The story of social business and the call for putting community ahead of shareholder dividends that would end with one man’s death in poverty.
In 2006 having published a strategy paper for social enteprise in Ukraine we joined the SEC and followed up with this introduction:
Tuesday, 21 November 2006
Hello SEC,
I came in search of networking possibilities in the UK, being an active contributor to both the Skoll Social Enterprise forum and the Omidyar network over the past few years. As far as I can see, no similar network exists within the UK.
I run the UK branch of P-CED (People-Centered Economic Development) using revenue from an IT service business to fund overseas efforts.
P-CED began in the US in 1996 by offering a whitepaper on poverty eradication to the Clinton administration. It proposed a people-centered approach and targetted economic development as an alternative to previous failures of top-down approaches, most notably the disappearance of vast sums in the Defence Enterprise Fund deployed in the Yelstin era of Russia’s recent history. You may see quite a lot of similarity between what we called a P-CED enterprise and the CIC form of business incorporation.
By 1999 our founder Terry Hallman had been invited to put these ideas into practice and chose to do so in Tomsk, Siberia introducing a microcredit bank operation under the principle of moral collateral, or peer group lending.
Having returned a successful outcome which saw the creation of 10,000 new businesses in the period 2000-2005 with seed funding of $6M we have continued to promote the model with my joining P-CED in 2003. Since then I have found the world of Social Enterprise in the UK almost inpenetrable, in spite of the government support which clearly exists. Hence a feeling of social isolation rather than enterprise.
Our current work is focussed on Ukraine, where we’ve recently completed a 3 year research project to bring peer group lending and social purpose business in at a national level. We’re now being supported in the non-monetary context by local resources who are helping with language assistance and channelling the plan through to national government.
We’re proposing a business mix of revenue positive and revenue neutral activities toward a major social objective, the funding of group care homes for all Ukraine’s economic orphans and street children. Our target for external seed funding will be the Millenium Challenge account for transitional democracy. Additionally we propose a new faculty for Social Enterprise in one of Ukraine’s state universities.
All of this will be based on the successful social purpose model for which proof of concept was delivered in the Tomsk project. I’d like to be able to talk to others in the UK about this.
You”ll find more about us on http://www.p-ced.com/
Regards,
Jeff Mowatt
P-CED UK Ltd
This was their response the following day
Hi Jeff
Thank you very much for your email which we have read with interest. At present, your area of work lies beyond the focus of our work, however, we know of some people who may be more aligned with what you are going. Please see details below:
Community Action Network
School for Social Entreoreneurs
Skoll Centre for Entrepreneurship
Ashoka
(contact names and email addresses removed to protect privacy)
Hope that helps and good luck.
Alexia Everett-Kerrigan
Membership Officer
Social Enterprise Coalition
Southbank House
Black Prince Road
London SE1 7SJ
How our work was beyond their current focus wasn’t clear. We were a self-sustaining business putting our profit into social objectives and we’d paid a membership fee to an organisation part funded by government grant support.
We’d introduced this profit-for-purpose model to the UK in 2004 with a proposal for tackling poverty, which drew attention to the failure of capitalism and the potential for uprisings. We’d approached Social Enterprise London with this and again, there was no way in which they could assist us,
On the Skoll Social Entrepreneurship forum, this approach was clearly something new, when I engaged in discussion with some of the leading academics on the top. One was Kim Alter, whose Social Enterprise Typology had been used in the strategy paper we were to release a month later. It included a clear description of how the bottom line of business could be broadened to meet social objectives. The conversation began:
Provocative as it may sound, many nonprofits successfully leverage monies received from their revenue-generating initiatives to enhance mission impact, increase their organization’s performance and sustainability, and also create new opportunities to help their clients/beneficiaries become more self-reliant. This amounts to —as Elizabeth Isele, Senior Program Director at Great Bay Foundation is fond of saying— “profit for a purpose.”
In 2008, the proposal was introduced to the EU Citizens Consultation, where it was visible for nearly 4 years.
It’s interesting to note that in 2009. stepping down as CEO, the organisation for which our international social business approach was “beyond the focus” of their work, forms an organisation called Social Business International. He doesn’t respond to my introduction, as a practitioner.
It’s Jonathan Bland who soon appoints himself spokesman for social business in Europe, rather than any practitioner and the definition from the EU Social Business Consultation is very familiar:
“‘Social enterprise’ means an enterprise whose primary objective is to achieve social impact rather than generate profit for owners and stakeholders. It operates in the market through the production of goods and services in an entrepreneurial and innovative way, and uses surpluses mainly to achieve social goals. It is managed in an accountable and transparent way, in particular by involving workers, customers and stakeholders affected by its business activity.”
Through my MEP, I tackled Commissioner Michel Barnier about the use of our intellectual property, as laid out in front of them in 2008. He admits that there are many similarities but claims that this is because of emerging thinking in recent years and points out that I didn’t participate in the consultation.
The emerging thinking is found in the work we’ve published online since 1997 and it’s our operational business model, based on that intellectual property. We don’t have to join a consultation to be attributed.
We see the investment we’ve made over 6 years then served up by others we’ve approached for support, in a joint initiative from USAID and our own British Council.
Social enterprise “support” has taken our subscription, the grant funding that our tax pays for and helped itself to our intellectual property. With no income to show for his efforts and according to his Embassy, no medical treatment which matches his budget, our founder loses his life.
He does leave a mark however, in his efforts to place children in loving family homes.
This loss, passing without comment from any of these support organisations, is clear indication that social enterprise support is neither social nor fit for purpose.
Economics for Humanity 