Liam Black: Difficult times for social enterprises

Liam Black, co-founder of leadership development organisation Wavelength Communications, explains how the downturn is creating a harsher environment for social enterprises.

What is a social entrepreneur?

I think a social entrepreneur is anyone who brings to a social or environmental challenge the same sort of rigour, business acumen, energy, risk-taking that an entrepreneur in the private sector would bring to value creation. And I think there’s quite a broad spectrum of the sorts of organisations that social entrepreneurs deliver their work through. So if you imagine a continuum where at one end you’ve got organisations that are a hundred per cent funded by grant money and fundraised income, there are lots of social entrepreneurs doing some really good work there. As you move along the continuum to a hundred per cent earned income where you have social entrepreneurs running social enterprises and social businesses, I personally push the definition even further and say that the actual ownership model of the agency you are in is irrelevant. There are social entrepreneurs in charities, in social enterprises and in private businesses, big and small.

Has the economic downturn affected your business?

We’re in a situation where I have literally just come from a meeting with a potential client who offered us a juicy piece of work and we had to say no we haven’t got the capacity to do it. Despite the downturn we’re finding that there is still a big hunger out there for a different way of doing business that not only meets the financial bottom line but meets people’s aspirations to create some positive social value in the world too, from really big global companies to small neighbourhood social enterprises up the road here in Hackney. So it’s going really well and we’re loving it.

How do social enterprises get funding?
You need to appeal to… if you want to do any sort of deal, particularly if you want to do a deal between a social entrepreneur and a private investor or a private company you need to appeal to their self interest – what’s in it for me. What is in it for me personally, both financially and also in terms of time and also how I’m feeling about this and also what’s in it for my organisation. But if you just appeal to self-interest it’s not going to survive the tough times. But you need to appeal to goodwill as well. I really believe that there are very few people in this world who if given a chance don’t want to create some positive social value in this world. I meet very very few who don’t care about that. Everyone cares about that. Even if it’s only from a selfish point of view that you don’t want lots of young people running around London stabbing you. You know that’s got to be addressed and it’s a complex issue that needs all sorts of people addressing it. So we appeal to people’s passion, self-interest and we appeal to their goodwill. If you can do those three then you can create some amazing difference in the world and create things that are more than the sum of their parts. And I think that’s what social entrepreneurs are really good at, the best of them, is bringing different elements together and making something quite surprising and more than the sum of the parts. Social entrepreneurs are good at putting different things together in order to achieve their purposes.

Are things getting tougher for social enterprises?

There’s absolutely no doubt that in the field of social enterprise in this country since 1997 when New Labour got elected it’s been relatively easy for social entrepreneurs with respect to the government: there’s been plenty of money, there’s been a lot of political patronage all the way up to number ten, I think every social entrepreneur in the country now has been inside Downing Street and has had breakfast with either Blair or Brown and been told how wonderful they are. So it’s been relatively easy to do that. It’s not so easy anymore, the environment is a lot more hostile, there’s less money around and people are asking a lot harder questions about spending their pounds – should I invest it in you social entrepreneur, or should I give it to Barnado’s or Save the Children or whatever it is. So I think that’s having a number of effects. On the one hand it’s cutting the bullshit out and there is a lot of bullshit, a lot of hyperbole: social entrepreneurs are going to save the planet, social enterprise is the future of business; neither of those things are true and I think that they’ll be less room for that hyperbole in tough times. And also there is less money around, and I think the ones that will survive at the earned income end of the spectrum are those that are business savvy, are genuinely entrepreneurial and are offering something that people want because people are going to be a lot choosier. So I think there’s going to be a bit of a cull during this recession and although I think this will be painful for individual people I think overall in terms of the social entrepreneurship movement globally, and it is a global movement now, I think it can only be good.

Nick Britton

Nick Britton

Nick was the Managing Editor for when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...