Charities and Businesses form New Social Enterprise

  • A new approach to funding social enterprises has emerged instead of relying on government funding.

    Minister Nick Hurd has endorsed the new 'co-mingling' funds between charitable and private capital to help deliver further social benefit.

    New methods need to be found for funding new social enterprises to free them from traditional methods and generate new methods of spending as well as methods of funding.

    Foundations traditionally donate to other organisations through grants, but recently have started providing affordable but repayable finance to social enterprises and charities.

    Joining charities and businesses together could be a good way to inspire new funding ideas from new funding sources.

    It is likely to create a new attitude to the social enterprise as it would add a new dynamic when being funded by a business.

    A report by the Cabinet Office, describes how commercial investors can partner with the non-profit foundations to co-fund finance initiatives, calling it ‘co-mingling funds’.

    The charitable foundation brings its expertise in how to allocate funds and can also take on a greater proportion of the risk. This allows them to attract private sources of capital that might not have been used for social benefit and gives banks a way to build on their existing corporate social responsibility (CSR) programmes.

    Robert Ashton has theorised that it actually makes more sense for a charity to use the opportunity of becoming a social enterprise to fund new sources of funding.

    As the charity and business have very different attitudes and methods, the combination of the two can be a winning team and benefit both parties.

    Ashton says:

    The answer is marriage. The charity is the bride: caring, soft and pacifying. The groom is a ‘for profit business'. Thrusting, assertive and successful, but aware that shareholders, customers and staff want to do good as well as make a profit.

    The fruit of their union can be a vibrant, sustainable, focused and innovative social enterprise.

     

     Image source: http://www.morguefile.com/archive/display/200384


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