Social enterprise: hopes, fears and making it work for you

Olof Williamson was a Senior Consultant at NCVO, looking at the latest thinking on funding, finance and public services. Olof has left NCVO and his posts have been retained for here for reference.

People often have very high hopes for how enterprise and earned income can help their organisation. But these can easily be dashed by bad luck or poor preparation.

I’m putting the finishing touches to our social enterprise training workshop on 21 November (Grow Your Own Income, here at NCVO), so I’m taking a look at the motivations for trading and enterprise, the main barriers and difficulties, and what you can do to make it work for your organisation.

Enterprise optimism

There are many reasons to be optimistic about enterprise. Entrepreneurship has been part of our sector for a very long time, arguably going back to London’s Foundling Hospital (est. 1741) or early cooperatives.  Over time, ever more voluntary organisations have become interested in trading and enterprise.

As a survey found back in May 2013, 92% of charities want to increase their income from business activity, and 52% of respondents said they were ‘excited’ about the potential (Social Enterprise UK).

And it is not just a local thing: when I talked to a group of 25 young civil society leaders from the UK and North Africa earlier this month (on an NCVO/British Council project) they were animated about the possibilities of social enterprise to embed social change in their rapidly evolving communities. Some of these young adults were already involved in organising educational and welfare initiatives with a strong enterprise element.

In my experience, the entrepreneurial motivation tends to fall into these three broad categories:

  • anticipation of the opportunities available (as reflected in the SEUK survey mentioned above)
  • a need to find new ways to fund existing work and make a difference (like the young leaders I mentioned)
  • encouragement or pressure from funders or other stakeholders to show you can pay your own way

But the motivation only gets you part way there. To get the enterprise up and running, and earning its keep, you then have got to set about a long road full of bumps, potholes and traps.

Trading troubles

The road to sustainable enterprise activity is often not an easy one, as I saw through my work with an arts organisation earlier this year. I was helping them look at the feasibility of growing their trading activity.

First of all they had to clarify what they would sell and to whom, and for what purpose (the motivation question above). They had ideas but they needed to organise and prioritise them. Then they needed to think about what skills and knowledge were required, and figure out who they ought to involve. Finally there were a whole host of technological and legal questions they’d not faced before, such as choosing the right price, how to take payment, and when to charge VAT.

To work through all this took an initial investment of time for the organisation, and they also needed financial investment to bring their ideas to fruition. Before their idea was earning them any money, it was going to cost them something.

Making it work for you

Making the investment of time and money can be well worth it. If you can harness the initial optimism, and work through and around the barriers, your voluntary organisation can bring in significant income from enterprise activity.

There are thousands already doing it, for example selling tickets to shows and events, providing education, training and advice, or working in partnership with the private or public sectors.

The inspiring thing for me is that so many organisations are out there testing the barriers of what is possible, innovating and experimenting.

The workshop I’ll be leading on 21 November is for people who have a trading idea either planned or up and running, but who want support and advice to help it grow to maturity.

And I’m always interested to hear your experiences of trading, and if you agree with the barriers and opportunities that I have described.

Further info from NCVO

From others sources

  • Social Enterprise UK Survey Findings about charities and enterprise.
  • For social investment advice and discussion, the Good Deals Conference in London is free for charities on 11 November.

(While the two events mentioned above are in London, NCVO’s consultancy, training and events happen across the whole of England. Get in touch if you’d like to know more).

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4 Responses to Social enterprise: hopes, fears and making it work for you

  1. Nick Comley says:

    Hi Olof, my experience of VCs organisations setting up a social enterprise is that they focus too much on trying to monetise and trade in their core activities, which are often unlikely to turn a substantial surplus. More and more I am trying to encourage proto social enterprises to think about finding compatible trading away from their core business, if a business is successful and can make investable surpluses why not consider Alpaca farming to fund your community car scheme!

    • Olof Williamson says:

      Hi Nick – yes it’s a very good point. Often the core service has been set up precisely because there isn’t a viable “market” to serve that need.
      Thinking more widely – and creatively – is an essential part of the planning process.

      The challenge is then to not get distracted by having wildly different operations to manage!

  2. Garaen says:

    I am in an incubator program called The School for Creative Startups. I specifically applied to the programme with the plan to create a company to assist non-profit organisations to monetise their donor lists. I will not divulge the specifics here, but I would love to talk with you or someone else about my idea and what the requirements might be for me to participate in these types of organisations based on my ideas. I was looking for an email contact for you at the end of the article, but find none. How may I get in contact with you to further this conversation off-line?

    • Olof Williamson says:

      Hi Garaen
      Sounds like an interesting project. I would be happy to talk to you, and will email to start the conversation.
      Olof