Social Enterprise in “The Big Society”

When David Cameron talks about “The Big Society” he is encouraging a culture change that is already underway. Periods of economic uncertainty create two kinds of response: those who put their heads down and hope the problems will go away; and those who come out fighting.

Community (paper chain people)

Among the thousands of new companies that started up in the last couple of years there are a growing number that set up to manage social enterprise ventures. Whether they listened to politicians or not, their actions were in tune with Cameron’s “Big Society” idea and their aims should be easier to achieve if his government does what he promised in his July 2010 speech.


Among the useful bits of existing legislation that came out under the previous government was a new type of company: the Community Interest Company. The value of this concept compared with previously existing company formats is that it recognises that social enterprise in the twenty-first century happens at grass-roots level. Older solutions dated back to the days when social action depended on the goodwill of country landowners, whose high-sounding titles gave them the privilege to live in big houses and live off inherited wealth. Not having to go to work for their living, the more enlightened nobles contributed their time to all kinds of charitable ventures and were happy to do it without pay.


Today’s social entrepreneurs have at least as much altruism as the socialites of old; but they can’t afford to work without being paid. The Community Interest Company (CIC for short) allows them to do this. In some circumstances it even enables them to receive dividend payments, just like the entrepreneurs who run businesses for profit. So social enterprise has an effective structure that gives social entrepreneurs the protection of “limited liability” and lets them earn a salary and get funding where it is available.


But the availability of funding remained the weak point. Funding bodies are notoriously “conservative” (small “c”) about whom and what they will support. CICs are still a new idea, and some funders are still unsure whether to support this type of not-for-profit venture. This is a changing situation. As more and more CICs are formed they are becoming increasingly familiar to the people that matter. It is much easier for a CIC formed today to get funding than it was for the early entrants to get support five or six years ago. But this is where Cameron’s speech offers real hope. He has announced that “every penny of dormant bank and building society account money allocated to England… will mean that the Big Society Bank will – over time – make available hundreds of millions of pounds of new finance to some of our most dynamic social organisations.” This really does sound like a new source of funding, so the social entrepreneur’s day has really come at last.


There is no magic formula for starting a new social enterprise any more than for creating a new business. Entrepreneurs in popular fiction wake up one morning with a light flashing above their head and apply their big new idea to creating a hugely successful organisation. Entrepreneurs in the real world see a problem and care enough to do something about it. They see deprived areas and say “this could be better”, they see bored kids and say “these people deserve hope”, they see opportunities and say “I know how to do
that” – and they act on their beliefs.


Legislation can’t do much to create solutions. Much recent legislation has made it harder for creative people to do the things society needs them to. Above all, the blame culture that seeks compensation for the slightest injury makes it essential that social enterprises protect themselves by registering for “limited liability”. The Community Interest Company (CIC) is a solution that already exists. The “Big Society” initiative makes it even more attractive.


Limited Liability

The concept of “limited liability” is society’s deal with the entrepreneur that says “we need people like you to take calculated risks for the good of society”. It allows those entrepreneurs to invest their time and money in businesses or social enterprises and put a limit on how much they can use if it goes wrong. The deal is, if you register your company information and publish your accounts etc your risk is limited to the money you put in the business (or social enterprise venture). Your personal assets are protected. So, you can lose your stake, but you don’t lose your house, car etc.


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