A guide to third sector trading - WCVA

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It’s an idea, but is it business? A guide to third sector trading 1: Getting started 2: First steps 3: Business planning 4: Legal and governance 5: Funding and resourcing 6: Financial controls 7: Managing growth 8: Management and governance 9: Social enterprise 10: Sources of support − acquiring expertise as specialists in their fields (even in relatively mundane areas) adds to their range and attractiveness of what they sell. • They sell their skills as trainers, development agencies, advisers and consultants, ie they are able to realise a market value for expertise and experience (which increase as long as they are delivering other services). • They are good for the public sector to invest in: − they give good returns in public service when they receive assets, contracts, grants, new responsibilities and encouragement − taken as a whole an expanding third sector trading organisation which is becoming more sustainable is a relatively good investment: not everything succeeds, but its diversity ensures that it will not disappear overnight − unlike non-trading community regeneration and community development organisations, the return on this investment increases exponentially over time after a usually slow start. Other models of development: Different patterns of growth: The ‘growth point’ version of development applies mainly to robust multifunctional organisations and partnerships, such as development trusts, which have the scope to be flexible. But there are other models which show quite different characteristics and which tend to be judged by different standards. Here are a few examples. When growth prospects are more limited: Charities providing social services for more narrowly defined groups of people such as children or disabled people, and those addressing specialist needs have more limited opportunities to achieve this scale of operation. They may extend geographical boundaries to raise more contract income. But ultimately the charitable cores of their indispensable social services may never achieve complete sustainability. This is not failure. It’s reality which cannot be influenced by grant cuts by public bodies if economies are demanded. The Oxfam model: Charities may hit on a particularly effective way of trading which takes off more widely and becomes a ‘franchise’. 170
It’s an idea, but is it business? A guide to third sector trading 1: Getting started 2: First steps 3: Business planning 4: Legal and governance 5: Funding and resourcing 6: Financial controls 7: Managing growth 8: Management and governance 9: Social enterprise 10: Sources of support • Perhaps the best known and oldest of these is the brand of shops which are to be found throughout the UK but which started in Oxford with an overseas development charity called Oxfam. It was a good idea which travelled extremely well and has been imitated many times over. • It is not necessary for an organisation to own a franchise. Time banking has evolved radical ways and spread throughout the country, and time banks are typically local organisations with their own structures and arrangements designed to fit local circumstances. Sometimes, as in the case of Creation Development Trust in Blaengarw, Bridgend, they become part of another social enterprise organisation. Meanwhile the ‘brand’ is assisted by national promotion and support by the Timebank charity. Growing to survive: Another interesting evolution in social enterprise can be found in credit unions which took off in the UK with efforts to emulate their success in small towns in places such as Ireland and Canada. It became clear early on that a very local model was wrong for the UK, and that credit unions would fail unless they were allowed to operate over much larger geographical areas – counties and cities rather than neighbourhoods. Intermediate Labour Market schemes: Intermediate labour markets are an entirely different model of third sector enterprise, often operated by much larger organisations. Here the core objective is to help people who have difficulties getting into the labour market to gain the kind of experience of employment which will equip them to move into jobs in the mainstream economy. They are heavily grant funded for fixed contract periods (for instance, by the European Social Fund), and do not have the same compulsion to grow in size as other versions of social enterprise. Perhaps because they are usually run by substantial bodies, they do not suffer from the same stigma of unsustainability as community-based groups and charities. But they are not necessarily any longer-lived. Ways to grow your business Value Wales and procurement for small enterprise: Welsh Assembly Government has actively promoted the concept of local government procuring services from small businesses in Wales under the Value Wales scheme. • Tendering: Under Value Wales third sector enterprises have access to local authority contract tendering. This includes the outsourcing by public bodies of personal social care services, training, consultancy and research, and can have direct benefits for charities and community-based enterprises. 171
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