From the moment I found out about the opportunity to become the CEO of Midlands Together CIC I was hooked.  The ‘idea’, already pioneered in Bristol, had an attractive simplicity to it and I quickly found myself referring to it as ‘a flash of the blindingly obvious’.   The model is simple. We buy empty and sub-standard homes and work with social enterprise partners to engage ex-offenders to repair, refurbish and restore these properties, which are then sold. The original capital, plus any profit, is re-invested back into the business to finance more property purchases and further job creation.   What’s not to like about running a commercially profitable property development operation with the intention of having a positive impact on the lives of a disadvantaged workforce, using the profits they help to make to invest in the support and mentoring we know they are going to need, given where some of our employees are starting from.

To a social entrepreneur like me, who comes from a commercial property background, this was the ideal opportunity to demonstrate ‘it is easier to socialise the commercial than commercialise the social’. Often organisations delivering great social impact have to rely on their staff, many of whom may be volunteers, going the extra mile, to get their outcomes. Charging a vulnerable or disadvantaged client for a service they know is desperately needed would not come easily to such people. If, on the other hand, funding the key activities that really make a difference can be seen as ‘investment’, it will attract the attention of people who are accustomed to creating value.

Once selected for the role, I worked with Triodos Bank to shape the business plan for the Midlands operation. In Bristol the idea had initially been backed by a small group of sophisticated private investors, but to achieve the scale of investment required to finance a regional model, the offer needed a wider audience. Triodos’ Corporate Finance Team brought the social investors to the table including some significant new players and I was able to pitch the opportunity face to face. The investment opportunity was also promoted in the financial press and amongst their socially aware depositors. The result was that the £3m offer was oversubscribed and we closed the bond 100 days after the launch.   Midlands Together was able to hit the ground running with a size and scale not often seen in the world of social enterprise start-ups. The Bond has a five year life which means we have time to make a real difference and build a sustainable business with a track record that could take us into the mainstream.

The capital enables us to create jobs, bring empty properties back into use and facilitate the employment of people who have been in prison. Offenders often leave prison with no permanent address, a history of substance abuse, literacy challenges and limited employment histories, all of which present huge challenges for living a crime-free life. A staggering 58% of short sentence adult offenders re-offend within 12 months of release.

We are working on four projects with three partner social enterprises currently on site. We have created 16 new jobs, will be creating 30 new homes once our current schemes are complete and none of our employees have re-offended. Over the five-year life of the Bond, we will have trained 100-150 ex-offenders and prepared them for a career in the construction industry.   Our investors are receiving a healthy financial return, while base rates remain low, and have the added benefit of knowing their funds are financing measurable social impact and great social value.  When the Bond matures in October 2018 we shall repay their funds and they can look for their next opportunity to back a “good” business idea.    

* This blog was originally published by Big Society Capital.

Hands up who understands what is meant by the expression ‘social value’? If you work in the third sector and social enterprise sector you’ll either be grappling with how to implement and monitor it or sticking your head in the sand and hoping it will go away. But for the time being it is here to stay and we have to make the most of it.

For the past two years Birmingham & Solihull Social Economy Consortium (BSSEC) has been delivering a Barrow Cadbury Trust-funded project aimed at identifying meaningful ways of implementing the Public Services (Social Value) Act 2012. The Act, for those of you not familiar with it, requires “public authorities to have regard to economic, social and environmental well-being in connection with public services contracts; and for connected purposes”.

BSSEC has worked jointly with Birmingham City Council and other public service commissioners to support the implementation of social value, providing briefings, resources and free workshops for social enterprises and trading voluntary organisations to help improve their ability to compete within the terms of this new legislation.

LOCAL AUTHORITY PROGRESS

Many local authorities have made good progress in putting in place practical arrangements to embed social value-based approaches in their commissioning and procurement procedures.

But they are not implementing social value as a stand-alone policy. Rather, it is being utilised as part of a wider response to the current pressures under which local authorities are operating – government spending cuts, decommissioning services, making efficiency savings, reducing the demand on services, and becoming primarily service commissioners rather than service providers. Efforts are also being made to align social value with existing corporate priorities, processes and key policy drivers and the following have become central to shaping social value priorities amongst councils:

• Targetted employment, apprenticeships and training opportunities.
• Strengthening local economies and ‘making the local pound work harder’.
• Avoiding ‘exporting jobs’ as a consequence of buying outside of authorities’ catchment areas.

Local authorities making the most progress on social value are taking bold approaches that go beyond the minimum requirements of the Act. Rather than applying social value only to service contracts above the EU procurement thresholds, which is all the Act requires, they are applying the legislation as widely as possible, to both services and goods, to all contract values, and to all providers.

Evidencing and measuring social value remain the least developed parts of the process and most authorities (and social enterprises, for that matter) are adopting a ‘wait and see’ position on measuring social value. There are a number of reasons for this:

• It is still very early days and few contracts have progressed to the point at which evidencing requirements can be reviewed or checked for effectiveness.
• Providers and purchasers lack not just standardised methods for measuring and reporting social value, but also a shared language for articulating social value.
• There is still some doubt regarding not the just the type of evidence commissioners want, but also what they wish to measure and report.

Reduced staff capacity within local authorities also means that too little is being done to assess whether transferable evidencing and monitoring methods might already exist in other parts of their organisations.

KEY ISSUES FOR SOCIAL ENTERPRISES

Many social enterprises don’t know where to start in adopting a social value measurement method. They don’t know what information to collect, what to measure, what information commissioners will find most meaningful, what method is most suited to their size and type of organisation, or what the costs of implementation might be. The bewildering array of courses, methods, tools, consultancy offers and proprietary systems purporting to measure social impact and social value make it virtually impossible to make a decision. Two recently launched websites alone – Inspiring Impact , which is backed by the Cabinet Office, and the Social Value Hub , which is an initiative of Social Enterprise UK – contain hundreds of outcome measures, impact tools and reports.

Fortunately for us, the Centre for Citizenship, Enterprise and Governance (CCEG) is currently undertaking work to assess how public authorities are implementing the Act and by Autumn 2014 there should be an ‘official’ UK social value portal which could include guidance and recommendations.

DEFINING SOCIAL VALUE

For many social enterprises the problem is not so much measuring social value but articulating and describing their social value. Many social enterprises struggle to describe what they do and the social benefit they deliver. They lack a defined, agreed corporate statement regarding their social value that is understood and used by all staff at all levels throughout the organisation. Achieving this is not the icing on the cake, but it is a good starting point and would help many to begin the process of identifying a suitable social value framework – including appropriate social value indicators and evidence – specifically for that organisation.

Our experience suggests that those enterprises fewer than around 25 staff are struggling because they don’t have enough staff to dedicate sufficient time and effort to social value and impact measurement.

There is a risk that a disproportionate burden of data-gathering and evidence will fall predominantly on the shoulders of suppliers. This would severely disadvantage smaller social enterprise and third sector providers (and smaller SMEs too). The Third Sector Research Centre recently published a report voicing precisely this concern.

PARTNERSHIP WORKING

Whatever regimes for measuring and reporting social value local authorities adopt must be proportionate and ‘do-able’ and should ideally be a joint effort between public service commissioners and the sector. Anything over-complicated or disproportionate is likely to erode rather than create social value. This makes continuing work to support social enterprises and trading third sector organisations in their social value practices of even greater importance.

Social enterprises and third sector organisations in Birmingham should take this early opportunity to sign up to the Birmingham Business Charter for Social Responsibility. The Charter is still in its infancy and early adopters are likely to be  able to influence both it and the subsequent monitoring that will be required from businesses reporting against their Charter action plans. While the Charter is not solely concerned with social value, it has become Birmingham’s main tool for a social value focus and guidance. Social enterprises should get cracking and start signing up to the Charter – they shouldn’t leave it to the private sector to lead on the Charter, as is the case at the moment.