Recently we held another in our seminar series, this time on the hot topic of social businesses. These can be simply defined as not-for-profit organisations who act in a business-like way. They don’t define themselves purely as charities, even though many of them are legally constituted as one. They see their social mission to deliver services without the obsessive drive for maximising shareholder value or the silo-constrained mindsets of public sector employment. This is a relatively recent innovation in the sector and often clashes with traditional attitudes of many who work in it, but in light of the profound challenges both the not-for-profit sector and public services face in the current climate, it a concept that deserves unpacking and demystifying for a wider audience.
As our guest speaker we had Tom Lewis-Reynier, Director of Communications at Catch22, a prime example of a social business. Catch22 is a registered charity and with an income of £50m last year. It was formed out of the merger in 2008 of the Rainer Foundation, a charity with roots in the probation service and as a youth charity, and Crime Concern, a charity focused on preventing reoffending. Since a 2012 restructure, it has styled itself as a social business, reflecting its innovative approach and focus on providing direct services, often in the public services commissioning market – it does not campaign or fundraise like a traditional charity. Tom himself started out in the private sector in sales and holds an MBA. We thank him for the very candid insights he was able to provide into the running of the organisation.
Catch22’s services cover four main areas; justice, education, employment and youth and families. The aim of a diverse array of services is to allow Catch22 to provide continuity and joined up, person-centred services, in contrast to the problems that come from the silos often found in the public sector. As it stands, this can lead to poor outcomes due to services not addressing the real needs of users – youth unemployment and reoffending are still too high, and public targets sometimes just shift negative externalities to other bodies.
Further, the VCSE sector too is also fragmented, with many small organisations and frequent duplication, which can frustrate public authorities than genuinely wish to engage with the sector. Catch22’s model and scale is designed to position them well by comparison.
However, despite significant work to ensure that they are geared towards delivery in the public services market, social businesses still make up a relatively small slice of the pie. Bidding can be an expensive process; Catch22 invested significant funds in the unfruitful process of bidding to be a prime contractor for the flagship Transforming Rehabilitation programme. It still works as a subcontractor in the supply chain for for-profit government services firms, but this demonstrates the difficulties the VCSE sector faces in winning contracts, especially as complex new financing mechanisms such as Payment by Results (PbR) become the norm.
Attendees at the seminar also asked about ‘culture eating strategy’ – how to introduce a social business model, acting in a business-like way to raise revenue that goes directly towards delivering social impact, in a sector traditionally focused solely on raising money through philanthropy. Tom said that this was a key issue, and that the organisation was looking to invest more in technology to help coordinate its service offer.
Tom also spoke of the increasing importance of impact measurement, noting that Catch22 has hired people specifically for this task in response to it becoming a requirement in contracts. Good IT is needed to collect the information demanded by commissioners, though this is still often quantitative, rather than going into the “granular” detail required to capture the nuances of service delivery and the real needs of users. But social impact is a great opportunity for the sector, as it offers VCSEs the chance to play to their real strengths and compete against PLCs on something other than just cost-cutting.
Perhaps most interesting though is Catch22’s Public Services Lab (a joint venture with Interserve, Clubfinance and Big Society Capital), focused on the Liverpool area. It is intended both to provide support for potential providers to win contracts, but also to act as a meeting ground where VCSEs can work with public sector commissioners to help them design services and contracts better. It seems likely that for some years to come, continuing ‘austerity’ will require both sides to think practically about how to craft services in a way that makes resources go much further, and initiatives like the Public Services Lab could prove vital.
The next part of our seminar programme, about social impact, will be on Tuesday 13th September. We will welcome Andy Murphy, the CE of Age UK Islington, who has been pioneering work with Clinical Commissioning Groups (CCGs) on how to evidence the impact that social care and welfare charities have on patient groups. This is a seminar that will deal with impact, the use of data, commissioning, GP practices and CCGs. It is highly topical and Andy will be sharing his front line experiences with us. Contact us at firstname.lastname@example.org if you would like to attend.