One hilarious blog about groups of people getting together to carry out activities that are not primarily focused on return on investment – do these organisations even exist?

As some readers will be aware, many of the UK’s charities and social enterprises are currently pretty cheesed off with the support on offer from the government in response to the global public health crisis.

It’s certainly annoying that charities and many social enterprises are unable to access the £10,000 grants available to small businesses – not for any specific impact, just to generally support their continued existence – because these grants are being administered via the business rates scheme. In the case of my organisation, this would amount to around 5% of our annual turnover. 

But this annoyance is nothing compared to the mixture of anger, confusion and disbelief that many social organisations feel about the government’s ‘furlough’ programme – otherwise known as the Coronavirus Job Retention Scheme

Under this scheme the state will pay 80% of employees’ wages and related costs (yay!) on the condition that they don’t do any work (oh, shit). In our case we have the opportunity to receive £9924 per month in public money if our staff do nothing, while receiving £0 if we continue to publish community newspapers providing vital public information to our local communities – an activity a cabinet minister recently described as ‘vital’. 

They go furlough, we go hire each other 

Of course, ministers and civil servants are reacting quickly to a massive problem under a huge amount of pressure and it’s not surprising that the initiatives they’ve created are not perfect to begin with. However, in this case, despite being repeatedly informed of the problem for several weeks, no moves have been made to resolve it. 

Instead, with furloughed employees allowed to ‘volunteer’ for organisations other than their own, the situation has reached a position that defies location on the tragic/funny/stupid continuum as charites are being forced to consider schemes to swap their furloughed staff

Her Majesty’s Treasury has so far failed to explain their reasoning and we know that it’s possible to create a job retention scheme that enables employees to keep working (if they want to and are able to) because the Australian government has done it. While Australian social sector leaders have requested improvements, the current offer is a staggeringly better deal for charities and social enterprises than what’s available in the UK. 

Go big or go down the route pursued by most businesspeople 

While the UK government’s furlough scheme is not an actively bad intervention – quite the opposite, it’s an honourable attempt to safeguard people’s jobs that works well for many companies – it is rooted in a flawed understanding of how business works, at least at a micro level. 

Charities and social enterprises are caught at the sharpest point of the sharp end of this problem but the idea that business people are only interested in carrying out business activities because those activities lead to the generation of profit is profoundly mistaken. 

Very few people start businesses – structurally ‘for profit’ or otherwise – with the intention of becoming multi-millionaires by floating their company on the stock market. In 2013, even in a country where venture capitalists (VCs) are treated like heroes, 1 in every 2000 US businesses was raising finance from VCs to pursue the dream of an IPO

There are wider questions about the possibilities for other types of larger business pursuing ‘shared value’ or even ‘profit with purpose’ but, at a basic level, everyday experience suggests that the average business is not the greed machine you read about in the economics textbooks. 

Most of us know plenty of people who run their small businesses because they enjoy doing the activity that the business carries out, and like to be both appreciated by their customers and respected by their friends and family because they provide a good service. This is also true of many people who work for small (and larger) businesses. 

Profits are important – businesses obviously can’t lose money on an ongoing basis – but for large numbers of people they’re not the reason why they get out of bed in the morning. 

So while the UK’s government furlough scheme is perfect for bars, restaurants and theatres that have literally to shut, it’s not such a great fit for businesspeople – whether they’re greengrocers, yoga teachers or gardeners – who are both willing and able to carry on providing some services to people who’d like them while observing social distancing but find these activities are no longer profitable*. 

Ultimately the scheme is based on the premise that the only two kinds of business activities are: (i) activities that generate profits and (ii) activities that should not happen. 

Bankrupt thinking 

Ironically, in recent times the prominent UK politician most closely associated with this utterly stupid idea has been the recently departed Labour Party leader, Jeremy ‘Jez’ Corbyn. 

Here he is just a few weeks ago lambasting private hospitals for charging the government for beds they are providing to support NHS treatment during the Covid.

“It’s disgraceful that private healthcare companies are making a profit out of the coronavirus” he storms. Before adding: “The beds should be used by the NHS. Rent free.”

Maybe it’s too late to raise this issue now we’re beyond the point where he was putting himself forward as the right man to RUN THE ACTUAL FUCKING COUNTRY but y’know Jez, profits are the money that businesses get paid over and above the cost of providing the service. 

What do you think, Jez, some of the costs involved in providing a hospital bed might actually be and – showing your workings – could you talk us through how you have arrived at the position that £300 a bed represents profiteering? It’s probably best to just let him go back to the allotment and forget about it all. 

This is one of those – not entirely unusual situations – where the only people who believe a theoretical position to be the practical reality are its strongest advocates and its strongest opponents. Both right-wing libertarians and left-wing anti-capitalists believe business is all about (delete as appropriate) heroic/evil business people making loads of money and in doing so either (a) creating wonderful dynamic economies or (b) exploiting ‘the 99%’ and making our lives as bad as possible in the process. 

Who let the dogma out? 

The actions of Chancellor Rishi Sunak in recent weeks suggest it is highly unlikely that he is a dogmatic right-wing libertarian in practice – but that ingrained dogma about the role of business is currently distorting the meaningful details of interventions that are fundamentally honourable and pragmatic. 

Economic dogma – to some extent enshrined in law – says that businesses are vehicles for profit when the practical reality is that they’re vehicles for action. People, and groups of people, form businesses to do things. Making some money, by whatever means happen to be available, is one of those things but does anyone, in real life, really believe it’s the most important one for most people? 

The reason why charities and social enterprises are the organisations most painfully skewered by this (probably) inadvertent ideological failure is that, for many of us, what is being done is ultimately more important than how it’s paid for. We openly and unashamedly exist in the interests of social action. While many of us ordinarily use 100% commercial models to support that action – it is the action that matters. 

At Social Spider, we publish independent community newspapers funded by advertising income because communities need independent local news. We love our advertisers and we’re proud to help local people find out about their products and services as part of our model – but we would have no interest in publishing newspapers that included all (or mostly) advertising and no community news. This would be pointless. For us, during the Covid crisis, our ability to generate income through advertising has collapsed but our ability to carry out social action would be the same (if we were allowed to pay our team to do it). 

The situation for charities is even more ludicrously obvious. If a charity has lost the means to hold fundraising to generate income to support homeless people, this has no impact whatsoever on whether the work which would have been funded continues to exist. 

Deep troubles 

While the UK government’s decision that businesses and jobs should be protected was clearly taken to safeguard the future of the economy, it also seemingly reflected a desire on the part of the ministers to prioritise the needs of citizens over and above conventional economic theory. 

Sadly, though, that conventional worldview is so deeply embedded that, as things stand, it is leading to the good intentions being thwarted. 

Whatever ultimately happens in terms of the government’s response to Covid, the Treasury’s rigidity on this issue exposes how inadequately it is prepared for a world where motives for commercial activity are necessarily becoming more complex – alongside a more urgent need to actively recognise complexities that have always existed but have too often been ignored. 

Battles for resources are not going away – but they’re going to play out in very different ways. The nature of work is changing and, as Kate Raworth and others have pointed out, it is no longer credible for the concept of economic success to be detached from environmental and social sustainability. 

At a basic level, it’s vitally important that we as charities and social enterprises fight hard for our specific needs and the right to stand with and support our communities through the Covid crisis – but it’s equally important that we see this challenge as an opportunity to make the case for a different approach to the economy as a whole: based on an understanding of life in all its messiness.

Leave a comment

Filed under Uncategorized

5 things we learnt when voluntary sector leaders asked the government for a funding deal to support charities and social enterprises through Covid – and what happened next didn’t blow our minds

Announcements about funding for the social economy are like buses on poorly-run bus routes. You wait ages for them to come along, and when they finally arrive they’re going to the wrong destination and they break down immediately. 

So, finally, Chancellor Rishi Sunak has given us this. On the plus side the support for hospices is genuinely good. Beyond that, if many in the voluntary sector – particularly spurned umbrella leaders – felt the Chancellor was insulting them by making them wait so long for his package of support, most are now wishing he’d made them wait longer

Very little help 

Given the estimates that charities are set to lose at least £4 billion in income during the first 12 weeks of the Covid lockdown, the £350 million allocated to small community charities (around 150,000 of them even if social enterprises are not included) seems a long way off what’s needed. 

The money is nowhere near enough for the small community charities – it would be amazing if it helped one in five of those that need it – and it ignores many larger charities (supporting millions of vulnerable people) entirely. 

It also stacks up particularly badly against the £585 million worth of business rates relief given to a single supermarket group (Tesco), who are about to pay £635 million in dividends to shareholders. 

Alongside this relatively paltry provision, the Chancellor has declined to make amendments that would enable charities and social enterprises who have lost income but still have similar (or increased) demand for their services to take advantage of his (generally very good) ‘furlough’ scheme to support workers. 

Why don’t you just piss off and do nothing?

The result being that many not-for-profit organisations – including my own – face the bizarre choice between receiving large amounts of public money to pay staff to do nothing, or attempting to carry on serving our communities while receiving no public money at all. 

The latter issue is the biggest of several which seem to demonstrate both government and wider society’s lack of understanding of social approaches to doing business* – with the result being that, far from receiving any special treatment, social organisations are currently actively disadvantaged compared to the average mainstream business. 

So, how have we reached this river of shit? Here’s five possible factors:

1. The Tories now like charities even less than they like trade unions

What was both impressive and surprising about Rishi Sunak’s package of support for business and employees was that it was clearly the result of extensive discussions with both business leaders and the TUC

Since the 1980s at least, Conservative governments have not been well known for their positive relationship with trade unions but the engagement on this occasion seems to have been genuine and meaningful – and it has contributed to the creation of a furlough scheme that works well for many thousands of businesses and millions of people (while not working for most charities and social enterprises). 

Given that the chancellor has taken such honourable and meaningful steps to reach out beyond his own party’s support base to shape interventions to protect so many employees, it’s sad that he – and colleagues – have chosen not to offer significant support to charities and social enterprises, either as part of that or alongside it. 

2. Government does not recognise the social economy as part of the economy 

As someone who only dips into policy debates about ‘the sector’ as a relatively small part of my wider day job, I have always regarded umbrella leaders’ concern that the voluntary sector has been parked in the obscure governmental siding that is the Department of Digital, Culture, Media and Sport as a niche moan. 

Who cares which Whitehall office civil servants are politely ignoring us from? 

Well, perhaps we should all start caring more because, while the Treasury shaped support to meet the needs of business (and many employees), there was apparently no one in the room to point out that there are at least 100,000 UK businesses which are no less businesses than others but which have social aims that have a significant impact on their business models. 

Aside from the Kafkaesque nightmare of the furlough model (from a social organisation’s perspective), many charities and social enterprises are also unable to access the £10,000 grants for small businesses – which are generally on offer to any business that operates from commercial premises. 

Our organisation is literally being penalised by an amount that equates to 5% of our entire annual turnover because we rent an office in a charitable community hub. 

It seems highly likely that the niche moaners may have been right after all. Either way, DCMS has now lost any credibility it ever had in terms of supporting and representing social enterprise and the wider voluntary sector. 

3. Much of wider society is either cynical about (or indifferent to) social economy organisations 

Covid has seen widespread public support for measures to help workers – in the sense that, despite voters having recently elected a right-wing government, there is no serious lobby against the Chancellor’s unprecedented support for jobs funded by a huge increase in public borrowing. 

This comes alongside a (positive and useful) ramping up of existing public support for the NHS demonstrated by a collective weekly round of applause, and multiple high profile fundraising initiatives. 

It’s been a different story for charities and the wider social economy. While many local people have enthusiastically volunteered for or donated to local charities as part of their response to Covid, there has been very little evidence of widespread public recognition of the collective role of charities and social enterprises in supporting the nation’s social infrastructure. 

Beyond people who work in the social economy, those expressing support for charities and social enterprises barely seem to outnumber those chuntering cynically about fat cat charity bosses being paid so much they can afford a car**. 

Individual chunterers aside, there are lots of justifiable reasons why members of the public might quite reasonably be cynical about some aspects of recent charitable behaviour – whether it’s the Presidents Club’s grotesque luxury misogyny in a good cause or Kids Company’s personality cult-driven  mismanagement.

But, while the public rightly seem to be able to distinguish between Philip Green’s management of BHS and the wider world of business, and (equally rightly) don’t blame everyone working in the NHS for the failings at Stafford hospital, negative views of charities – and perhaps social organisations more widely – seem to have cut through. 

It’s unlikely that a large percentage of our fellow citizens have an actively negative view of charities and social enterprises – and surveys suggest trust remains high – but it seems like the wider public mood towards is, at best, ambivalent. 

4. The Charity Commission’s policy stance has serious knock-on effects 

Once again, usually a relatively niche concern for those in the ‘the sector’ bit of the sector: recent years have seen ongoing (and possibly growing) disagreement between the Chair of the Charity Commission (the formerly Conservative peer, Baroness Stowell) and sector leaders about what charities are for. 

While she may have been doing other work behind the scenes, Baroness Stowell seems to have spent most chairship going round telling conferences and national newspapers that charities are really bad and need to improve. 

On the one hand, this reflects anger felt by large sections of the public – and most people involved with charities – about some appalling high profile scandals. And while it is telling that the Commission’s outlook contrasts with a notable lack of calls for ‘business’ to change their ways as a result of the behaviour of Philip Green, it’s perfectly reasonable for these kinds of points to be raised.

What’s more significant is the policy aspect that comes alongside it. Examples include Baroness Stowell’s comment that: “People want to see that what goes on in a charity is motivated by the same spirit of charity that prompts them to volunteer at a shelter on Christmas day, or sacrifice a luxury for themselves in order to make a larger Christmas donation.”  

Alongside the claim that: “… over recent years, we’ve seen charities losing sight of what they stand for in pursuit of organisational advantage. We’ve seen charities engage in pressure-tactic fundraising, supposedly justified by the money that raises for the cause. We’ve seen charities that should be working together instead competing for scarce resources.”  

These points represent a policy-based objection to the way that many charities currently operate. It is entirely legitimate for the elected government to appoint a Charity Commission who doesn’t agree with the way that charities operate but (described in less pejorative terms) all the practises she criticises here are – rightly or wrongly – realities of the current ‘market’ for charitable resources. 

Baroness Stowell’s rhetoric raises the possibility that part of the government’s reluctance to support charities (in particular) is because it doesn’t like the business models of the sector as it currently stands – and would be happy to see these business models experience creative destruction at the hands of Covid. Whether or not the Commission’s views about the changes needed are correct in the long term, this would be a very risky position to occupy in the short term. 

5. Social sector lobbying is well intentioned but (currently) ineffective – 

An awful lot of MPs have signed an awful lot of letters to ministers to get us to this point, NCVO chief executive, Karl Wilding has put the case to the DCMS select committee and some sector leaders have barely stopped tweeting to have their dinner – but it hasn’t worked. 

Despite the heroic efforts of Karl and others, on the basis of the gap between what’s needed and what’s been delivered, this is (so far) the least successful lobbying effort by the voluntary sector and the wider social economy since the word lobbying entered widespread usage. 

While cynics will inevitably say this is about not holding enough swanky Westminster receptions or paying for enough MPs to go on holiday to totalitarian states with lovely beaches, the TUC doesn’t do that either – and they have been able to get a good deal for most workers. 

Whatever it is that we collectively as the voluntary sector/social economy/charities and social enterprises (maybe the fact that I haven’t been to settle on one name for us through this blog hints at part of the problem) needed to make an effective case to government, we haven’t managed to do it. 

It’s a sorry state of affairs and the result is that – while as many as possible will try to find a way to keep going – 10s of 1000s of organisations are likely to go out of business, while many more will keep going but will never truly recover from the damage. And millions of people will miss out on vital social support that would otherwise have helped them make it through this crisis. 

At a time when, in many other ways, the government is doing so well in handling a horrific situation to best of its collective ability, the current offer represents a massive failure of policy and imagination that will neither be forgiven nor forgotten. But maybe it’s partly our failure too. 

 * I’ll look at that in more detail in a future blog 

**I do not have a car.


Filed under Uncategorized