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The place of social enterprise in the new welfare state

Jeff Trexler | Thursday 6th August 2009

One traditional understanding of charity is that it serves to lessen the burdens of government. It's a seemingly innocuous enough notion--as with its deceptively prosaic cousin, the notion that a tax exemption or deduction is a tax subsidy, it sounds like a common sense idea--but as applied it tends to raise uncomfortable questions.

A big 'un is the question of whether charity deserves support for any purposes or projects outside the government's own agenda--after all, if a charity is supposed to be performing government functions and the tax privileges that help fund it are essentially government grants, tolerance for risky disruptive innovations tends to be relatively low.

As the political pendulum swings back to government away from the private sector, it's been fascinating to see how social enterprise is being re-imagined as an extension of government aid. It's a subtle but significant shift from just a decade ago--heck, a year ago--when social entrepreneurs were said to have the answers that governments & nonprofits lacked.

Case in point: Scott Allard's essay on social enterprise in relation to his new book on the geography of current government social programs. Allard gives the usual huzzahs to social enterprise, but as usual, the caveats are where it's at. The real point of his analysis is what he says that social enterprise is lacking and how it needs to "fit within and strengthen the existing safety net."

Yet, we should not view social enterprise as a magic bullet. The financial institutions located in high-poverty communities may not be a good fit for this type of enterprise. . . .

Social enterprise also does not remove the need for other safety net programs. Most social enterprise cannot provide the health care, access to affordable housing, child care, quality education, and transportation resources necessary for low-income families to weather temporary economic setbacks or achieve permanently higher economic trajectories. Moreover, many startup businesses fail or fail to generate significant income, which leaves the owners and workers economically vulnerable. Even with more entrepreneurial approaches in place, there remains a need and a role for the public safety net to help working poor families overcome barriers to employment and well-being.

These concerns, however, do not outweigh the potential impact of social entrepreneurship. Social enterprise should be a prominent tool in any community's antipoverty toolkit. Instead, we should be asking ourselves whether we are training the next generation of nonprofit leaders, social workers, and policy experts to think not just about creative entrepreneurial solutions, but how they fit within and strengthen the existing safety net.

If social enterprise is just another tool in the communal toolkit, is it really social entrepreneurship?

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Jeff Mowatt 15 November 2009

Jeff, You may be aware that the NHS in the UK is putting much effort into encouraging social enterprise.. We're actually a for-profit social enterpise services business with some NHS customers. The Social Enterprise Investment Fund (SEIF) excludes our type of enterprise. There have also been problems with encouraging staff to leave NHS jobs to set them up because of pension transfer issues. For many on the traditional left, it's being interpreted as healthcare on the cheap.

Otherwise I see the benefits. For example ad a distributor of an EHR product from Bangladesh, there's an opportunity to develop the economy there. The product serves social benefit to the health industry here and returns us an income. The surplus invested in our social project in Eastern Europe which aims to leverage social enterprise there is the final dimension.

http://jm.ly/4PgNdI

Getting anyone else to see it this was proves somwhat difficult.

Jeff

Nick Micinski 10 August 2009

Social enterprises are capable of addressing problems where there are markets or trading can get at a solution-- charities are needed when markets fail or there is no trading option. Neither charities or social enterprises should be the puppets of a government agenda; both have their place within civil society because of their particular strengths and weaknesses.

I think what your suggesting is that social entrepreneurship has to be outside of the box, innovative thinking that shouldn't be in any toolkit... rather it hasn't been thought of yet because it has to be new and specific to a particular problem. Although that may be the entrepreneurial spirit, some social enterprise standards should be pushed in economically deprived or socially excluded communities.

What I worry about more are charities branded as social enterprises or social enterprises that are chasing government grants-- I think that undercuts the very thing that makes social enterprises innovative.