Coming off grants is like giving up smoking; easy to say but far harder to do. Both are strongly addictive and in earlier times we were told that both were good for us. The similarities go further, in that it is often peer pressure that leads the teenager to their first cigarette. So too does the pubescent charity quickly spot that others are winning grants and decide that they should apply for this easy money.
Today, as Government funding cuts begin to bite, the risks of grant dependency are as transparently clear as the tar laden lungs in those 'stop smoking' posters are not. In fact more than a few voluntary and community organisations are facing financial cold turkey.
Just as some find it easier to quit smoking than others, so too will giving up grants be impossible for a significant number of organisations. No number of social enterprise cake stalls will generate enough cash to pay for the kind of heavyweight support our most vulnerable citizens need. For these outfits, the only way to balance the books is to clearly demonstrate the money your interventions can save society.
Then society has to pay. It's called 'social return on investment' and too many strive to make it a dark art, rather than a simple cost return calculation. Let me illustrate the dilemma. I'm working with a young social enterprise in a large Midlands city. I won't name names for the simple reason that people's benefit payments are at risk. I don't want publicity to jeopardise the fragile existence of those I'm about to talk about. The enterprise is a catering business. It's spun out of a mental health service user support group and is poised to take over the cafe at the local mental health trust hospital.
Right now, the cafe is closed to the detriment of staff, patients and visitors. A small group of service users, led by Brian and Adrian have, with my help, developed a business plan, negotiated a deal for the cafe, and checked out demand for ethical outside catering. In terms of aiding their recovery from debilitating long term mental illness, the project has been fantastic. A grant pays for a project worker. Together we have created a vision, planned how to make the venture profitable and sustainable.
There will be two sources of income. The most obvious will be the trading receipts from over the counter sales and outside catering. This is easy to work out and relatively simple to influence. You can add value and increase margins without too much trouble. You know when you've gone too far because your customers will tell you. If you don't respond, they will stop coming. It really is that simple. But around half the income will come from monetising the positive impact of the volunteering experience.
Many of those working will be making their own journey to recovery. The role of volunteering and work experience in re-building confidence is well documented. People cannot leave the wards and start back at work. They need to gradually re-build self esteem, organisational skills and more before the nine to five routine can become possible.
Those agencies facing funding a service users long term worklessness will also fund this activity. It is these same agencies that fund the benefits payments service users receive to pay their living expenses. Now here's the rub; Brian is worried about his benefits. If he becomes a director of the new CIC, he suspects his giro lifeline will shrink. Now all entrepreneurs take risks, but for Brian, a family man with young children, the risk is almost untenable. If he loses his incapacity benefit and the enterprise flounders, he is unlikely to get the benefit back.
How can we protect Brian from this risk? For him it's a deal-breaker.
What to do
- Understand that you may be working with people who are grant dependent – wean them off
- Be realistic and recognise all possible sources of income
- Look for start up grants but do not expect long term revenue funding
- Involve and excite your local Benefits Office; get them on your side
- Make sure your most vulnerable team members are not taking huge financial risks
- Just as social enterprise is going to grow, so is the need for social enterprise to translate value into income.
- Be entrepreneurial and avoid the dangers of grant addiction.
Robert Ashton is a Big Society troubleshooter and the author of How to be a Social Entrepreneur
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