Is Big Society Capital in denial?

I began to wonder recently when reading David Floyd’s blog in the Guardian which states that  “BSC’s Nick O’Donohue does recognise the problem but his answer is apparently to put money into new, profitable, social organisations that don’t yet exist”

In Nick Donihue’s own blog, he refers to the EU social business consultation saying:

“The concept of Social Impact Bonds, a revolutionary financing vehicle which allows private investors to fund important social interventions and earn a return based on actual social outcomes and which originated here in the UK, are being picked up around the world.

The EU is also on board. Over 800 people assembled in Brussels last November to listen to President Barosso and Commissioner Barnier launch the Social Business Initiative which lists 11 separate actions to improve access to funding, increase the visibility of social entrepreneurship, and improve the legal and regulatory environment for social businesses. Initiatives include a new Euro 90 million fund and special priority for investments in social enterprises in the next EU budget round.”

I’ve run a social business in the UK since 2004, P-CED uses its profits to achieve social outcomes. We design and leverage strategies for tackling poverty and childcare reform internationally.

In 2006, our paper on microeconomic development and social enterprise in Ukraine, proposed a social business approach with the primary focus of childcare reform. It described a centre for social enterprise and a social investment fund if 1.5 billion dollars. We published in the spirit of radical transparency 9 months later.

In 2008, we launched the Social Business and For Benefit Corporations group on Linkedin, wrote to USAID and the US Senate calling for their support and put forward our social business plan to the EU Citizens Consultation. All of this being very visible online.

When in 2011 I noted the remarkable resemblance between the EU Social Business Consultation and our own work. I took this up with our MEP Sir Graham Watson. He acknowledged the likeness and took it up with Commissioner Michel Barnier who in turn acknowledged the ‘many similarities’ with what was explored in the Social Business Consultation and our operational model.

So as pioneering practitioners that sets everything straight?  well not exactly, there’s now a Social Business Experts group, populated by those who have no experience whatsoever, presumably spending their time thinking about the business that does not yet exist.

As I’ve described in earlier posts, having introduced our social enterprise project to potential supporters, we found that 3 of those approached joined together with others including PwC, to deliver their own social enterprise initiative in Ukraine, leaving out our primary focus of children, particularly those disabled in institutions. One of those approached, Erste Bank is allegedly a social business.  As a consequence of being pushed out of the way after 6 years effort, our founder died in poverty,  leaving Ukraine’s vulnerable children to neglect and abuse in state care.

Imagine, having challenged organised crime and lived to

That’s no skin of the nose for Big Society Capital, who seem determined to bludgeon their way to social innovation, at whatever cost – to others, not themselves.

In the white paper, which first proposed this alternative to traditional capitalism it was reasoned that ‘Dismissing people and consciously leaving them to die is probably not the way to go’.  Here we are, 16 years later experiencing that at first hand.

In Big Society Capital,  we have a private organisation managing £600 million of public funding, who are apparently entirely devoid of scruples.  There can only be one reason for them being in denial of practitioners – we’re a threat to the crony culture that pervades the public sector.  Has  nothing been learned from the experience of A4e?

When we’d made the case for a social investment fund we’d suggested:

“Project funding should be placed as a social-benefit fund under oversight of an independent board of directors, particularly including representatives from grassroots level Ukraine citizens action groups, networks, and human rights leaders.

This program provides for near-term social relief for Ukraine’s neediest citizens, most particularly children who normally have least possible influence and no public voice. Over a few years time, the net cost financially is zero. Every component is designed to become financially solvent, through mechanisms of cost-savings and shared revenue with other components. One component, Internet, provides essential communications infrastructure as well as a cash surplus to be used to offset any lingering costs of other components such as childcare, and otherwise goes to a permanent social benefit fund under oversight of the aforementioned independent, citizens-based non-government board of directors.

Any number of other social enterprises can be created. Furthermore, any number of existing for-profit enterprises are entirely free to contribute any percentage of profits they wish to increase the proposed initial $1.5 billion social investment fund. If for example the total fund comes to $3 billion, that amount would generate at least $300 million per year in a hryvnia deposit accounts at any one of several major Ukrainian banks, to provide ongoing funding to continue to create and expand social enterprises.

This strategy places adequate funding for social benefit under control and management independent of government and the very obvious vicissitudes and conflicts inherent therein.”

It’s hardly a good omen for the future of social business for it to be established on this kind of dishonesty.

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