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Dai Powell's blog

Dai Powell is HCT Group's Chief executive. His blog explores ideas on social enterprise, transport and related issues. Always forthright, Dai’s views are his own and do not necessarily reflect the position of HCT Group.


What is a social enterprise....going around in circles?

Posted: 16 Nov 2011

Everyone is fed up of the debate ‘what is a social enterprise’ - and rightly so. In the end what we want to do is get on with the tough challenges of trying to run a Social Enterprise. The sector can, if it is not careful, spend too much time inward looking instead of getting on and trying to change the world. However, sometimes you come across situations that are so off the mark that it would be a dereliction of duty not to challenge their position.

Circle Health is not a Social Enterprise. Fact. This is regardless of the degree to which social enterprise definitions vary widely between people and organisations.

I have strong beliefs about what makes for a social enterprise. Other people have differing – and valid – beliefs about what makes a social enterprise.

I believe that a Social Enterprise should have an asset lock. This means that the stakeholders who are contributing to the growth and development of a Social Enterprise are building companies for the future and for the benefit of communities - hopefully over many generations.

I believe that social enterprises trade for a social purpose and that they have social aims as their primary objective. I also think that profits generated by a Social Enterprise should be reinvested back into social good. These statements are what I think makes a Social Enterprise, but these are not the reason why Circle Health is not a social enterprise.

The reason why Circle Health is not a Social Enterprise is the one factor that everyone involved in social enterprise can agree on – be they practitioner, support organisation or commentator. That one factor is transparency – and the structure chosen by Circle Health is very far from transparent.

Reading in the paper at the weekend, and searching for more information on-line, transparency does not feature that high up the agenda of Circle Health. From what I understand, Circle Health is a subsidiary of Circle Holdings, a minority of the shares in Circle Health are with another company, one registered in the Virgin Islands called Circle Partnership. It is this last company that staff have shares in. The vast majority of the shares in Circle Holdings are held by six investors. The legal responsibility of Circle Holdings is to maximise shareholder value.

If my interpretation of this is indeed accurate, then Circle Health must do one simple thing if they are to lay claim to the title Social Enterprise. They must put this structure to the fore of their communications, setting out clearly that this is a point of pride and explaining how it directly enhances the delivery of their social outcomes.

We may not agree on definitions, but please let us be open and honest. Let us try different business models and see what works, let us see what the public and communities support and explore what achieves the greatest social outcomes. If companies wish to jump on the social enterprise bus then great, but remember your tickets need to be transparent.


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