UK Regional dissemination workshops
Caterham Research Dissemination Workshop 24th May 2007
RESOURCE CAPACITY AND FUTURE SOCIAL ENTERPRISE DEVELOPMENT
- INTRODUCTION
The Sustainable Development Research Centre (SDRC) is the research partner to the Benefiting the Economy and Society Through (BEST) Procurement programme, which is part funded by the European Social Fund under the Equal Community Initiative Programme. Action three of the programme is to disseminate the research undertaken through a series of dissemination workshops in each region of England, one in Scotland and one in Wales. Each of these will discuss one of five themes: Agents for Change; Health Markets and Social Enterprise Development; Influencing the Demand Side; Resource Capacity and Future Social Enterprise Development and Business Effectiveness. Each workshop will bring together BEST Procurement Programme development partners and local people involved in the supply and demand sides - providing a forum for them to discuss their experiences of social enterprises and procurement.
- THE CATHERHAM WORKSHOP
The Caterham dissemination workshop was held on the 24th of May 2007 at the Officers’ Mess of the Caterham Barracks. The theme for the workshop was Resource Capacity and Future Social Enterprise Development. Speakers and delegates at the workshop included representatives from SDRC, the Development Trusts Association (DTA) and local social enterprise.
The workshop consisted of two sections – the first comprising a series of presentations on various issues pertaining to the theme of Resource Capacity and Future Social Enterprise Development. Delegates listened to presentations on the demand side from the perspective of the BEST Procurement Programme in the East Midlands. They also heard from a local representative who discussed the range of resource capacity issues pertaining to social enterprises. Delegates were also informed of the research carried out by SDRC and presented with a case study from the East Midlands of a social enterprise that sells to the public sector.
The second part of the workshop comprised an open discussion involving all participants and focused on the workshop theme. As a primarily participant led discussion, this provided an opportunity for delegates to share their good and bad experiences and discuss issues important to them.
- ISSUES RAISED – RESOURCE CAPACITY
The remainder of this report summaries the main issues that emerged from both the presentations and the group discussion at the Caterham workshop. Although the delegates were predominantly from the South East, both local- and nationally-relevant issues emerged. Delegates discussed, in particular, the current and future ability of social enterprises to win public sector contracts.
3.1 RESOURCE CAPACITY – A BARRIER TO CONTRACTING WITH THE PUBLIC SECTOR
Delegates discussed the resource capacity issues that are faced by social enterprises in terms of being a barrier to them winning contracts with the public sector. It was felt that there is a general assumption made at various levels, from national government down, that social enterprises have the ability to enter procurement relationships with local authorities. However, delegates felt that this is a generalisation and despite government rhetoric and funding streams contributing to the notion that social enterprises should be winning public sector contracts, the staffing and capacity levels of many social enterprises mean that they fall well short of being able to do so. It was mooted that many social enterprises are simply too small to work with local authorities.
Delegates felt that there are various sections of both the public and social enterprise sectors that need to realise that whilst some social enterprises are capable of contracting with the public sector there are others that will not be able to and will not want to.
The workshop discussion highlighted that successful social enterprises require large inputs of human capital in terms of energy and resources. Therefore, many social enterprises experience resource capacity problems when faced with the time needed to prepare a tender application to the public sector. The time spent working on a proposal can be detrimental to a social enterprise because it takes a worker away from their normal task within the enterprise and the organisation itself must bear the cost of this.
Delegates also discussed practical examples in which the resource capacity of social enterprises had been stretched whilst trying to compete for contracts with the public sector. An instance was discussed in which a consortium of local organisations had formed to write a proposal. After expending considerable time and effort on the proposal, including journeying a substantial distance in order to make a presentation, the consortium did not win the contract. They were left with the feeling that the contract went to the type of large, nationally-known organisation that is regularly awarded contracts, without much consideration of their proposal.
Such instances leave social enterprises wondering whether it is worth them spending time on proposals when they feel the award of the contract is almost a foregone conclusion, not in their favour. It was felt that local authorities need to change in their approach to contracting, and not always go with the perceived safer option. This led to delegates mentioning that local authorities are risk averse, which makes them less likely to contract with social enterprises if they are uncertain about their ability to fulfil a contract. However, it was discussed that people in general are also risk averse.
Delegates postulated that a possible solution to reduce the amount of time required for the preparation of tenders would be for social enterprises to write their own contracts, outlining what they could provide to the public sector, and then present these to the public sector for their consideration.
Resource capacity issues also prevent social enterprises from bidding for public sector contracts if the contracts offered are on a particularly large scale. Delegates noted that the South East England Development Agency’s (SEEDA) Sustainable Business Strategy outlines how they envisage the way ahead for the region. It was discussed that social enterprises are not explicitly mentioned but are considered if one reads between the lines. However, it was discussed that SEEDA wants suppliers to operate at a regional level and it was felt that there are no social enterprises in the area local to Caterham that can supply on this level. Although some social enterprises in the area have started creating consortiums it was felt that even these would be unable to supply at the regional level.
3.2 OVERCOMING RESOURCE CAPACITY BARRIERS
As well as noting the difficulties of resource capacity that are experienced by social enterprises, delegates also considered some ways of overcoming these barriers. It was raised that there is a useful tool for social enterprises to use on the South East Excellence website. By asking questions that walk through the organisational structure of an enterprise, the tool writes up information that a social enterprise can use when tendering for a public sector contract. It was felt that this makes the procurement process a lot easier for social enterprises to deal with. It also enables the organisation to consider whether they are capable of procuring with the public sector or not.
It was felt that contracts and communication networks are the key to successful social enterprises. Often the people who run social enterprises find it hard to spare the time to attend network meetings because human resources are so precious within the organisation. It was suggested that social enterprise workers find it hard to do both the networking necessary for a successful business as well as the day-to-day running of the business. However, it was felt that if some time could be spared for networking events it would benefit social enterprises in the long-term.
It was raised that there are few social enterprises in the South East because of the amount of wealth in the area. There are geographically specific pockets of deprivation, however, where social enterprises do operate. It was felt, however, that the orientation of the South East transport network is towards connecting places within the region with London rather than with each other. This means that there are poor transport links between the areas within the South East in which social enterprises are currently operating. This hinders the formation of social enterprise collaborations. It also restricts the market opportunities that are available to social enterprises – once a social enterprise reaches a certain level of trading within its local area and is looking to expand it is difficult to do so because the suitable area for it to expand its trading activities into will not be well connected to it in terms of transportation. Therefore, delegates felt that there were particular resource capacity barriers for social enterprises within the local area.
- ISSUES RAISED - FUTURE SOCIAL ENTERPRISE DEVELOPMENT
4.1 THE POLITICAL CONTEXT
It was believed that a problem for social enterprises in the South East region is the very structure of local government. There are, for example, no services commissioned locally by the local authorities. Contracts tend to be large and co-ordinated by the county council, which implies the collaboration of eleven districts. This presents problems for future social enterprise development in the area because it makes it difficult for such organisations to become involved in public procurement in any meaningful way that could sustain or expand their organisation. It was felt that the public sector lacked any strategic planning to look at services that could be supplied at a local level more successfully. If this was done, it may provide increased opportunities for social enterprise development within the local area.
The workshop also highlighted that the party political make-up of local authorities may impact on the potential for social enterprises to develop within the South East. In particular, it was suggested that there can be political reasons for local authorities not to work with social enterprises. Delegates noted that many local authorities in the South East are Conservative-led and this may hinder their propensity to adhere to Westminster (Labour) led policies and initiatives such as sustainable procurement (that directly and indirectly encourage the public sector to buy from social enterprises). This has wider implications for the UK as a whole because it suggests that the political make-up of local councils may have some sort of correlation with the degree to which social enterprises contract with the public sector.
4.2 MAINTAINING SOCIAL AND ENVIORNMENTAL GOALS
Delegates pointed out that social enterprises sometimes find it difficult to maintain their social and environmental goals as well as successfully pursue a procurement relationship with the public sector. It was thought that some social enterprises are being forced to look towards procurement as other funding streams run out, purely as a strategy for survival. This can happen if grant money, such as government funding, fails to get to where it matters. Delegates felt that often by the time grant money reaches its destination, it is not the amount that was originally intended and is generally not worth it. Therefore, as social enterprises feel compelled to engage with procurement, it was felt that their service provision could become secondary. It was questioned as to how far a social enterprise should stray from its original social or environmental goal in order to sustain income.
4.3 BECOMING SUCCESSFUL BUSINESSES
It was pointed out that because social enterprises are designed to be profit-making there is a necessity for them to be run as businesses. However, delegates related that in their experience it is unusual for the people involved in running social enterprises to actually acknowledge the fact that they are involved in a business. It was discussed that for a social enterprise to operate as a business, it is necessary to have a business mind set, but it tends not to be business people who run social enterprises. In many cases they come from a background of, for example, a charity trustee, and this often means that they are wary of taking out loans for the business. It was also felt that social enterprises need to be willing to take a risk if they are going to undertake contracting with the public sector.
There was a suggestion that social enterprises would benefit from being provided office space in the heart of a commercial business building. This means that there would be infrastructure for social enterprises where they can be supported by commercial businesses.
4.3 BUILDING RELATIONSHIPS WITH THE PUBLIC SECTOR
It was discussed that for social enterprises to work with local authorities it is necessary for them to develop a relationship. In relation to this point, it was raised that many social enterprises are subject to service level agreements, whereas the private sector does not tend to need these. However, it was felt that council workers did not have a shared vision of procurement and would habitually give grants and not label them as service level agreements.
It was felt that social enterprises need support from local authorities, particularly in terms of identifying the people that they need to approach in order to be able to work with the public sector. It is necessary to build the market for social enterprises and to raise awareness of the benefits social enterprises offer. Delegates felt that the benefits were not currently fully appreciated by the public sector. It was intimated that some delegates had been in contact with public sector employees who did not understand the nature of a social enterprise – with a misconception being that social enterprise is a legal structure. It would be beneficial for social enterprises to explain to local authorities exactly what a social enterprise is – this could be achieved through a series of awareness raising workshops with the right people, such as procurement officers.
5.0 CONCLUSIONS
This workshop highlighted that resource capacity is a major issue faced by social enterprises in general, and particularly those wanting to sell to the public sector. It appears that the resource that is most often stretched within social enterprises is that of human capital. In particular, the time needed to prepare tenders for the public sector presents problems for social enterprises.
The delegates at this workshop highlighted that social enterprises should not only focus on tendering for public sector contracts because not all organisations will be able to provide what the public sector requires. It remains open for debate as to whether social enterprises that are not winning contracts with the public sector are failing do so purely because of capacity issues or whether the social enterprises are not supplying the goods or services that are relevant to the public sector.
AUTHORS
Sarah-Anne Munoz (MA, MSc, PhD), Researcher
Heather George (BSc), Research Assistant
Sustainable Development Research Centre
Horizon Scotland
The Enterprise Park
Forres
Moray, IV36 2AB
01309 678111
Sarah-anne.munoz@sdrc.uhi.ac.uk
http://www.seeda.co.uk/Publications/Sustainable_Development/docs/SustainableBusinessStrategy06-09.pdf
