BITC: A hybrid value chain for looters?

The somewhat depressing news today is that BITC are running an advertising campaign to promote social enterprise in the 2012 Olympic and Paralymic Games.   They aim to raise the profile of those creating jobs and rebuilding communities in the host borough.

Given the international nature of the Olympic Games and understanding that  poverty and disability are global concerns,  we could consider the  wider context of the international community, the ‘hybrid value chain’ of business and community sector operating together for improved livelihoods.

It was just last year BITC published the Business Case for being a Responsible Business, in which CEO Stephen Howard said:

“What is needed is a form of capitalism that is driven by businesses which not only think about the short term returns but also about building longer term sustainable businesses that create economic, environmental and social value – what McKinsey & Co call ‘long-term capitalism’. To ensure viable and sustainable businesses in a more responsible – and low carbon – economy, we need to increase the speed and scale of change towards responsible business and operate in a more connected way. This means ensuring that responsible business is at the heart of all aspects of business operations and business models, and not just a preoccupation of one department. And it means new connections and partnerships that will help businesses take a more joined-up approach to their activities.

Responsible business is not a trade-off between people, planet and profit – companies should be expanding the connections between societal and economic progressi and looking at innovative ways to integrate responsible business practices into their core practices. A divide is emerging between those that embrace sustainability-driven strategy and management, and those that don’t. ii These ‘embracers’ are the businesses that will survive and thrive and to help those currently at an earlier stage of the journey, we need to provide the proof – the argument and numbers – that show why and how responsible business practices build successful organisations, to help them define those materially relevant to them.”

As a social enterprise who’d being doing just this for the last 15 years,  I’d been writing an article on Changing Capitalism for People and Planet, which described how it began with a paper, suggesting the same thing and led to our international development action in support of disabled children.

In 2004, our UK business plan had argued that:

“Traditional capitalism is an insufficient economic model allowing monetary outcomes as the bottom line with little regard to social needs. Bottom line must be taken one step further by at least some companies, past profit, to people. How profits are used is equally as important as creation of profits. Where profits can be brought to bear by willing individuals and companies to social benefit, so much the better. Moreover, this activity must be recognized and supported at government policy level as a badly needed, essential, and entirely legitimate enterprise activity.”

It was in Ukraine however, where two years later, we’d reasoned this approach in support of disabled children, saying in our strategy paper that:

“An inherent assumption about capitalism is that profit is defined only in terms of monetary gain. This assumption is virtually unquestioned in most of the world. However, it is not a valid assumption. Business enterprise, capitalism, must be measured in terms of monetary profit. That rule is not arguable. A business enterprise must make monetary profit, or it will merely cease to exist. That is an absolute requirement. But it does not follow that this must necessarily be the final bottom line and the sole aim of the enterprise. How this profit is used is another question. It is commonly assumed that profit will enrich enterprise owners and investors, which in turn gives them incentive to participate financially in the enterprise to start with.

That, however, is not the only possible outcome for use of profits. Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples – the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise.”

As I describe elsewhere, this led to changes in government policy and subsequent impact on the number of domestic adoptions.

USAID had been asked to support it in 2008, after they introduced the East Europe Foundation to Ukraine in 2007, offering small grants to community orgainsations.  We’d seen this as a response to the 2006 strategy paper, where US government had been asked for support , ‘financially and any other way possible’

They wrote back some weeks later, to inform us that their limited budget would not support assistance for ‘handicapped and mentally retarded children’ 

They would however come around to embrace ‘enlightened’ capitalism several years later. Naturally, as if their own thinking.

Now here’s the elephant in this room of enlightened capitalism.  EEF donors include two of Ukraine’s wealthiest men who have also been identified by media as Ukraine’s Scrooges,  whose philanthropy is regarded as being only a PR exercise. In  research  for the strategy plan, describing Ukraine’s Death Camps for Children these are identified by  my deceased colleague, as being the source of the childcare problem.’   He said:

“Excuses won’t work, particularly in light of a handful of oligarchs in Ukraine having been allowed to loot Ukraine’s economy for tens of billions of dollars. I point specifically to Akhmetov, Pinchuk, Poroshenko, and Kuchma, and this is certainly not an exhaustive list. These people can single-handedly finance 100% of all that will ever be needed to save Ukraine’s orphans. None of them evidently bother to think past their bank accounts, and seem to have at least tacit blessings at this point from the new regime to keep their loot while no one wants to consider Ukraine’s death camps, and the widespread poverty that produced them.”

Now take a look at the donor list for EEF, where you’ll find BITC, PwC, The British Council and John Smith Trust listed as partners.

BITC has clearly made itself part of the problem and the borrowed thoughts of Stephen Howard on capitalism, offer only empty rhetoric.   Where Terry Hallman gave his life, BITC and associates are helping the obscenely wealthy brush the livelihoods of the most vulnerable under the carpet.

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