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Money not laws 23 June 2016

Posted by cooperatoby in EU, social economy.
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160623 EP SE report coverThe European Parliament has published a report on the social economy. I’m glad to see it features a lot of good practices we identified in SEN, like the UK’s Social Value Act and the Le Mat social franchise, although the authors seem never to have visited the SEN website.

The study packs a lot into its 120 pages. It has 6 big-country studies (DE, ES, FR, IT, PL, UK), boxes on EQUAL, DIESIS and Mondragón, and makes some interesting proposals on taking the social economy forward:
– a digital transformation – on the grounds that “The digital single market can help protect Europe’s economic and social model and increase citizens’ well-being, by being a key component of the renewal of public services”;
– indicators of added value other than GDP
and…
– a clear definition.

So it comes up with another new definition:
“Distinctive features of the social economy can be identified – par ricochet – on the basis of what sets them apart from other enterprises. These elements include:
(i) the primacy of people: the social economy is based on the primacy of the individual and of social objectives over capital,
(ii) sustainable growth: the overall aim of the social economy activities does not emphasise the pursuit of profit and its distribution to the owners as an ultimate goal,
(iii) social and economic balance: in conducting their activities, social economy actors are engaged in a social aim and
(iv) democratic governance: social economy entities function in accordance with democratic, transparent and participatory decision-making processes.”

I think the social economy could improve service delivery by using digital tools more, and that the EU agenda should give an explicit place to them. Measures of social value are definitely needed, and the SBI as well as SEN worked on this. The main issue is for stakeholders such as public authority customers to start using them.

It’s difficult to disagree with the four ‘distinguishing features’ above, but I’m not sure they are any clearer than all the definitions we’ve navigated between so far. I fear that the again repeated call for a supposedly clear EU-wide definition misses the point. Will it enable very much to actually happen? It’s much more to the point to improve access to public funding programmes such as the ESIFs and to private investment in projects on the ground, and to help the sector’s federal support bodies to do their job. As in: “Existing social innovation and social investment programmes tend to reflect a focus on investor-led models and could be opened up to innovation based on member capital and on participatory innovation.”

See: http://www.europarl.europa.eu/RegData/etudes/STUD/2016/578969/IPOL_STU(2016)578969_EN.pdf

Mission-led business – building another half-way house 13 June 2016

Posted by cooperatoby in Social enterprise.
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The British government is trying to consolidate a newly-defined sector of what it defines rather broadly as the ‘social economy’.

It has coined the term ‘mission-led business’ (MLBs) to fit between social enterprise and corporate social responsibility. The definition is stronger than the latter in that it ‘identifies an intention to have a positive social impact as a central purpose of its business; makes a long-term or binding commitment to deliver on that intention through its business and operations; and reports on its social impact to its stakeholders’ – but weaker than the former because it ‘can fully distribute its profits’.

Rob Wilson, the UK’s Minister for Civil Society, has published a call for evidence on MLBs, saying: “I want every UK entrepreneur to be able to easily establish a business that makes a good profit while at the same time making a commitment to social impact. And I want everyone – consumers, governments and companies – to integrate mission-led businesses into their buying and investing habits.”

This initiative thus seeks to give an identity to businesses which want to a have a positive social impact – and who doesn’t? – but whose investors are unwilling to share any profit or power with other stakeholders. The definition is silent not only about ownership and participation, but also about the distribution of profits or assets. It relies solely on good intentions and social reporting.

The evidence will be considered by an advisory panel led by Nigel Wilson, CEO of Legal & General, but which has no representation from co-operatives, social enterprises or charities.

To comment, before 8 July 2016, go to: https://www.gov.uk/government/consultations/mission-led-business-review-call-for-evidence See the Pioneer Post report at: https://www.pioneerspost.com/news-views/20160512/global-social-innovation-round-34

See Senscot post – thanks Alison Lamond in Facebook Worker co-operatives group.

A slight change of tack? 14 April 2016

Posted by cooperatoby in Social enterprise.
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It’s good news that Elżbieta Bieńkowska, the hitherto elusive Commissioner in charge of social enterprises (her portfolio comprises the internal market, industry, entrepreneurship and SMEs), has finally found the time to meet members of the European Parliament’s Social Economy Intergroup, as Social Economy Europe reports.

Sadly, one thing the Commissioner did not do is announce that the Commission is planning to launch a “Social Business Initiative II”, though this has been hinted at by officials. But she did at least signal her desire to avoid any potential rift between the two main tendencies in the social enterprise sector – those that institutionalise participation and democracy in their legal structures, and those that don’t. So the drift in terminology from “social business” to “social enterprise” continues and the buzzword is now “social economy enterprise”: “The Commissioner agreed on the necessity to share -within the different EU institutions- a common and inclusive understanding of the social economy. In this way, she stressed that the term “social economy enterprises”, seems to be the consensual one and therefore it should be used by the different institutions whilst developing its policies.”

Hopefully this hatchet-burying means that the Commission and the sector can concentrate on increasing the number, scale and impact of social economy enterprises. Their potential contribution is recognised. It would be a wasted opportunity if the Commission did not focus efforts on maximising it.

Social innovation is more than start-up support 8 March 2016

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The BENISI project aimed to identify 300 social innovations and help them to scale up. But faced with the enormity of this task it seems to have fallen back on promoting start-ups, without assessing whether they are either social or innovative.

I’ve just come back from the BENISI final conference and I have to say I am disappointed. I encountered at least two circular arguments, and ended up quite unsure whether the project was promoting social innovation, social enterprises or just start-ups.

A circular notion of growth

Firstly, the presentation of the project’s outcomes was couched in purely economic terms. It measured whether a business had scaled up by whether its revenue hadP1000111 BENISI grown – and then reported that one of the requirements for growth was financial investment. An unsurprising deduction. Even less surprising is that innovations that generate revenue are easier to scale. The only social outcome reported was employment growth, which is a by-product of revenue growth rather than a social outcome in itself. Social impact can grow even without revenue growth – for instance if a better method of delivering social services was replicated. If it was more efficient, revenue might even fall. In fact many ‘social innovations’ rely on using IT to cut the cost of service provision, and along with it cut the jobs they provide.

A circular notion of impact

Then there was the workshop on impact measurement, in which I was astounded to be told that the three factors making for impact are the values of its workers, the corporate culture and the management methods. That’s all very well, but these are not indicators of impact. They are drivers of impact, or as another participant contributed, indicators of a capacity to achieve impact. Impact is what happens in the outside world, and is about improved quality of life for the enterprise’s intended beneficiaries. Intention should not be confused with success.
Regrettably values, culture and management are not enough – witness how many social enterprises run by the best-intentioned value-led people you could possibly imagine nevertheless go bust and fail to achieve any impact.

Where’s the evidence?

Maybe BENISI could not have been expected to prove scaling in a 3-year timeframe. Maybe the project has served its purpose in making social innovation visible to a larger number of people – reportedly 14,000 have been reached.
But there is deep confusion over what the object of the exercise was. The discourse was about social enterprise, but no one is measuring these enterprises’ social impact – or at least the summary report did not attempt to make any sense of what social impacts the 300 projects did report. Surely one must at least one of them must have got some clients into jobs, or taken x tons of poisonous heavy metals out the waste stream, or housed some poor people, or cut its energy consumption, or even just got some letters of appreciation from its clients?
Unless an enterprise has a notion of what it is trying to change, and measures and reports on whether it is achieving that, then it is not a social enterprise. Having an explicit social goal is one of the principles of social enterprise the European Commission set out in the Social Business Initiative.
Social enterprises reportedly measure impact mostly as an internal management tool (“you can’t manage what you can’t measure”), but it’s also useful in building customer loyalty and essential in getting impact investors on board. Also see EVPA guide.
Public funders like the ESF are also keen to fund social innovation – but taxpayers’ money has to been seen to be benefitting somebody. Otherwise the fascination will fade.

Social what?

It seems to me that the Impact Hubs are hard at work promoting start-ups, and that many of these will be innovative in some way, but that doesn’t make it social innovation and it doesn’t make the start-ups social enterprises.
I also missed any explanation of what the different methods for scaling are – are they social franchising or organic growth or new products or new markets or acquisition or what? And then I’d like to have known which of them were tried, and which worked best in the sample of 300 enterprises. I was left wondering whether scaling is any different from good old growth. Maybe it is just that ‘growth’ is a taboo word which is too reminiscent of capitalist economics.
I left when a speaker pronounced that it was a problem that no social enterprise had yet done an IPO. That’s a key feature of a social enterprise – it can’t be floated on the stock market as a financial investment!
So that’s the trouble: social innovation is everything to everybody, and the name of social enterprise is being taken in vain.
To protect the guilty, this report is made under Chatham House rules.

Social innovation & migration 5 February 2016

Posted by cooperatoby in Social enterprise.
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I’ve been thinking briefly about the relevance of social innovation to migration. Many social innovations rely on one of two mechanisms: user involvement and new technologies.

On the first point, the people who facilitate migration are typically portrayed as exploiters – people traffickers – but they are clearly fulling a market niche. They are providing services that migrants want to buy. The principal problems are price and quality – i.e. a high profit is being made through providing unreliable and dangerous transport and accommodation. If the public sector is unwilling or unable to find solutions, and the private sector exploitative, is there a third way?

Could one look at addressing the problem from the users’ point of view? Before the Second World War, migrant services like the famous ”Kindertransport” were laid on by philanthropists. Today, those looking to emigrate for whatever reason could form co-operatives to manage good value, safe means of transport.

On the second point, migrants already apply new technologies to this social problem, even if only by using Google Maps. But surely some Uber-like matching of supply and demand could also be useful.

Objecting that all this is illegal is not only inaccurate but beside the point: just as in treating drug addiction as a medical rather than a criminal issue, this is all on the principle of harm reduction.

Missing links 29 November 2015

Posted by cooperatoby in EU, Social enterprise.
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EQUAL archived website front pageThe other day I was dismayed to find that my habitual Google searches for ‘Social Business Initiative’ and ‘EQUAL’ didn’t work anymore. Both sites contain a wealth of useful reference documents on EU policy. Prime suspect was the Digital Transformation, the Commission’s search-and-destroy mission on its wonderful web presence, whose stated objective is to “help people find the information they are looking for quickly and easily” but which in fact has the opposite effect by erasing history and disabling countless external links.

Happily I found that links I’d previously written into Wikipedia articles still worked. What has happened is that the Commission has obscured them. In the case of the SBI it’s an accidental result of the merger between the Enterprise and Internal Market DGs, and in the case of EQUAL it seems to be sheer bloody-mindedness that the EQUAL archive site is hidden from search engines.

Anyway all is not lost. Here are the links: SBI: http://ec.europa.eu/growth/sectors/social-economy/enterprises/index_en.htm

EQUAL: http://ec.europa.eu/employment_social/equal_consolidated/

‘New’ social economy means non-social economy 15 May 2015

Posted by cooperatoby in social economy, Social enterprise.
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Oh dear another attempt to redefine democracy out of existence.
In the footsteps of the terms social enterprise, social entrepreneurship, social business, social innovation and social investment, all of which, brandished in the wrong hands, seek to take the mantle of the social economy and depoliticise it, we now have a takeover bid for the very term social economy itself. It comes from about as far away from Europe as you can get in this world, California.
In her blog Lucy Bernholz notes that Rob Reich, also at Stanford has “coined” the phrase ‘new social economy’ to mean, wait for it:

    Organizations and financial structures that deploy private resources for shared social benefits – i.e. the sector formerly known as philanthropic, independent or nonprofit.

A presentation setting this out is here and an audio lecture about how the established model of the social economy needs to change is here.

It is simply extraordinary and leaves me speechless that the project is to redefine the social economy entirely in terms of impact investing, with nary a mention of the “social” dimension of any ownership, decision-making, production processes or impacts.

Progress Microfinance not reaching social enterprises 13 May 2015

Posted by cooperatoby in Social enterprise.
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The European Progress Microfinance Facility (EPMF) was intended to open up finance to social enterprises as well as other microenterprises. By March last year the 28 EPMF intermediaries had made 13,250 loans worth €125m. However its interim evaluation reports that only 4% of the loans went to social enterprises.

Some reasons for this are that social enterprises don’t make enough profit to repay a loan, and that they require larger loans than other microcredit borrowers (the maximum loan size is €25,000), and hence the lenders demand more collateral, which they don’t have. It notes that in countries such as Bulgaria they lack experience of borrowing and prefer to stick to grants, so instruments combining loan with grant may be more accessible.

The evaluators comment that take-up by social enterprises might have been higher if they had been a higher priority for the microfinance institutions which have benefited from EPMF loans and guarantees.

The EPMF is shortly to be augmented by another fund specifically targeting social enterprises, funded under the EaSI programme.

Visualising the interconnectedness of all things 15 January 2015

Posted by cooperatoby in cooperative, Leeds, Social enterprise.
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Twitter just alerted me to the existence of Wikigraph, a brilliant tool which shows the shortest path between two Wikipedia entries – and all the other pages they and the intervening links connect to. Here’s how close Suma is to being a social enterprise:
Wikigraph

Employee ownership stalling 15 January 2015

Posted by cooperatoby in cooperative, EU, Social enterprise.
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EO in Europe 2007-14Employee share ownership is almost the other side of the coin from the investor-led type of ‘social business’, in that it addresses the third dimension of social enterprise – participation – rather than a company’s objective (social or not) or profit distribution policy.

It is based primarily on an individualist model and is conceived of as giving individual workers an incentive to work harder, by sharing the returns with them through the payment of dividends, thus increasing returns for investors too. But it can have a collective dimension, as in the case of ESOPs, where worker shareholdings are held and voted by an employee trust. It is also generally held to improve the efficiency of work organisation. There is some overlap with the social economy in the case of Spain’s 11,500 sociedades laborales, in which pubic authorities can invest for local economic development purposes.

Employee ownership has progressive intents in that it shares the fruits of labour more equitably, and also deters hostile takeovers (though it does not prevent corporate takeover as in the case of Britain’s bus companies). Many governments have therefore enacted measures to encourage it, and until 2011 it has been steadily growing. The European Federation of Employee Ownership (EFES) annual survey reports that in 2013 8.75 million employees 31 European countries held fractionally under 3% of company capital, worth in total €267 billion (an average holding of €30,000). However its latest annual survey finds that although in 2014 this total rose to €310 billion, the number of employee shareholders has now stopped:

For the third consecutive year in 2014, the number of employee shareholders decreased in Europe. This should be a warning signal for everyone. In fact, the number of employee shareholders in continental Europe decreased by 500.000 persons (-8%) from 2007 to 2014, while the number increased by 200.000 persons in the UK (+8%). These changes are clearly related to the regressive fiscal policies in many European countries, while in contrast, the UK chose to double the fiscal incentives for employee share ownership, considering it is a key element of recovery and an investment for the future.

Employee ownership is one the tools we need to transform the economy, so the reversal of this growth trend is worrying as well as surprising.

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