By Nigel Kershaw - OBE, chairman of The Big Issue and CEO of Big Issue Invest,
The emergence of the social entrepreneur
Back in 1991, when The Big Issue was set up, the idea of a 'social entrepreneur' was completely foreign to most people. There were a few pioneers out there involved in 'ethical business', such as The Body Shop, and one or two you might call 'social innovators', like Lord Michael Young, who helped create the Open University and the Consumers Association. But social entrepreneurship itself was largely uncharted territory.
Now, in 2012, the term social entrepreneur is much more widely used, and we are seeing many social enterprises doing business in ways that create a positive social impact.
One of my heroes in life, Thomas Paine, a radical involved in both the American and French revolutions, once said, "A long habit of not thinking a thing wrong gives it a superficial appearance of being right." Paine was talking about the need to always challenge the status quo, and not accept things as they are. This underlies the story of my life, the story of social enterprise and the story of The Big Issue.
The Big Issue is born
Gordon Roddick and A. John Bird launched The Big Issue in 1991 in response to the growing number of rough sleepers on the streets of London. It addressed the problem by offering people who were homeless, or at risk of homelessness, the opportunity to earn a legitimate income, thereby 'helping them to help themselves'. Created as a business solution to a social problem, it has gone on to become one of the most instantly recognisable brands in the UK and a powerful blueprint for social change.
The organisation currently works with around 2,500 homeless and vulnerably housed people across the UK, and circulates over 105,000 copies of the magazine every week. Now comes the really good bit – the vendors pay £1.25 for each magazine and sell it on for £2.50. What we've done here is create 2,500 entrepreneurs and given them a self-sufficient alternative to begging, stealing, prostitution and street crime.
It sounds simple, but this idea really challenged business norms and we came up against a lot of resistance both from charities and business. For example, bank managers just couldn't get their heads around the fact that we might want to use our profits to solve homelessness rather than buy a yacht in Marbella!
Tackling the root causes of homelessness
But our social impact doesn't stop there. When The Big Issue makes a profit we mug ourselves on the way to the bank and give that profit to our foundation to help tackle the underlying causes of our vendors' homelessness. We've created a transformative business model that really works. We're not frightened of making profit. The profit we make, through the simple self-help mechanism of selling a magazine to our vendors, is recycled to seek to dismantle the causes that created the problem in the first place.
And that is what social enterprise is all about: finding a business solution to a social or environmental crisis. Creating profit to reinvest in growing the business and delivering the social mission.
In good company
Thankfully, we are by no means an isolated example. Government figures suggest there are more than 55,000 social enterprises in the UK, generating annual turnover of more than £27bn. Other well-known social enterprises include the Eden Project, Cafédirect and Jamie Oliver's Fifteen Foundation.
Less well known but equally inspiring examples are Cool2Care and My Time. Cool2Care places care workers with families with disabled children, while My Time delivers mental health counselling services. They were both set up by entrepreneurs who had experienced the problems they wanted to solve. Both offer remarkably innovative solutions to big social challenges. And both make a financial profit and deliver a social dividend.
Big Issue Invest
We're now helping to expand the social enterprise sector with Big Issue Invest, which is effectively an old-fashioned merchant bank that is run by social enterprises, for social enterprises. All our funds have been raised in the private marketplace with initial seeding from Government. So far we've loaned nearly £20m to 230 social enterprises – including Cool2Care, My Time and Fifteen – with a loan repayment rate of 96% (and that with 75% loaned against future cash flows).
In 2010, we launched a fund to raise private capital to invest in social enterprises, with reasonable financial returns and high social impact. Investors include HSBC, Deutsche Bank, the Esmée Fairbairn Foundation and NESTA, as well as individuals and family trusts, such as Tony Nutt from Jupiter Asset Management, Eric Lonergan of M&G Investments and Henry Tinsley, formerly of Green & Blacks.
With Big Issue Invest we've had to turn the traditional finance model on its head. We're challenging the status quo again – extending the boundaries of traditional investment and philanthropy.
Making a difference
The culture of saying, "Yes, we can do things differently" comes from being a social enterprise. It comes from the kind of radical thinking upheld by Thomas Paine. And it's the kind of thinking that will continue to drive increasing numbers of social entrepreneurs as they look to address both inequalities and social and environmental problems with business solutions that can really transform our society.
Big Issue Invest
By social entrepreneurs – for social entrepreneurs
Big Issue Invest is a specialist provider of finance to social enterprises. Part of The Big Issue group of companies, it is led by social entrepreneurs and experienced social financiers. Big Issue Invest pays any dividends generated up to its parent, The Big Issue, a social enterprise with a charitable arm, The Big Issue Foundation.
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