Money Is Not The Only Bottom-Line

Can a business that puts the good of society or the environment before shareholder value ever be a success?

Yes, according to Jonathan Bland, chief executive of the Social Enterprise Coalition, a group that promotes such businesses.

“Social Enterprises are a business model for the 21st century,” he says. “They combine entrepreneurialism and the benefits of good business while addressing social and environment concerns.”

Interest in running businesses in which money is not the only bottom line has been increasing. More than 15,000 social enterprises are operating, according to the Department of Trade and Industry. They employ half a million people and contribute £18 billion each year to the economy.

The Chancellor indicated a commitment to social enterprise last year by introducing Community Interest Companies. CICs must pass an initial test and, when up and running, produce an annual report explaining how they have benefited the community and are involving their stakeholders.

The Conservatives also have social enterprise high on their agenda. This week David Cameron, the party’s leader, said that it would form a cornerstone of the Tories’ policy to promote law and order.

Mr Cameron, visiting Coin Street family and children’s centre on the South Bank in Central London, a business set up to provide affordable local childcare, said: “There are brilliant voluntary bodies and social enterprises across this country . . . and they need a . . . government that sets them free to deal with those issues and help our community.”

One way in which social enterprise can help communities is by providing jobs and local services. Greenwich Leisure Limited (GLL), set up as an employee-owned trust by Greenwich Council in southeast London in 1993, took over the management of the borough’s failing leisure facilities. GLL increased turnover from the facilities from £2.5 million in 1993 to £9 million in 2004 and took on leisure centres in other boroughs. Now it manages 55 leisure centres and has a turnover of £45 million.

Mark Sesnan, GLL’s managing director, says that a key to this success has been the motivation of the staff. “Changing from a council employee to a co-operative worker doesn’t always turn a miserable individual into a happy, helpful person, but it works 90 per cent of the time with 90 per cent of the people.”

While some social enterprises plough back all profits into the operation, others re-invest only part.

Getting funding for a social enterprise is tricky, but some grants are available. Paul Harrod, of the SETsquared Partnership, a coalition involving Bath, Bristol, Southampton and Surrey universities that provides business support for fledgeling technology firms, set up a programme for social entrepreneurs last year.

Mr Harrod said: “People tend to think there is investment in business in one corner, and donations to charity in another. We encourage investors to look on their investment as ‘patient capital’. They may have to wait a while before they get it back, but when they do the enterprise will be up and running successfully, giving benefits to society.”