By Ed Whitelaw
Anyone who’s worked in the third sector for some time will well understand both the value and challenges of third sector infrastructure organisations. On the one hand, they have been critical to the success of the sector over the years; campaigning as the advocate and voice for the sector; levering vital resources and funding; providing for peer learning and affirmation; and delivering for the really practical, from work space to training, from business advice to marketing.
On the other hand, when they go wrong, wow, do they go wrong. Sometimes with a spectacular bang, but more often incrementally over time, in a barely discernible way, until they become as much the problem than the solution.
The root of these challenges tends to lie broadly in two places; firstly, the issue of business model and secondly, issues more associated with wider human motivation and nature. This is how things so often play out.
Adam Smith characterised business as a great act of human cooperation and all around us we see the explicit embodiment of this, for example in Chambers of Commerce and organisations such as the Federation of Small Business, these are well established and generally well regarded organisations operating largely on a traded membership model. In any given area, there are plenty of customers, often with the income to well afford an annual membership fee. But when it comes to the third sector (and this is the ‘sweat’ bit) the numbers are different – fewer customers and less disposable cash. Hence third sector infrastructure organisations serving a range voluntary and community groups and/or social enterprises, that rely wholly on membership fees often struggle – its hard work. Though some, particularly within the more business focused social enterprise sector do make it fly, the national Social Enterprise UK and Plymouth Social Enterprise Network, of which I am a director being two good examples – though none of us would claim that it’s easy.
It is for this reason – the challenges of making an independent business case stack up – that most third sector infrastructure organisations, historically at least, are in some way reliant of some form of service contract or grant funding.
There are many, possibly countless, examples of great infrastructure organisations across the country, that make a real difference to their members and subsequently the communities and beneficiaries they serve, but I bet you, we can all think ones that we view in a less favourable light (this is the ‘blood’ bit).
When fallings out and blood lettings occur around infrastructure organisations the origins are often associated with a perversion of incentives, driven by survival instinct and good old motives of money and power. The last two are more obvious so we’ll start there.
The episcopal high churches of old drew much of their power (and money) by being the link to, and, in practice, the barrier and gate keeper between the people and god. Similarly, within third sector infrastructure, this can translate to being the organisation between the members they support and policy, local and national government, in practice managing, if not controlling, the information and sometimes the money. It’s not hard to see that the incentive of working solely to support your members in this situation can, over time, begin to become perverse with the gaming of data and information and the top-slicing of funds – more one ring to rule them all, than one organisation to support them all.
The above is not hard to envisage, when budgets are tight and you need to survive. However, it is often when an infrastructure organisation establishes, with an initial healthy cash injection and they acquire a set of fixed costs – staff, offices, etc. that the root of the problem is seeded. These ongoing financial bottom lines can lead to incentives shifting from supporting members to the need to feed the beast. What has been seen (no names mentioned!) is that often on start-up, an infrastructure organisation wins, say a three-year contract to provide support services etc., and, as soon as any organisation or entity is created, being people driven, like all entities it wants to survive. What happens, in a cash strapped world, when grants and contracts dry up and income generation opportunities are limited? Something a whole lot more bloody – they start competing for work with their members – not just cannibalism, but infanticide.
Infrastructure organisations are both vital and desirable, and arguably should be properly funded, particularly in the case of more voluntary and community based organisations for the key public service they provide. But when, as we’re seeing, that is just not happening, how do we keep them from slipping into becoming the problem instead of continuing to provide solutions?
In the context of distinctly different social enterprise, and the now growing community business sector, something new is emerging.
For some time, social enterprises have become comfortable with the balancing act of holding the tension, and creating a synergy, between producing economic value (paying your way) and social return (having a positive impact on the world). Coming to terms with, in an honest way, this existential challenge – something for me and something for the world – has been one of the hallmarks of the social entrepreneur. Understanding the value of both cooperation and competition, or ‘cooperatition’ being a business and social purpose organisation has allowed for new thinking to develop.
The isolation of graphene – a new wonder substance – in 2004 and its subsequent journey into popular debate has provided some inspiration; what is learnt in science can so often inform society. Graphene is ultra-light, flexible and tough; it is flat, one atom thick, colourless and see through and; due to its structure – a hexagonal network of carbon atoms – it is also a great conductor of electricity. Isn’t this what we want from an infrastructure organisation: light touch, flexible and responsive; resilient, strong and non-hierarchical; transparent, well connected and highly networked?
Plymouth Social Enterprise Network (PSEN) aims to be a focal point for the social enterprise sector in the city. The network is a vibrant marketplace for exchanging information, ideas and expertise. It promotes enterprise, learning, collaboration and commercial opportunities for social businesses in Plymouth. It represents the interests of social enterprises and helps develop of the sector, everything you want from a sector infrastructure organisation.
To achieve this, form has followed function and now into its sixth year going from strength to strength, the network has managed to avoid many of the above pit-falls, in a large part due to what we call graphene management or graphene structure. Though graphene literally is rocket science, it isn’t when translated a management principle – but it is a bit different. What this looks like in reality is a philosophical position, a legal structure supported by the right policies and a set of conventions and values.
PSEN is more a flat network between, than an umbrella organisation above. It is purely a sum of its members, recognised social enterprises trading within the Plymouth travel to work area, who annually directly elect a board from within its self to a core CIC structure. Coupled with a positive culture of ‘yes we can’ this has ensured that the network has remained non-hierarchical, grass-roots and hyper connected and networked with multiple access points.
Philosophically, being purely a sum of its members and for its members, PSEN only seeks to plug holes, never undertakes work that could be delivered by one of its members and this is further ensured by a convention of being asset free – having no fixed costs, no office, no staff. Having no set costs to meet every month, there are no internal incentives to potentially pervert and skew the mission – it can survive almost on thin air. This makes it flexible, resilient and responsive, it can be as quiet or as active as required in response to members or external needs.
This is not to say that the network does not take action, it led the successful bid that saw Plymouth recognised as the UK’s first Social Enterprise City. This is enabled via a set of policies, which help further lock-in this light touch, asset free approach. While the Network receives regular income via membership, this is topped up by sponsorship, contracted and commissioned work – running a festival, undertaking research, an events programme, international projects or acting in a strategic capacity for example. It is here that the dispersed nature of graphene really comes into its own. Through procurement policy and transparent practice all work, even key admin roles, are parcelled out to members as contracted, paid or freelance work. The staff are the members, the organisation is only the members, in practice there is no third-party organisation and no fixed overheads. There are no perverse incentives. Not an organisation, a genuine network and, if you spent much time in Plymouth you’ll know, increasingly a movement.
Ed Whitelaw is a director at Plymouth Social Enterprise Network and Head of Enterprise and Regeneration the south west rooted social enterprise group Real Ideas Organisation RIO.