Social enterprise: a solution for the voluntary sector?

Abstract

Purpose To identify the factors influencing the success or failure of voluntary organizations to utilize social enterprise models to achieve financial and/or social objectives. Design/methodology/approach A review of the literature of success/failure factors in trading ventures is presented. Describes the study to understand why social enterprise models either do or do not work in the voluntary sector. Evaluates findings from five separate consultancy projects with UK voluntary sector organizations, where the consultancy work comprised feasibility assessments of new business ideas for each organization and projects carried out by Beehive Promotions Ltd, a subsidiary of Social Enterprise London (SEL). Presents the critical success and failure factors involved in an action research framework for the organizations. Findings The five critical success factors identified were: organizations wishing to trade must have a product or service that can be sold; the need to identify a market with resources and inclination to pay for the service or product offered; ability and desire to change organizational culture; significant commitment from internal and external stakeholders; and the need for organizations to have requisite management skills to deal with the additional complexity involved in pursuing social enterprise models. Concludes that the three critical failure factors were: underestimating the development time required; the bureaucratic burden carried by third sector organizations; and the fact that organizations driven toward social enterprise for reactive reasons and fear declining grant income are less likely to succeed. Suggests that commercialization is not always a good thing for voluntary organizations struggling to build businesses while maintaining a focus on their core social mission. Originality/value Fills a gap in the literature where the issues brought up in this exercise have tended not to be studied.

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