Motivated by change

A new breed of socially conscientious entrepreneur is finding that philanthropy can pay. Gareth Chadwick reports
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The Independent Online

There's a hole at the heart of corporate Britain and increasing numbers of young workers are trying not to fall in. A recent report found that 89 per cent of thirtysomethings feel their lives have become too cosseted, too regulated and too controlled by people, businesses and institutions they no longer respect or trust. It reveals that employees are increasingly disillusioned with the soulless grind of the corporate workplace.

The report, by Standard Life Bank and The Future Laboratory, indicates that not only are people disenchanted with the corporate grind, they are actively looking for alternatives. The corporate workplace may fill the wallet it seems, but rarely does it feed the soul. It is one reason for the rise of the social entrepreneur.

A social entrepreneurial venture, defined as a venture that has a social purpose as its prime objective, can range from a large corporation involved in community-focused projects and which recognises its social as well as commercial role, to a wholly grant-funded operation with a single social purpose, such as a soup kitchen. In between these extremes are organisations like charities, which although heavily reliant on funding also tend to have commercial arms, and social enterprises.

Social enterprises are the darlings of the sector, hyped by many, including the Government, as "the third way". A social enterprise is an organisation which has a primary social purpose, but which uses a commercial model to achieve that purpose.

The Eaga Partnership in Newcastle manages programmes on behalf of government, utilities and social housing providers. It undertakes energy efficiency work, instals central heating systems and carries out benefit entitlement checks to make sure people are receiving the benefits due to them. Sounds laudable enough, but its real success in terms of social entrepreneurship is that it is entirely employee-owned, with workers receiving a share of the profits after 12 months, and devotes all its trading surpluses, from a turnover of £250m, to tackling social issues such as fuel poverty and poor housing.

The social enterprise sector ­ which, according to the Department of Trade and Industry (DTI) consists of about 5,300 enterprises, making it larger than the clothing manufacture sector in the UK ­ has its celebrity adherents. Jamie Oliver recently announced plans to open a branch of his restaurant Fifteen, which trains jobless young people to become professional chefs, in Amsterdam in November.

Social entrepreneurship is a growing trend. A report from the London Business School revealed that 6.6 per cent of the UK's working population is engaged in setting up or managing organisations that trade with a social purpose, not including charities, and indicates there is huge potential for further growth.

"The social entrepreneurial sector is becoming a profession in itself," says Dr Alex Nicholls, lecturer at the Skoll Centre for Social Entrepreneurship at Oxford University. "As it does so, it becomes more attractive to a range of people who have those professional skills already or want to develop them. They want to regain a social purpose to their lives, but through a meaningful job, not sitting around basket weaving or something similar."

The concept that groups or individuals can generate social benefit in innovative ways is nothing new, but what has changed is the relationship of those organisations with the mainstream corporate world; the idea that the social sector can open a dialogue with businesses and learn from them to deliver social good.

The recognition that the sector receives at the highest levels is also new. New Labour has been a vocal supporter and set up a 10-person social enterprise unit at the DTI in 2001 which, despite only having a budget of around £1m, is a powerful champion for the sector. There is a marked difference in the US, where the government largely ignores social entrepreneurship, or parts of Eastern Europe where there is active hostility towards the sector.

The growth of organisations which have social improvement as their primary purpose is clearly positive, but the fact that there are so many gaps in society that rely on social entrepreneurs to fill them is not so heart warming.

"Social entrepreneurs very often emerge where there has been market failure, in terms of the private sector not being able to provide what local people need to improve their lives, and where the public sector is unwilling or unable to step in," says Jonathan Bland, chief executive of the Social Enterprise Coalition.

Identifying the need is the easy part. Meeting that need is not so easy. The first challenge that many face is centred on funding. No matter how worthy the social cause, there is a cost in providing it. Social enterprises generally meet that cost through their commercial activities, but for other types of entrepreneurial organisation in the sector, obtaining financial support is a major problem.

Mainstream lenders are understandably wary about lending to ventures that have little or no commercial objectives. Some banks are more amenable than others. The Co-operative Bank is well known for its strong ethical stance and RBS/NatWest and Barclays have dedicated community and regeneration focused banking teams.

There are also organisations such as New Philanthropy Capital, which works with donors and charities to channel money into community projects in the UK and worldwide and the Community Foundation, a nationwide organisation that works with individual and corporate donors to channel funds to specific community or sector-based projects.

A vital source of funding at a local level comes from Community Development Financial Institutions (CDFIs). These offer a range of financial services to individuals or organisations that are unable to access finance from mainstream providers. CDFIs vary across the country, but include credit unions, venture capital funds, social banks and mutual guarantee societies.

The nature of the social venture will often determine how successful it is in obtaining financial support. Tick the right boxes and you are half way there. But some ventures face more problems than others.

Peter Gibbs spent over 15 years working on cruise ships in the US and the Caribbean. Having seen at first hand the poverty in some of the countries he visited in the course of his job, he handed in his notice in 2001 and set up Sea-Change. The aim of Sea-Change is to collect the unwanted small change left on cruise ships and funnel it back into recognised charities such as War Aid.

Gibbs calculates that once established, the running costs of the venture would be around 10 per cent of the monies calculated. His supporters include Geoff Mulgan, head of the forward strategy unit at 10 Downing Street and Lord Fitt of Bell's Hill. Even with such high-profile help however, Gibbs says he is finding it difficult to get the venture established. "Because we cross international boundaries it seems to be harder to pin down financial support. Once established, Sea-Change will be self-funding after two or three months, but I've spent all my own money already just in trying to set the venture up. Unfortunately the cruise ship industry itself doesn't seem very interested in helping it get going," he says.

Social entrepreneurs are nothing if not tenacious, however. Gibbs has vowed to keep knocking on corporate doors in the cruise industry until he is allowed in. "There's always a personal drive behind social entrepreneurs and it's often an ethical issue," says Alex Nicholls. "After all, they are never going to be very well paid in this sector. They are hugely innovative and dynamic people who could be leaders in whatever sector they chose. Fortunately for us all, they choose to act in the social sector."

How business nous is helping the world's disabled

As award-winning industrial design students, David Constantine and Simon Gue could have had successful, jet-setting careers in industry.

Instead they moved to the West Country to design and build wheelchairs for users in the developing world.

Constantine is himself a wheelchair user. In 1989, he and fellow Royal College of Art student Gue designed a wheelchair for the developing world. Designed to be made from locally available materials, the design was simple, easily adaptable and ideally suited to the often rough environment of many developing countries.

The design won them the Frye Memorial Prize. With the prize money, Constantine and Gue teamed up with a friend from university, Richard Frost, a former tax consultant, and took their design to the Centre for the Rehabilitation of the Paralysed in Bangladesh. They were invited to return to establish a wheelchair workshop, which they did in 1991, after graduation, and Motivation was born.

Motivation is a UK-registered charity working primarily in developing countries to improve the quality of life for wheelchair users. The United Nations estimates that there are 20 million people in the world who need wheelchairs but don't have one. The World Health Organisation estimates that the life expectancy of a paraplegic in the developing world is between two to three years. In the UK, paraplegics have a normal life expectancy.

Motivation's work is all about trying to change the culture of disability. By designing wheelchairs, training local people in production and all the necessary support services, they help individuals make the most of their lives and gain freedom. The organisation works by invitation only, with partners in Africa, Asia, Central America and Eastern Europe. It employs 18 people in the UK and 26 overseas.

"We get dozens of approaches every month from groups all over the world, but generally only a couple turn out to be feasible projects. It could be a request for individual wheelchairs or a wheelchair workshop that needs upgrading," explains Sarah Beattie, operations manager at Motivation.

"We will go and visit the most appropriate projects and talk to them about their requirements. We train them to build and repair their own wheelchairs using local materials, how to use them correctly, help them integrate into the community.

"It's hard work, but having a very clear, practical goal that is so important to the communities with whom you work, and then helping them achieve that goal, is hugely rewarding," she says.