March, 2012 - Rodney Schwartz

Recently I had the privilege to attend as a judge of the Global Social Venture Competition (GSVC). Each March for the last ten years a semi-finals is held at the London Business School. It feels like I have been a judge forever—and the competition and the competitors get better and better each year.

During the competition I overheard one judge say to another, about a particular competitor, “Oh yeah, XYZ has made a living out of winning social enterprise competitions”. It was said as a gentle putdown, though it felt to me like a rather commendable and positive strategy. The firm involved did not require substantial amounts of capital and “picking up” the odd £10,000-£20,000 or so seemed to keep things ticking over.

This approach will not satisfy the requirements of most social enterprises, but as an element of a fundraising strategy it seems to offer substantial benefits. First, all the firms competing on the day, and in other competitions, have the opportunity to hear the other presentations as well as to receive valuable feedback. Second, all the competitors gain access to a varied group of experts–who in turn provide valuable resources directly and make connections with others who may add value. Third, there are normally prizes awarded. In the case of the GSVC, there will be $50,000 worth of awards to the winners.

In my view, such competitions also serve a very useful purpose in that they help social entrepreneurs to practice and refine their pitches in a relatively safe environment. The GSVC is generally focused on the business plans of students who have recently received their business degrees. Otherwise I would consider making such events mandatory for all social businesses and enterprises ClearlySo eventually introduces to angel investors. Such competitions are just a fantastic way to get practice.

And who was the winner this year? An excellent and interesting business from Lithuania called Sveikas Vaikas (the English name is “InBelly”—do not ask me if it means the same thing!) which seeks to do for additive free food what the Soil Association and the Fair Trade Foundation have done for organic food and fairly traded goods, respectively. The entrepreneur who pitched at the event, called Kristina Saudargaite, was simply outstanding.

First Published in Third Sector in March 2015.

Defenders of unfettered free market capitalism, as it has been practiced for the past three decades, are diminishing in number. The model has been proven to be utterly unsustainable–a false economy.

A growing number of observers believe something new is emerging–a more social economy, where social, ethical, environmental and financial objectives are balanced. This is no longer just the belief of ardent zealots, but the mainstream sees this as a viable concept for economic organisation.

Governments across the political spectrum are embracing social enterprise, and, encouragingly, the corporate sector is as well. We at ClearlySo work with over 100 corporations and dozens of governmental counter-parties with an expressed interest in helping the social enterprise and investment sector to flourish. Their intentions are noble and the folks involved tend to be sincere–but in our judgement the good work is frequently offset by two categories of flawed approaches.

One is to bury the sector in grants. Free stuff is great but it creates a false economy, giving the impression of a sector heading towards or already achieving sustainability (because of all the buzz and activity). In this way we begin to kid ourselves–were the grants to cease the sector would simply evaporate, with few exceptions.

The other approach is to seek to ‘work with’ the sector on a commercial basis. This approach would appear to have intellectual merit as corporations and government agents buy services from the sector and arguably are bringing it into the normal market economy. However, the sector’s immaturity and the absence of normal market disciplines caused by grant-dependency, often causes social enterprises desperate for work to offer products and services at low prices, often below cost.

This situation is helpful for cash-strapped governments and profit-oriented mainstream firms. They take advantage of competition in the sector to force prices to an unsustainable level. “Socent XYZ will do it for free”, those social enterprises trying to become sustainable are told, or “this is the most we can pay…..due to budgets, etc.”

All this is also a false economy, especially for governments who subsidise a sector through one set of actions and then under-pay for services with another. Far better to pay a fair price, which they certainly do with large private sector firms selling to the public sector. Corporations looking for (and are getting!!) bargains from the social enterprise sector would appear to be indirect beneficiaries of governmental grants to the sector, as well as the below market wages of their dedicated staff and the free work of their volunteers.

Can this possibly be right?
Do many of you out there in the social enterprise world experience such behaviour?
Is there a justification for corporations and governments to pay a premium to social entrepreneurs for the products and services they offer, or does this continue to falsify the social economy?

First published in The Social Edge in March 2012