Where does a social enterprise get its start up capital from?<\/p>\n
Ultimately?\u00a0<\/p>\n
I understand that they may get it from a wide range of sources – but in essence where is that value created before it is made available to a social enterprise?<\/p>\n
If I am right then it comes from:<\/p>\n
But ultimately the source of nearly all of this cash is the ‘for profit’ sector*.\u00a0 In essence money is taken from, or given by, those who have created profits to invest in ‘social enterprise’, including public services,\u00a0that have little realistic potential for generating sufficient profit to make the risk of private investment worthwhile.<\/p>\n
The extent of the ‘stealth’ in the ‘taxation’ varies widely in different contexts.\u00a0 For example if I buy fairtrade chocolate I know that I am paying a premium to provide a social good.\u00a0 The chocolate bar is clearly labelled and I can easily find out more about how my premium is used to derive social gain.\u00a0<\/p>\n
However if I rent an office in a managed workspace provided by a ‘Community Interest Company’ am I\u00a0equally clear on the premium that I will be paying to enable them to generate a profit in order to re-invest back into the community?\u00a0<\/p>\n
Is the product clearly labelled in the same way that my fairtrade chocolate bar is?\u00a0<\/p>\n
Are the mechanisms for re-investing my taxation clear and transparent?\u00a0<\/p>\n
I can see lots of salaries that need to be covered from my rental.\u00a0 I can see additional overheads (atria, gyms, cafes, sexy furniture, light fittings\u00a0etc)\u00a0that need to be paid for before any profit is created for re-investment.\u00a0 And I can see prices that are significantly higher then the local market rate.\u00a0\u00a0 I can’t clearly see how my premium will be used to benefit the local community.\u00a0 It feels like a stealth tax!<\/p>\n
Even if the labelling is transparent and the mechanisms for re-investment are clear then I still have a problem with this model.\u00a0 While both service provider and service user are engaged in a fair exchange from which both gain, I am not sure about\u00a0what drives excellence in the service provider in the long term.\u00a0\u00a0It feels a little like any other\u00a0subsidised public service – and these have been notoriously difficult to manage efficiently and effectively.\u00a0\u00a0\u00a0As much energy goes into maintaining the subsidy as into generating value.\u00a0 The ‘taxation’ gets locked in.<\/p>\n
So is social enterprise just another stealth tax?\u00a0 Well that would explain the massive extent of political interest.\u00a0 But social enterprise can and must be so much more than this.\u00a0 It can be the genuine organisation of a community around the concept of using enterprise to create social value.\u00a0 It is this vision of a genuinely ‘social’ approach to enterprise that I believe we are at risk of losing.\u00a0<\/p>\n
*I believe that there is a tiny venture capital movement developing to invest in social enterprise – but I am not sure what the return on investment is that these venture capitalists seek.\u00a0 If it is a true VC model then it will be a substantial profit on their risk capital.\u00a0 If they just want to see social good then it is not venture capitalism as I understand it\u00a0– but just another form of giving.<\/p>\n