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John Maddocks presentation - LGiU general power of competence seminar
- 1. Social enterprise and public service delivery John Maddocks
- 2. Changing service delivery landscape Health Localism Personalisation of social care Big Society Public Service Reform “… support the creation and expansion of mutuals, co-operatives, charities and social enterprises, and enable these groups to have much greater involvement in the running of public services” (The Coalition: Our Programme for Government)
- 3. Social enterprise - definitions ‘ … a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community ...’ DTI 2002 ‘… social enterprise if: the person or body is carrying on a business ; the business’s activities are being carried on primarily for a purpose that promotes or improves the social or environmental well-being …; the greater part of any profits for distribution is applied for such a purpose .’ Public Services (Social Enterprise and Social Value) Bill
- 4. A social enterprise … Undertakes trading activities (50% > of income) Has a social purpose Profits are reinvested (50% > reinvested) = social enterprise Independent Asset lock Accountable for social goals = social enterprise mark Participatory structure? = participatory social enterprise
- 5. Main types of ‘social enterprise’ Charities that trade Annual earned income approx £17.5bn Shift from grants to contracts Community interest companies Over 4,600 community interest companies Number is growing rapidly Mutuals Turnover approx £100bn 1million employees Co-operatives (part of mutuals) Turnover approx £33bn Over 4,900 co-ops in UK
- 6. Variety of legal structures Including: Company limited by guarantee Company limited by shares Company limited by guarantee & registered charity Company limited by guarantee & registered CIC Company limited by shares & registered CIC Industrial & Provident Society- for benefit of community Industrial & Provident Society- bona fide co-op Limited liability partnership Charitable incorporated organisation Charitable Trust
- 7. Different structures different characteristics The results of choices made over legal structure and rules will be seen longer term. It impacts on: Regulation Governance Property rights Financing Trading Tax Accounting Participation Long term purpose
- 8. Types of governance Self selecting - Just the governing body and no wider membership Democratic – Open membership (involving one or more stakeholder groups) elect governing body Hybrid – governing body appointed by another body and/or % of places allocated to particular stakeholders, or some other mix of selection and appointment
- 9. Differing characteristics - examples Footnotes: 1. Co-ops and companies able to revise asset lock terms in their governing documents 2. Can issue member shares if not a company limited by guarantee Characteristic Charity Co-op CIC Open membership Optional Yes Optional All surpluses retained Yes Optional Optional Asset lock Yes Yes, but 1 Yes Charitable status Yes No No Issue member shares No Yes, if 2 Yes, if 2 Tax advantages Yes Limited No
- 10. Sandwell Community Caring Trust Charity - company limited by guarantee Initial funding £1.2m (previous year £1.6m) Initial 5 year contract Reduced number of managers Reduced spending on admin Increased spending on service delivery Culture of valuing staff Low absenteeism Low staff turnover
- 11. Sunderland Home Care Associates Initially CLG – 20 members £1 share each Changed to CLS to allow for share allocations Shares distributed to employees in two ways: Annual free allocation linked to salary Annual sale Board includes 5 employees (3 year term) and tax/legal expert 360 employees £3.5m turnover £168,000 pre tax profit (2009)
- 12. North West Housing Services Industrial & Provident Society bona fide co-operative Formed by a consortium of 38 independent organisations Now has 46 member organisations Provides professional services to housing co-operatives, small housing associations, leaseholders and social enterprises
- 13. Greenwich Leisure Limited (GLL) Industrial & Provident Society for the benefit of the community Oversees the management of over 100 public leisure centres, including swimming pools and gyms within London and South East England The board has representation from a number of stakeholders including: customers council staff
- 14. Carn Brea Leisure Centre Trust Initially LA run Transfer to an external contractor Closed Reopened as charity – company limited by guarantee Income £1.3m (2010) 90+ employees Trustees elected by membership
- 15. Central Surrey Health Social enterprise formed in 2006 Company limited by shares Co-owned by 700+ employees Delivering community nursing and therapy services Previously within PCT In NHS pension scheme
- 16. Bromley Healthcare Company limited by shares & CIC 800+ delivering community health services Staff and local GPs all have shares Cannot trade shares Cannot own more than one share each Board of directors Council of governors Community Forum
- 17. Bucks Urgent Care Limited Liability Partnership Consortium of two GP provider companies and a national provider of out-of-hours medical services Won contract in 2009 to provide specified health services for the population of Buckinghamshire including: an out-of-hours service a GP-led Health Centre a dedicated Admissions Avoidance Team to respond to requests from care homes for urgent medical advice
- 18. Iceni Partnership Charity - company limited by guarantee Received £3.85 million EU funding to develop two community asset buildings, redesign the town centre and to provide community cohesion projects and events Manages: community centre assembly rooms business units Strong volunteer involvement Small paid staff team
- 19. Eaga: from social enterprise … to Plc … to …. Carillion Started by 5 staff to address fuel poverty Initially a CLG, then CLS then Plc Established employee benefit trust (EBT) and transferred share ownership Established charitable trust to fund research into fuel poverty and wider energy issues Floated 49% of business on Stock Exchange 4,000 partners (2007) Partners council Revenue £762m, 51m pre tax profit (2010) Now Carillion Energy Services
- 20. Lessons? The choice of legal structure matters Understand the ‘differences’ It takes time to develop services, governance, management, participation and the ‘culture’ of organisation Service transfers can lead to different ways of ‘thinking’ about service delivery Choose structure for right reasons
- 21. New opportunities Changing relationships New service delivery models New financing and funding models New training and support services Organisational difference and what it offers to users and providers
- 22. New publication What is a social enterprise? Types of social enterprise Legal structures part 1 Legal structures part 2 Financing Charity trading Tax and social enterprise Governance Tupe Considering options
- 23. Questions - discussion [email_address] http://www.cipfa.org.uk/bigsociety http://www.cipfa.org.uk/panels/charity
Editor's Notes
- #6: ‘ General charities’ is an NCVO definition which excludes: 1. inactive or duplicates of other organisations 2. faith groups, trade associations, mutuals, housing associations and independent schools. 3. charities that are owned by the government or the NHS.
- #10: Table indicates differences as well as grey areas.