Death by Definitions

Rod
First, I agree with your last statement.
Second, it has been my experience that people who use the term social investment often are lobbyists who want new Government grants or tax treatments so that they can implement their own personal social agenda. Mission-related investors are primaily focused on a specific problem. Impact investors are trying to do the most good with the funds that they have. I prefer working with mission-related, impact investors who are working on a mission I believe in.

Right on Paul!!
I have really come to question people's hidden agenda, who push the term "social enterprise". Well to be completely honest, I have started to question a lot of people's agenda in the 3rd sector.
Having just navigated through it's jungles, I am more cynical then ever considering how hard it is to obtain information from most, when I naively thought we all shared the same goal. Curious world!

I couldn't agree more with Rod Schwartz: Less talking, more action!

Dear Ingrid

Thanks so much for your comment
Even more cynicism--this is starting out as a very hopeful sign

The sector needs more cynicism
we will never become a big part of the economy unless we hold ourselves up to this sort of scrutiny

You mention the jungle.......
I had breakfast today with a wealthy individual who has been desperate to pick his way through this jungle, or swamp, but becasue it is so complex and convoluted, he has held back
we certainly need to SIMPLIFY and, as I said before, just get stuff done!

regards, rod

Dear Paul

Thanks for your comment
Little there to disagree with, although I am not sure I understand the difference between what you describe as mission related investment and impact investment but, truly, who cares
Your cynicism on how people use these terms to advance their own agendas is spot on!

regards, rod

A timely topic Rod, after the 'mini-circus' last week in Cardiff which delivered quite a surprise.

George Bernard Shaw once wrote, that it was impossible for one Englishman to open his mouth without causing another to instantly despise him. Of late, I've found that very true of social enterprise.

Back in 1996 our American founder Terry Hallman set out a theoretical model of what he described as People-Centered Economics in his white paper for the Committee to Re-Elect the President. It described a business trading in the free market with a primary social objective and at least 50% of profit invested in a social outcome.

http://en.wikipedia.org/wik[…]ntered_Economic_Development

At Voice10 last week we had it read back to us in the criteria for the Social Enterprise Mark, and from an organisation I'd contacted several times from 2006 about our work, without response until last year, when I was told they were too busy.

After we brought it to the UK in 2004 we began discussing the proof of concept in Russia here on Social Edge and since them with our work in Ukraine.

We'd spent several months from January 2004 on a plan for digital empowerment whic would render profit to CDFIs to fund social enterprise,

We see it again now, reflected in the Reboot Britain campaign. Ours delivered at no cost to the public, the more recent version involving spending of millions in government funds.

Jeff

Dear Jeff

Thanks for your comment

American readers will not believe that there was, in fact, a small circus around just such a definition or "mark" at the Social Eneterprise Coalition annual conference in Cardiff.
I did not attend but heard some interesting reports

regards, rod

When people from different christian religions, or members of far left groups get together they too spend all their time arguing about jesuitical distinctions or the meaning of state capitalism. This is an aspect of all movements that is about identity. To argue that definitions do not matter to social enterprise identity is incredible. What is perhaps more interesting is to examine the position of those that are trying to be more open or more closed. I saw a recent UK government commissioned report on the size of the sector in which the amount of non grant income had been increased to a maximum of 75%. The previous definition had been at 50% (i.e. more than half your revenue had to come from trading - that is enterprise activity). The new definition swept up the so called 'emerging social enterprises' aka those that are not enterprises at all but in fact creations of local, central or other parts of government, the soi disant 'grant hounds'. Now they can have their cake and eat it by continuing to live off grants while having the imprimatur of social enterprises. Interestingly the social enterprise mark has gone back to the 50% of revenues first established by the Inner City 100. But they have increased the amount of profit that can be disbursed from 50% to 65% so that now only 35% has to be reinvested. I wonder who lobbied for that change and which companies get counted in by the widening of the definition.

Interestingly the social enterprise mark strapline of 'trading for people and planet'applies to a lot of regular enterprises - not all of which put profit maximising at the centre of their universe. It is a bit like trying to define your national characteristics. This exercise always ends up with people saying things like tolerance, sense of humour, resilience only to realise that no one has a monopoly on these traits.

Interesting question Peter.

Going back to the Cardiff mini-circus, I was aware that much of the advocacy that we'd done for inclusive capitalism was now being served up under the brand of Phillip Blond. The Tory party has seen the opportunity to exploit what government has failed at, I suspect.

From the larger circus of government, I think Gordon Browm gave the game away in his Business call to action, asking for 'showcase' social initiatives. That's what we're getting, from his close friends in the world of venture capital. For example the appearance of Call Brittania out of nowhere as a 'social enterprise'.

When I read the document promoting the concept of a 'social impact bond' recently, I found in it an example of what we'd actually been doing in Ukraine to invest in getting children out of institutional care.

Intellectual property, placed in the public domain with social intent is being ripped off all over the place, by those wanting to promote their careers on the back of it. Perhaps the most callous example I've seen so far was found in a page on the website of the John Smith Memorial Fund. It's an article about Stephen Byers and his work in getting Ukraine into the EEC.

http://tinyurl.com/y8jb9ge

He refers to a plan to help vulnerable young people. Clearly a derivative of something we'd submitted to government and published as a news article 2 years earlier. Except that the most vulnerable young people we'd identified, the residents of institutions for the disabled, had been omitted.
 
They may be borrowing from us, but for these vulnerable children they are taking life itself, by brushing a human rights issue under the carpet.

        '

Jeff
Thanks for your follow-on comment
rod

Dear Peter

Thanks for your comment

More cynicism about definitions and who has lobbied for them is appropriate
I just want to ask who has the time for such nonsense?
Whatever we define ourselves to be, I am sure it matters little to the 99.9% of people who do not read this sort of stuff--and they are the folks that really matter. At ClearlySo for instance, they are the folks we spend our time worrying about

your comment on religion reminds me of the film "the Life of Brian" and the split between many factions within a group of radicals of the day.
Of course they got nothing accomplished, they drafted resolutions and agreed to debate points--but that had the redeeming feature of being funny--this is not!!

Regards, rod

A professor from a reputable US business school published an article detailing his year-long quest to define this term as he traveled and researched across the globe - which ended in uncertainty (and possibly a suntan). Surely this undoubtedly highly intelligent individual could have created value in a more tangible way.

The definition will sort itself out as need be and people will use different variations as they have to.

Dear Ashley

Thanks for your comment and good to hear from you

I will not ask you to name and shame the priofessor or the school
If he or she got someone else to pay for their suntan then at least I can see what value they got out of it...as for the rest of us....

best, rod

Hi Rod, it all depends on the definition of definition doesn't it? To my mind 'social' is defined as any one or enterprise that develops people (in work through innovation) as we know, innovation can't always be planned or defined in the present moment, so looking back (from the future) has a point, though the best way to predict the future is create it yeah. When deciding what is and isn't social I agree it shouldn't be so narrowly defined, as for anyone or any organization, the definition of a successful life involves serving others.

Definitions too often obscure the fact that everyone has to work together for it to be social. Being the biological creatures that we are, I'd like to compare us to bees - the four-winged flower-feeding insects who buzz, which incidentally helps them define themselves as pollinators on individual paths to receptive fertilization - bees need each other to make hives productive, the same way people need each other to make 'social' business. Like bees who labor for others, being 'social' no doubt benefits from cross-fertilization. Another interesting fact about bees is they digest and transform by the power of their own, so with being social, if pollen is the product, why draw a line over where the profit goes?

Dear Jo

Good to hear from you and thanks for your comments

I like your but on bees, one of the most social creatures there are
...or at least they seem that way to me!

But I agree with you, what it is should not be that narrowly defined
And even if it was, I would not use the payout of profits as a key criteria

regards, rod

I have oft pondered the differences between the terms "social enterprise" and "sustainable enterprise". The latter requires simultaneous consideration of all three pillars of sustainability: social, economic and environmental factors, recognising their interdependence.

Although many "social enterprises" _do_ rest securely on all three pillars, the term "social enterprise" may unwittingly shift the mindset of well-meaning "social entrepreneurs" towards unsustainable endeavours.

In general, as an educator, I prefer to inspire people towards "sustainable enterprise" (understanding sustainability) and avoid the term "social enterprise".

Can a "social enterprise" be effective if it is not a "sustainable enterprise" (even if it is a short term intervention intended to have a lasting social impact)?

Dear Kim

Thanks for your comment--indeed thought-provoking

I do agree that enterprises can be sustainable, both or neither
Tobacco firms can be financially sustainable,or at least they seem to be, but they are not based on your definition of the three "pillars", as they are socially harmful--yet many do not share your view--there's the rub!

I do believe that ultimately the best firms are both
Finally, if you are inspiring young people towards either than you have my sincere congratulations and best wishes.
There is no task more noble than to inspire young people to pursue what is best within themselves--sustainable, social or otherwise!

regards, rod

Rod, a great post, and a big question. Two tales....

"I dont know where the path leads, but I know paths are made by walking" - an Australian first peoples' saying that sums up your last point. But this path has been walked. With 1.7m people engaged in social leadership in UK (GEM Monitor) and nearly 1m civil society organisations (NCVO Civil Society Almanac) we have plenty of social entrepreneurship. And with a sizeable propostion of those organisations trading for a substantial chunk of their income, plenty of social enterprises too. Is it just more that we want, or different? I guess both - more civil society in areas of weak social capital, and more enterprising social organisations in sectors that have become stale. In that case we do need new language - we wont get what we dont have without action, and its difficult to call for action without language to say what you mean.

"You must know the name of a dragon before you can slay it. But once you say its name you call it to you, so better be ready" The Social Enterprise Mark all over. If we want SE to have more customer clout, we need a clear identifier and a customer promise that the customer will actually value. The Mark calls the dragon to us. Does it make us ready? Well not as written. I cannot work out why it would matter to a customer of any kind that the organisation distributes less than 50 % of profits but if wound up, distibutes NIL assets. If a customer wants social ownership and value, 100% = a charity. If they want plenty of social good, measure that and give it a mark.

But back to the paths being made by walking. The SE Mark is just starting out with baby steps. Lets see how it evolves. At least they've started walking.

Dear Cliff

Thanks for your comments and for taking the discussion up a notch with displays of your erudition; by sharing these two perfect quotes

I accept both your points on their merit:
We need a language and we need to be ready
My question concerns largely how much of our time we allocate to different activities
In my opinion, we spend too much on defining and less than we should on doing

Delighted by so many UK comments on this piece

Kind regards
rod

Hi Rod. I agree with most of what you write, as ever. It has always been about delivery and impact for us, rather than debates + definitions (although social entrepreneur is also prone to being caught up in definition wars). As Cliff says, language is important, but only as a means of better achieving what we want to achieve. I'm sure the people behind the Mark would say that they are launching it precisely to grow the sector....and that the lack of understanding is holding it back.

From our standpoint at SSE, it tends to be that people choose structures, financing, governance etc that is best suited to achieve their mission. And then need to deliver at high quality, engage communities / stakeholders, measure / prove their impact, operate transparently, and communicate all of the above effectively.

At least the Mark is now moving on to being related to delivery (i.e. entering the marketplace, organisations can choose it etc), rather than just inward-looking definition debates. As with most entrepreneurial initiatives, the learning will be through doing. And this will no doubt be the same.

Nick

Thanks for your post
I think we must stop agreeing in public--people are starting to talk

On a serious note, let me reply to your comment
Everyone says that they are focusing on definitions to be helpful
....and that they are ultimately only doing this because it is necessary
But clearly plenty of people have done precisely this already
Each new entrant to this process just wishes to "clear up some ambiguity"

There is no getting around the fact that this gives license to others to do likewise--"just to clear things up"
What we are left with is a cacophony--pointless hair-splitting
When such attention is targetted on the finer points of constitutional law, or Talmudic study, for example, it is perhaps appropriate
When it is aimed at our sector it is a net waste; not at the individual level, as in the new SE Mark, but when added together--the series of such individual actions

I like what you guys do at the SSE and feel the training you give is invaluable--keep it up!!

regards, rod

One thin g I've noticed is our sector has received much attention from academics, who are notorious for coming up with 50 ways to spell the word "a", the mix of good intentions (the road to hell is paved with them) academic scrutiny and disconnect between the actual entrepreneurs and those hosting panels, conferences, and white papers about them (another trait of academics, I had 2 phd profs in college who had tenure in the biz school but had never been outside of the world of academia or done so much as run a lemonade stand)

I do think there needs to be a lingua franca since SE crosses so many disciplines with their own vernacular and they often try to appropriate each others words which creates tons of confusion and frankly loss of credibility. ie: Donations are not investments. winning a fellowship or a grant is not profit. unless the end user pays you for your good or service they are not your customer.

However endless research and debates to nit pick every nuance is a waste of time. It both hinders and discredits our sector. Again another wonderful trait of academics, research for the sake of research, no thought of commercialization, no accountability to produce any value out side of more scholarly articles for their peers to review and quote in their own white papers!

Last I checked both entrepreneurship and helping people was deeply rooted in action. Not endless debates in the ivory towers of academia.

You act and course correct as you go along and in the both cases the market should be the ones that tell us what is what.

Finally a big problem i see is that our sector is not spared from the messiah concept. In all this endless talks and meeting very, very, very few times have I heard people reference what the people they intend to help think of of this let alone seen any of them present at this gatherings mostly because we have not done a good job in including the poor into our sector as peers and co- creator or dare I say the ones calling the shots since they are the ones most familiar with the practical day to day realities of the problems we aim to solve.

Dear Martin

Thanks for your comment

I would be more than satisfied if it were only academics who were engaged in these debates
In fact I think the one group who have a useful role toplay in such debates are academics--one can hardly say that theoretical discussions are outside their remit

But they are a small part of the debate

kind regards, rod

This was a point made about doing business a different way, that's all. Nothing to do with nonprofits, cooperatives, foundations etc - because the intention was to offer a replacement paradigm.

Martin above is right. When the academics came on board the whole thing got confused.

It starts by recognising that within our so-called free market system the flow of wealth tends to accumulate in the hands of few people. That''s something that even Sir Richard Branson acknowledges now, and he's one of them.

So when business, some businesses, are reconfigured to serve people rather than the pursuit of profit based on abstract numbers, for it's own sake it has the potential to change the flow of wealth to benefit those leased served by the prevailing interpretation of capitalism.

Clearly some business still has the potential to cause more harm accruing profit than it does good by means of social investment. Others may have the potential for some social good, without any financial contribution to the community. A business which invests more to the community than it distributes in profit to its shareholders is one making a commitment to community rather than solely operating for the benefit of shareholders.

It was sometime last year, I remember when academia took this concept of a new form of capitalism to the Oxford SE Forum and served it up as their own conception. An undergraduate behaving this way might reasonably expect expulsion.

The irony of the SE Mark criteria is for me that having been freely given by business which pays tax to government, a government then grant funds someone else to re-invent it.

Shouldn't the fundamental principle of social enterprise across all forms be that like the cooperative movement's principle of cooperation, i.e. be social to other social enterprises and that ethical business can't be founded on dishonest practices?

Jeff
A good and relevant summary, thanks
However, I must take issue with one point
I think academics are a valuable and key ingredient to the successful development of the social economy
Proactive businesses like ourselves at ClearlySo and others require the theoretical farmeworks they help to provide
As mty comment above to Martin makes clear--academics are the one group who are NOT wasting their time, talents and money in thinking about theoretical constructs--when they do it, it is as a part of their job

regards, rod

I don't spend time trying to define who I am vs who someone else is. What I do is look for people and ideas who can help me fulfill the social mission of may organization. Often, to do that, I need to be helping them fulfill their mission, too.

I've been coming to Social Edge for many years because of the ideas that are exchanged and the people I meet. But mostly, for the potential that these discussions will draw the donor into on-line learning with the doers.

Your comment saying "I had breakfast today with a wealthy individual who has been desperate to pick his way through this jungle, or swamp, but because it is so complex and convoluted, he has held back" is probably the most important one to all of us in this discussion and who visit Social Edge.

How do we get the donor into the same on-line places where the doers and dreamers and innovators are meeting and sharing their ideas. If I'm a retail shop, the donors are the customers I need to be in my store, shopping and buying my ideas.

What actions are each of us, who may have different definitions for how we describe ourselves, doing to get that donor from a one-on-one breakfast discussion into this on-line network so they can become self educated and make decisions that support organizations and enterprises that seem to have good ideas and potential to do good work?

Dear Daniel

Thanks for your comment and for the opportunity it gives me to brag about ClearlySo (www.clearlyso.com)

It is precisely this excessive focus on talking and not doing that got us to start the business, which is focussed on helping social enterprises, businesses and entrepreneurs to succeed
One of the key aspects of their success, and a key ingredient (but certainly not the only one!!) is access to capital
Our view has always been that Government is a fair weather friend which can distort the sector and that to make any progress we need to entice in the private investor; the wealthy as well as the mainstream retail investor

We do this on the site through our "looking for capital" feature as well as via our "Social Sector Speed Dating", which we have successfully trialled last year
We are greatly accelerating this in 2010, although only in the UK at this stage--we are open to other ideas
I suspect that our Canadian business, which launches later this quarter, will enjoy utilise this format

We need to get donors and even more importantly, INVESTORS into our shop
Clear language may help; but what works even better is real live examples
We have nearly 800 on our site (growing by 100 per month) and when investors meet them face to face, their stories do what 1000 definitions, however clear, never can.

Thank you once again for your comment which is astute, as usual

Regards, rod

Rod, your site look great. I like the way you map the businesses that are listed on your site. However, it prompts some questions that might be starting point for another discussion on Social Edge.

Your site seems clearly focused on social entrepreneurs with business models, or products and services that can earn income if they can find enough customers and investors. Many of the customers might be other social innovators, but who fund their work from donations and public money.

Does anyone have any statistics about the number of SE businesses, earning income from the social good they do, vs the number of social innovators who depend on philanthropy and other forms of revenue?

In the maps I show at http://mappingforjustice.blogspot.com I use poverty demographics to show all of the places tutor/mentor programs are needed. Each of these might use a product developed and sold by one or more SE companies who have been incubated by a site like ClearlySo. However, this leads me to wonder if there are similar groups attracting philanthropist to sites with the organizations who need to be providing similar services in many places.

It seems that for every successful SE business there might need to be hundreds of other "businesses" who are using those products or who serve as distribution points for them. Any thoughts on this?

Dear Daniel

Thanks for your comment and for your kind words regarding ClearlySo
We feel we are the first marketplace for social enterprises and businesses, but also for commerce and investment, and have been going since last March--trying to help these oeganisations to succeed

Certainly we focus on those with business models or are "trading" activities, as Brits tend to say
Otherwise they are charities, which is fine, but not the sort of organisation to be much helped by our site
They may do business with social businesses or enterprises (SBEs) or charities, or the Government or the private sector
We would not distinguish regarding its end customers

The Social Enterprise Coalition and others in the Uk have the sort of stats you are seeking

Your map sounds like a great idea--I hope it finds success

Best regards, rod

Rod, you have indeed, brought some focus to several key issues in closing finance for socially responsible start-ups. As an entrepeneurs cross-over to the social side of enterprise development, we are struck with so much energy being placed on terms, language, and discussion of what really, when distilled, says, that there is not only not enough money ready and able to fund socially responsbile investments, but that the multi-laterals, and not-for-profit foundations and organizations really need to step up their act to understand that NOW is the time to expect returns on their dollars - no more free lunches. (econo 101 - I am afraid) The day of donar dollars supporting new innovative programs is going and almost gone. We need to bring qualified investments with a social purpose to qualified investors who understand ROI and ALSO want to make a difference. Here is where we need to focus. Investors who invest for ROI will have no problem understanding the added value and social benefit if approached by those of us in the social sector. HOWEVER, the donar funding world of govenrment, NGOs, multilaterals, etc. need major redirection and change to turn donar funding models into ROI driven investment modes. Frustrating as it is, we believe that the quickest way to success in our social sector is where we have been able to demonstrate success in the past - the angel, seed capital, and vc funds which understand ROI and NOW want to ALSO make a difference. Let's forget about what we call this type of investment and let's just get it! THIS is our challenge, we must be great innovators, stay the course of social investing, and demonstrate ability to make money. Govenrment, NGOs, foundations, etc will follow. These sources of dollars have never been bottom line focused and if wee are to create sustainable businesses, we must be first financially viable AND then make our differences... Let's pick our fights and win! Christine Adamow http//:www.africabiofuel.com

Here is another idea of social business :http://www.socialedge.org/[…]/death-by-definitions . In my opinion social business is such kind of business which does make profits but does no harm to people and the environment in order to earn more.

I would rather say a Social Business is more like statet here www.grameencreativelab.com

Ok, sorry, I'm a beginner: I meant like stated here:
http://www.grameencreativelab.com/
A social business in my eyes does much more than just not harming people and environment: It tries to eredicate a social problem without taking personal profit from it.