterprise movement. As everyone starts to feel the effects of the global financial crisis it is clear that there is a growing market place for alternative business models, which hold social and environmental value to be every bit as important as financial gain.

"The action research projects we are announcing today show cross-government support for social enterprise. Our work on Social Return on Investment will create new momentum for third sector organisations to prove how effective they are."

At the "Blazing A Trail" lunch reception for social entrepreneurs and young people whose lives have been transformed by social enterprise, held at the Cabinet Office's Admiralty House, the Minister announced:

• Four brand new action research projects by departments across government are to be funded by the Office of the Third Sector in the Cabinet Office to the tune of £740,000 over three years.  The projects will galvanise government action to test social enterprise solutions to the challenges we face.
• Departments involved are: The Department of Health (DH), the Department for Business, Enterprise & Regulatory Reform (BERR), the National Offenders Management Service (NOMS) and the Department for Communities and Local Government (DCLG.
• A new project to help measure social value in a way that everyone can understand. It is aimed at making social return on investment
  (SROI) accessible, affordable and a well understood route for articulating the social value organisations create. This should to help everyone involved to make better decisions. A consortium led by SROI UK has been appointed to carry out the three-year project, which will run alongside a complementary project funded by the Scottish Government.
• The results of two successful pilots which showed that investors are willing to consider the social and environmental implications of their investments. The work suggests a way forward to a marketplace where both investors and the firms in which they invest understand products capturing social as well as financial returns.

At the end of a full day spent taking in a diverse range of events designed to raise the profile of social enterprise, the Minister
commented:

"Social Enterprise Day has been tiring but tremendous fun. At South Bank Mosaics in south London, I have seen how the homeless and those who have been in prison can re-engage with society through a social enterprise that creates amazing public artworks. I have met young people from the inner city facing a prosperous, fulfilling future because Sam Conniff at Livity or Tokunbo Ajasa-Oluwa at Catch-22 showed faith in them. The evening I spent in conversation with those who have the money and the will to make all of this happen, discussing how they can find young entrepreneurs with the ideas and energy to match, and how the value of their investment could be measured.

"All in all, this has been an inspirational day. Economic and financial uncertainty present challenges to us all, but more than ever our country needs social enterprise to blaze a trail. There are opportunities for those with the ideas, drive and courage to put the good of society alongside the benefit to themselves."

Communities Secretary Hazel Blears said:

"Social enterprises make a huge difference to our communities. As we enter tougher economic times, they are more important than ever.

"That's why I'm making sure that my department does all it can to support them, open new opportunities and help them grow."

Secretary of State for Business, Peter Mandelson said:

"Increasingly young entrepreneurs are looking beyond the balance sheet and establishing enterprises with a conscience that directly benefits their communities.

"UK social enterprise already contributes £8.4bn each year to our GDP and it is a sector which is steadily growing."

Notes to editors

1. The Office of the Third Sector is part of the Cabinet Office that deals with Government policy on charities, voluntary organisations and social enterprise. More information can be found at www.cabinetoffice.gov.uk/third_sector

2. Sam Conniff and Tokunbo Ajasa-Oluwa are Social Enterprise Ambassadors. See http://www.socialenterpriseambassadors.com/ for more.

3. Most recent estimates suggest there are at least 55,000 social enterprises in the UK, contributing 8.4 billion to the UK's GDP and employing at least 650,000 people (2005 Small Business Survey - BERR)

4. Action Research:  In the Final Report of the Third Sector Review, OTS committed to support other government departments in undertaking action research geared towards developing their understanding the role social enterprise can play in helping them meet their strategic objectives.

Following a process of project development with departments, OTS is today announcing the first four projects. These projects are funding by OTS, but developed and led by departments. A key outcome will be that departments develop their evidence base. Projects are:

• Department of Health will be supporting five of six social enterprises delivering mainstream health care to undertake social return on investment assessments. These will help articulate more clearly the impact these social enterprises in economic, environmental and social terms.
• Communities and Local Government will be examining the potential of community share and bond issues to stimulate social enterprise activity, promote community empowerment and attract private sector investment.
• The National Offender Management Service will be scoping Social Enterprise activity within probation settings. Focusing on quality indicators and sustainability of projects and "what works", the project will establish progression routes for new, developing, and established social enterprise models operating in the criminal justice sector and contributing to reducing re-offending.

Business Enterprise and Regulatory Reform will be working with Community Development Finance Institutions to explore different approaches to increasing their sustainability.

5. The OTS Measuring Social Value project will be taken forward over 2008-2011 and will build on current work around impact measurement and aims to:

• Standardise the approach to using Social Return On Investment
• Increase the accessibility of SROI for social investors and third sector organisations
• Develop a network of practitioners who will raise awareness of SROI and social reporting
• Increase the evidence base of the impact of the third sector
• Enable social enterprises and other third sector organisations to prove the social value they create
• Support social investors and commissioners of public services to make more intelligent investment or purchasing decisions

6. The project will be run by a consortium led by SROI UK, with New Philanthropy Capital, Charities Evaluation Service, New Economics Foundation and National Council for Voluntary Organisations as members.

The contractor will be working with investors, grant makers and commissioners, those who are involved in the measuring social value world and with the third sector, to ensure that SROI becomes an accessible, affordable and well understood route for articulating the social value they create. The complementary project being run by the Scottish Government will, in particular, have responsibility for the development of a SROI portal and of new training materials for practitioners.

7.   In 2007, The Office of the Third Sector invested in two social investment pilots with the objective of increasing private sector finance in social enterprises, deepening understanding of how to increase the range of finance available for social enterprises and successfully broadening the research base of the sector. Their outcomes are announced today:

• Charity Bank was awarded £100,000 to carry out action research into the market appetite for and availability of investment from the demand and supply side. The programme was undertaken jointly with the advisory firm, Investing for Good. Its work centred upon Yorkshire and Humber although interviews were also held in London and other locations. Outcomes of the pilot include 3 infrastructure and product development projects already under way, which will introduce new investment into the social enterprise sector.
• Communities Innovation UK led the other (Equity Plus pilot) aiming to create the UK's first social business angel network, alongside an investment readiness support service. Outcomes of the project include provision of education and advice to over 35 social enterprises, and approximately £800,000 of new private investment into the sector, with other deals in development.

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