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1 Social Enterprise A Strategic Framework and Action Plan Introduction 1. Social enterprise offers a different perspective on the regeneration of the Nottinghamshire economy than perhaps the more traditional routes - and is one in which the County Council, notably via the Regeneration Division, has a strong record of leading and driving. 2. Four key reasons combine to suggest this is a good time to review its direction and emphasis, namely : an emphasis upon performance of services across the County Council which has prompted strong ideas for alternative means of delivery and procurement; the Best Value Review of the Economic Development function and preparations for the Economic Development Framework, culminating in the establishment of the Regeneration Division Business Plan all of which promote social enterprise as having the potential to make a strong impact upon the County Council s regeneration ambitions; strong concerns within academic, local and central government circles about the increased polarisation of local, geographical and thematic communities economically, socially and environmentally and the potential of social enterprise in helping bring about change; a nationally driven debate about the need to promote enterprise and increase entrepreneurial skills generally and particularly within disadvantaged areas. 3. It is in this light that the potential of social enterprise is being talked up by central government through the National Strategy for Neighbourhood Renewal and the establishment of the Social Enterprise Unit at the Department for Trade and particularly Industry. The Treasury too has adopted a stance in favour of promoting social enterprise through its Community Investment Tax Credit and its likely support of the recommendations contained within the Dti sponsored Howard Davies report (Enterprise & the Economy in Education) in promoting an enterprise culture. All of this activity has now been crystallised within the Government s recently published document Social Enterprise A Strategy for Success (Dti, July 2002). 4. Within this context, this Strategic Framework aims to : offer a definition of Social Enterprise of relevance to Nottinghamshire and to support the delivery of the County Council s ambitions as set out within the Strategic Plan; stimulate discussion about the nature of social enterprise and its potential role; set out a rationale for a re-emphasis of its role across the County and offer an Action Plan to take this work forward. Page 1 of 8

2 Social Enterprise and the Question of Definition 4. Definitions of social enterprises are open to interpretation and are sometimes the subject of fierce debate. Social enterprises are in many ways like any private sector businesses, but crucially they are geared towards community benefit rather than the generation of profits. Social enterprises therefore, do not fall within the standard definitions of private or public sector enterprises. There is considerable pressure not least from Government - for social enterprises to become self-sustaining, i.e. not reliant on grants or other forms of subsidy, with revenue generated through trading activity. 5. However if the enterprise is fulfilling a useful function within the context of regeneration / social inclusion, there is no particular reason why the trading activities should not be subsidised. Trading co-operatives and employee owned businesses are often counted as social enterprises as they frequently include a community/social benefit clause in their objects, even when their aims are concerned with product manufacture, service delivery, jobs and training and are subject to the usual fluctuating trading conditions as other enterprises within the mainstream economy. In other words, they clearly do not fall within a not-forprofit category, which some commentators see as important. 6. Perhaps it is best to defer to the Government s definition : A social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profits for shareholders and owners. (Social Enterprise A Strategy for Success. Dti July 2002) 7. Social Enterprises can be effective at developing services, which may be unattractive or inappropriate for the private sector, or cannot be delivered effectively by the public sector. They can also be valuable in engaging local people in economic activities in ways that both public and private agencies have found difficult. It also helps develop a stronger sense of community offering, arguably, more locally based, bottom up support to deprived communities, not necessarily limited to economic development and not necessarily viable or sustainable in the medium / longer term. 8. The wider Social Economy can generally be thought of as comprising a range of organisations and projects which together form a sector which is characterised as independent of the state and of the public and private sectors, providing services, goods and trade for a social purpose. Though independent of the public sector, it has close links with it, often being funded (initially at least) through grants but aiming ultimately to achieve viability through the private sector principles of trade, service provision and income generation. The sector generally aims to make profits (or at least avoid losses) and to be sustainable, but profits are not sought for distribution to shareholders. 9. In summary, social enterprises form part of this wider social economy, forming a distinct grouping within the social economy, being organisations that trade or Page 2 of 8

3 provide a service to achieve their ambitions which are fundamentally geared towards community benefit rather than simply the generation of profits. The Nottinghamshire Perspective 10. While others can worry about precise definition, we might usefully recognise from the above at least three commonalities : Business Oriented - being directly involved in the production of goods and the provision of services to a market. They seek to be viable trading concerns, making a surplus from trading or via grant aid support to allow the further development of those goods and services; Social / Community Ownership - they are independent entities with clear community or local ownership structures, based on participation by the stakeholder groups and ultimately, being accountable to their members and the wider community for their social, environmental and economic impact. Social / Community Aims - they have values rooted in social and economic change and well-being through job creation, training and provision of services. 11. There is plenty of evidence from Nottinghamshire and elsewhere to suggest that the social economy and specifically social enterprise - is a good thing. Social enterprises can meet service needs between public and private sectors, members of social enterprises can acquire numerous transferable skills and can build confidence in individuals and capacity within communities. In summary, they can : Act as an important part of the community regeneration and economic development jigsaw, offering routes to employment and training, particularly in engaging the most disadvantaged or most difficult to reach ; Support the better engagement of communities in neighbourhood leadership and democratic participation- and hence within regeneration programmes and service delivery; Be a catalyst generally, for supporting new sustainable business growth and specifically, for developing new clusters; Offer a means of introducing the rigours of business planning and the realities of running a business to community organisations; Enable the public sector to deliver competitive and accessible services outside the immediate public sector but within the public realm; Create new ways for voluntary sector organisations to develop more sustainable forms of income and move away from grant dependency. 12. Nottinghamshire County Council principally via the Regeneration Division - has traditionally supported such activity grouped around the following themes : (a) Community Engagement providing financial and practical support and promoting entrepreneurship to groups within disadvantaged communities, principally from an economic development perspective supporting their capacity to access jobs, training and learning. Key activity : Page 3 of 8

4 - The East Midlands School for Social Entrepreneurs a nationally driven project, which aims to raise citizenship and community activism, creating local champions and thus enabling community enterprise. Its development has the support of the County Council. - Specialist support - from the Development and Programmes Team within the Regeneration Division, complemented by funding from the County Council s Economic Development Budget. - Community Nutrition / Food Initiative In partnership with the Cooperative Wholesale Society and North Nottinghamshire Health, an initiative designed to tackle food poverty and encourage healthy eating in disadvantaged communities was piloted in North Nottinghamshire. Local groups involved in this initiative have benefited from democratic management training and financial management support. (b) Community Businesses being in many cases the next step for groups, supported with both practical advice and finance to become sustainable initiatives providing a service to local communities. Key activity : - Coalfield Community Landmarks The County Council has lead this partnership approach to supporting the development and local management of community facilities within key coalfield communities, supported by the Millennium Commission. This, together with other partnership approaches to supporting and developing community resources, will help local communities to realise their capabilities and become self-sustaining community businesses. Four projects are underway in some of the most deprived parts of the County. (c) Accessing the Labour Market Providing innovative ways of securing advice, training and jobs through a range of measures via lifelong learning and community learning projects. Key activity : - Intermediate Labour Market Projects (transitional employment schemes) - as part of the Bridge to Work initiative, a County-wide programme is in operation helping support the most disadvantaged unemployed people to secure jobs through the ILM initiative. Delivered in partnership with the District Councils and the Groundwork Trusts, the Programme has secured national recognition for its innovative and successful approach, linked in with mainstream service provision. The support of the CRT in the Coalfield area has allowed the operation of a small scale but none the less successful Social Enterprise Fund, again developed with support from the County Council. (d) Financial Exclusion Setting the framework for the strategic development of and thence financially supporting the establishment of alternative forms of finance and of maximising people s access to income and benefits. Key activity : - Credit Unions - Nottinghamshire County Council has pioneered the development of Credit Unions across the County and as testimony to its success, the North Derbyshire North Nottinghamshire Coalfield Alliance has supported the project s expansion into North Derbyshire. Page 4 of 8

5 (e) Co-operatives, Trusts and Employee owned Options Support accompanied where appropriate by grants or loans to businesses with wider social and community ambitions and those seeking successor options. Key activity : - Out-of School Care Co-operatives The financial support available through the Working Families Tax Credit is leading to an increased interest in out-of-school care clubs. Nottinghamshire County Council is pioneering out-of-school co-operatives which are proving highly successful in establishing and attracting participation from the more disadvantaged communities within the coalfield area. - Succession Planning for Small Businesses Nottinghamshire County Council offers assistance to business leaders looking to pass over ownership of their business. A key element of this support is the consideration of social enterprise succession options. The aim of this is to help sustain and grow social enterprises within the existing business community. 13. While his list stresses the wide nature of the County Council s much welcomed existing activity it also asks questions about its focus when supporting such activity. The Wider Context 14. Outside of the County Council s own activity across Nottinghamshire, the activity of others in this field is patchy and where it exists, is generally restricted to action at the margins, largely under the Community Engagement work mentioned under (a) above - and more usually than not, has County Council support and direction. But this shouldn t be too surprising. Even though few disagree with its potential, nationally, outside the activity of the large mutuals and co-operative societies, the social enterprise sector cannot be considered a strong one. While there has been much publicity surrounding social enterprise and its potential for impacting on the social inclusion agenda, examples of well established social enterprises are relatively few and it is often the same examples that are widely quoted in support of the sector. 15. In a joint initiative with the Development Trusts Association and the New Economics Foundation, the Local Government Association has attempted to prompt debate and increase awareness by publishing results of a survey and case studies - on community enterprise in public service delivery ( It Takes Two to Tango April 2002). Examples of this in Nottinghamshire are few and far between, an exception being the Homecare Co-operative at Ollerton. The Division has previously promoted wider possibilities within the authority to little avail. There may be some possibilities to explore this further and certainly the Government is keen to encourage this. 16. As a relatively new sector of the economy, much attention has been given to how it is best developed and resourced. A number of local authorities see the promotion of social enterprise as an area of work in its own right, establishing specifically defined posts or more radically, setting up in-house social enterprise units or funding external agencies. London, Bristol and Durham all have Page 5 of 8

6 identifiable and individually branded units. It is not clear yet how successful these units will be; much of their initial activity has been concerned with marketing and training. 17. Our own experience over time (including reference to the former Co-operative Development Agency work) has shown that it is difficult to distinctly separate social enterprise activity from other areas of work. Apart from trading cooperatives and employee owned businesses, social enterprises form part of a wider approach to community regeneration and do not allow themselves to be supported in a discrete, stand alone way. Examples of this include Boughton Pumping Station and the Coalfield Community Landmarks projects, where social enterprise activities includes a crèche, training, advice and information, a cafe, shop and banking facilities for example. 18. This pattern of interdependence is likely to continue. The desire to operate at a neighbourhood level will generate further demand for devolved local regeneration plans involving a number of partners around increasingly clearly designed bidding and funding packages - and many of these bids will inevitably include a social enterprise theme. 19. In summary, where social enterprise is being developed in Nottinghamshire outside of the County Council, it is highly localised; by default developmental and hence time-consuming and is founded generally around the principle of social and community cohesion rather than offering a credible, sustainable economic alternative. 20. This process is difficult to control and the County Council needs to be clear how intensively, if at all, it is to support such activity and where its energies might best be directed. As a pointer, most commentators suggest the following factors as being the key building blocks for developing the social enterprise sector : Creating the means for investment within the sector at different levels; Building partnerships with the private sector for mutual benefit; Creating assets for the sector which provide a means of (ultimately) independent income; Opening up the public procurement process to social enterprise possibilities; Developing leadership and expertise within the sector; Promoting the benefits and possibilities of the sector; Taking some (sensible) risks and piloting initiatives; Co-ordinating the support available to the sector; Developing better means of evaluating impact. 21. Conclusions reached from other studies on what social enterprise needs (eg the Countryside Agency draft work Mapping Social Economy in the East Midlands, the emda sponsored Social Enterprise East Midlands strategy) and now the Government s own Strategy all appear to tally nicely with our own understanding of the sector in Nottinghamshire. The SEEM initiative provides a strong regional framework for the further development of social enterprise across the East Midlands and the County Council has supported its establishment and its early development work. Page 6 of 8

7 Social Enterprise the County Council s Direction 22. Given that social enterprise is recognised as a good thing and hence a good thing for Nottinghamshire and there is a strong understanding of what might best support its further growth, the attached Table sets out an Action Plan to achieve this. To identify the wider social economy as a separate sector for whole scale support is arguably prescriptive, inappropriate and inflexible. The sector itself is too diverse to benefit from a standardised, common package of support. 23. In addition, as illustrated, there is much already successfully taking place at all levels which has a specific focus, is discretely managed but that has links across the Division and into other Departments witness the Credit Union Initiative, the ILM Programme and the CCL Scheme. This paper doesn t seek to present anything that interferes with this other than offering some thoughts on its better co-ordination and better external linkages to achieve critical mass, some better economies of scale and positive publicity for our services. 24. A further important context comes with the completion of the County Council s Economic Development Strategic Framework. Aside from the direct reference to the potential of social enterprise to play a key role in stimulating enterprise and innovation, there is significant potential to support the development of clusters of activity across the County. 25. Notably, three clusters appear to have a significant social enterprise perspective the care (home and childcare) sector; environmental (waste minimisation and re-cycling) and perhaps less a cluster, more a theme, the wider rural, market towns, farming and access to services related issues. Certainly the care and environmental sectors, with their links to mainstream service delivery suggest the County Council could play a lead role in exploiting this potential. Wider, the recently published Treasury cross-cutting review on The Role of the Voluntary and Community Sector in Service Delivery (Sept 02) offers a route to reinforce social enterprise activity through a different relationship with the voluntary and community sector. This too may offer opportunities in the medium term, perhaps aligned with the procurement theme being addressed through the Nottinghamshire Improvement Plan. 26. It should be stressed of course that the County Council s involvement in the previously mentioned range of initiatives allows us to draw some strong conclusions as to the type and focus of any potential support for social enterprise. The work in developing the Out-of-School Co-op model and the CCL Scheme for example has demonstrated a strong demand for specialised support on enterprise development, on finance and legal structures. There is little if any evidence that a focus on land and property is required. There is a quantity of managed workspace available across Nottinghamshire and there is a planned expansion of the innovation centre concept which will make additional workspace available but these are not focused on social enterprise activity. In summary, at the present time, there is limited evidence of demand for such facilities or of a land and buildings approach reaping any particular rewards. 27. Our conclusions drawn from this and other projects are straight forward. Social enterprise can be stimulated by four things an increased awareness of the Page 7 of 8

8 sector; quality, tailored technical advice and support; finance and finally, the exploration of linkages with public service delivery. 28. The County Council can draw on staff resources to support the wider social economy particularly from the Regeneration Division and Community Services Department. Much of this is however dedicated resources to particular initiatives for example, 3 full-time staff responsible solely for the development of the Credit Union project. The lead role on social enterprise issues comes from within the Development & Programmes Team as part of staff s wider responsibilities but with the support of colleagues as appropriate from the Business Support side. 29. Related to this lead role, financial support to social enterprise has hence come principally from Economic Development with opportunities to match secured from various external funding opportunities, notably the Objective 2 Programmes, the SRB Programmes and the Coalfield Regeneration Trust. There are however the resources drawn from the former Nottinghamshire Co-operative Development Agency, amounting to just short of 200,000. Its future use for social enterprise related activity has been agreed by members. In addition, the County Council has secured EU match-funding against this amount through the Coalfield Alliance Objective 2 IFE to help deliver the Social Enterprise Action Plan. The Social Enterprise Action Plan 30. Given this expertise, the already intensive development of key aspects of the sector within Nottinghamshire and the (relatively limited) resources on which to draw, the Action Plan concentrates its energies upon the following four areas : 1. Developing the leadership, advocacy and expertise role to promote awareness of the potential benefits of social enterprise across the County; 2. Co-ordinating and delivering practical advice and support to existing and potential social enterprises across the County; 3. Providing finance to support the development and growth of social enterprises; 4. Exploring the possibilities of allowing social enterprise growth through the different delivery of County Council services, through the public procurement processes or through spin offs from its mainstream activity. This can be under-pinned by a better means of evaluating impact and hence direction of social enterprise in Nottinghamshire. Broken down by the above four areas, the attached Table sets out the action to be pursued. Geoff George Coalfield Regeneration Manager Regeneration Division December 02 Page 8 of 8

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