SOCIAL INNOVATOR SERIES | SOCIAL INNOVATOR SOCIAL INNOVATOR SERIES: WAYS TO DESIGN, DEVELOP www.socialinnovator.info AND GROW SOCIAL INNOVATION The past thirty years has seen a remarkable growth of social ventures in both the developed and developing worlds. Sometimes referred to as the Third Sector, they in fact operate across sectors, in parts of the state, the grant economy, the collaborative household economy and in the market as social enterprises. While there is a long-standing economic and managerial literature on the market SOCIAL economy, and methods of operating within it, as well as a complementary body of work on public finance and public sector management, there is remarkably little on the distinctive character of social ventures and the social economy. SOCIAL VENTURING Yet this economy and its ventures are set to play a critical role in addressing many VENTURING of the most urgent contemporary problems, from climate change to chronic Robin Murray disease, and from social welfare to new forms of consumption. This volume is part of a wider project to bring together, on the basis of experience, issues faced by Julie Caulier-Grice those working in this new social economy and the methods and approaches applicable to them. Geoff Mulgan | Murray, Caulier-Grice, Mulgan Caulier-Grice, | Murray, www.nesta.org.uk www.youngfoundation.org Designed by 35 Communications ISBN 978-1-84875-044-9 Photographic acknowledgements Method 19 Prototype design. Courtesy We would like to thank all those who have of Riversimple. kindly granted us permission to use their Method 20 St. Charles Co-operative, (left) and images in this publication. Janice Stewart, the first NPH servers program graduate displaying the co-op’s products (right). Introduction. The Healthy Living Centre Courtesy Niagara Peninsula Homes. F O R E W O R D at Bromley-by-Bow, February 2009. Courtesy Method 21 The Diabetes Bus, Slough. of the Bromley-by-Bow Centre. Courtesy of Race for Health. Method 1 A patient at a mass eye camp. Method 22 Cafédirect advertisements courtesy Courtesy of Avarind. of Oikos Foundation (left) and Cafédirect (centre This volume – part of a series on methods and issues in social Method 2 The view from Lynedoch village, and right). innovation – focuses on how to establish and grow a social venture. courtesy of the African Carbon Trust, and Method 23 Open design. Sample of designs completed housing at Lynedoch, courtesy from the Greenpeace Apple campaign. of Akhone Damani. Courtesy of www.greenmyapple.org. It is the result of a collaboration between NESTA (the UK National Method 3 The Bell-Mason diagnostic diagram. Method 24 Urban tilling in Milwaukee, Endowment for Science, Technology and the Arts) and the Young Method 4 The Uphams’ house in Berkeley, Courtesy of Growing Power, Inc. California. Courtesy of the Center for Method 25 The Tower Hamlets Community Foundation – two organisations that are committed to the role that Environmental Structure, Berkeley, California. Recycling Consortium in action. social innovation can play in addressing some of the major Method 5 Simple co-operation. Courtesy challenges of our time. of Un Techo Para Chile. The authors Method 6 Co-operative consumption. Co-op Robin Murray is an industrial and environmental members on the village green outside the Old economist. His recent work has focused on new The authors have done a remarkable job in scouring the landscape Crown, courtesy of The Old Crown Co-operative. waste and energy systems and on projects in Method 7 Co-operative production. The ceramic the social economy. He was co-founder and of entrepreneurs and campaigners, organisations and movements co-operative in Imola, front elevation (Co-operative later chair of Twin Trading the fair trade – in the UK and internationally – to present a rich set of accounts Grocer) and from the air (Google Earth Luigi-I-mola). company and was closely involved in the of how social innovation actually happens. We hope that it motivates Method 8 International co-operation. The companies it spun off, including Cafédirect, Liberation and INPC opening procession in Divine Chocolate, Liberation Nuts and Agrofair others to contribute to building a new, more social economy. Kelekam, Kerala, courtesy INPC and Deepeka Day. UK. He has alternated working for innovative Method 9 An FSC certified tree nursery. economic programmes in local, regional and But this is more than an inspiring set of stories. It is a guide – based Courtesy of © Erik Goethals / Forestry national governments, with academic teaching Stewardship Council. and writing. on the sometimes difficult experiences of social pioneers – that Method 10 The David Hubbard Memorial should help to produce a stronger, more informed approach to Library, Pasadena, courtesy of William Julie Caulier-Grice is a research associate McDonough and partners. at the Young Foundation specialising in social social innovation. Method 11 Dividend Transfer. Courtesy innovation and criminal justice. She formerly of Divine Chocolate Ltd. worked on education policy at the Social Market Like the social ventures it describes, we want this work to grow Method 12 Co-operative Generation. The Foundation, where she co-authored Fade or Westmill turbines courtesy of Andrew Watson Flourish: how primary schools can build on and develop. Your comments, thoughts and stories are welcome at and shareholders at the launch, courtesy of children’s early progress. Her most recent the project website: www.socialinnovator.info Westmill Wind Farm Co-operative. publications have explored ways of funding Method 13 The Mondragon Valley, in the Basque community activity and on civil society’s role country, Northern Spain. Courtesy of Ovum. in campaigning for social change and meeting Dr Michael Harris, NESTA Method 14 The Aylesbury Estate from the social needs. South. At the time of its construction in the 1960s the estate was the largest public housing Geoff Mulgan is director of the Young estate in Western Europe. Foundation. Between 1997 and 2004 he worked Method 15 The winning goal. Courtesy of D. Vima. in the UK Prime Minister’s office and Cabinet Method 16 County Hall, the home of the Office and before that was the founding Greater London Council, formerly the London director of the thinktank Demos. He is a County Council, on the South Bank of the Visiting Professor at LSE, UCL, Melbourne Thames opposite the Houses of Parliament. University and the China Executive Leadership Courtesy of Simdaperce. Academy. He also works as a part time adviser Method 17 Entering the Dialogue in the to Prime Minister Kevin Rudd in Australia. Dark exhibition. Courtesy of Dialogue Social His latest book is The Art of Public Strategy: Enterprise GmbH. mobilising power and knowledge for the Method 18 Fieldworkers at Sekem, Egypt. common good. Courtesy of Sekem. Published July 2009 CONTENTS 1 CONTENTS Page Introduction 3 Section 1 The Process of Venture Formation 18 1. Business Models 20 2. Incomes and Outcomes 27 3. Charting the Elements 35 4. Economic Architecture and Business Plans 42 5. Setting up the Venture 49 Section 2 Ownership and Governance 54 6. Ownership 56 7. Co-ops and Associations 62 8. Community Interest Companies 68 9. Stakeholder Governance 73 10. Boards 78 Section 3 Raising the Finance 86 11. Financing New Ventures 88 12. Public Share Issues 93 13. Loan Finance 99 14. Social Impact Bonds 105 15. Crowdfunding 111 16. The Grant Economy 119 17. Venture Philanthropy 127 2 SOCIAL VENTURING contents contINUED Page Section 4 Culture, Knowledge and Relational Capital 134 18. Keeping it open 136 19. Intellectual property 141 20. Formation: Developing Skills and Cultures 148 21. Users at the Centre 153 22. Branding 158 23. Open Brands 164 24. Valuing the Voluntary 169 25. People and Pay 176 Bibliography 183 Acknowledgments We would like to acknowledge the help and support from colleagues at NESTA – in particular Michael Harris for his encouragement and perceptive comments on the text. We would also like to thank colleagues from the Young Foundation, especially Yvonne Roberts and Will Norman for their editorial comments and Alex Watson and Sarah Hewes for their contributions. We are grateful to all those who have provided contributions and guidance, especially Jonathan Gray at The Open Knowledge Foundation, Patrick Andrews of Riversimple and Will Brooks from My Football Club. This publication represents solely the views of the authors and does not necessarily represent the views of NESTA. Any errors or omissions are those of the authors. INTRODUCTION 3 IntRODUctIon Ever since its foundation in 1948, the UK’s National Health Service has been committed to preventing ill health as well as curing it. Yet, as in other countries, public health remains the Cinderella of the service. It commands less than 2 per cent of NHS resources at a time when obesity, heart disease, mental health and diabetes are all rising steeply. The problem is partly the dominance of curative medicine, and partly fragmented government. How can the NHS influence the multitude of factors contributing to ill health, such as income inequality, unemployment or food policy? The Bromley-by-Bow Centre, a social venture in London’s East End, has pioneered one answer to this problem. It established a healthy living centre that brought together GPs (with a list of 4,200 patients), nurses, arts, education, sheltered housing, support and care and a three acre park. A sculpture in the courtyard welcomes visitors to the centre. The GPs take art classes after work. There is a food co-op whose products the GPs can prescribe for their patients. There is a welfare and benefits advice shop. The centre offers yoga, t’ai chi, aromatherapy, dance classes for children, circuit training for boys and exercise classes for Bengali women, and for older people with arthritis or heart problems. The centre is based on the common sense principle that what contributes to health is what matters to life itself – friendship, material and emotional security, the chance to express oneself, to feed the spirit, to help and be helped.