Enterprise in The Youth Sector - Getting Comfortable with Commercialisation

We recently shared some insights from our youth sector enterprise survey, which is part of ongoing research to better understand the role of the enterprise in the impact and resilience in the sector. Alongside the survey, this research includes:
 

• Interviews with youth organisations who engage in enterprise activity
• Case studies of organisations participating in the Enterprise Development Programme (EDP)
• Interviews with key stakeholders in the EDP

 

The data we are gathering is telling us about the types of organisations that take up enterprise and the business models they are using, the skills they need to get these off the ground and the social impact enterprise can have. The extent of the social impact is often considered in relation to product or service being sold, and youth organisations both within the EDP cohort and beyond are employing a range of approaches to enterprise along a spectrum from mission centric through to unrelated to mission (Alter 2007). There are enterprises that: 
 

• engage young people directly in the ‘enterprise delivery mechanism’ or activity, such as through a cafe run by young people or selling bikes refurbished by young people;
• generate income through selling their service offer for example to schools or local authorities and those that 
• sell services or goods unrelated to their mission in order to generate income to support their direct work with young people, for example, through renting space or accommodation . 

 

Some organisations do all of these things simultaneously, and some combine them with other sources of funding, such as grants. Whatever the business model or approach, the data has drawn our attention to a particular challenge that some organisations are having as they embark on their enterprise journey - getting comfortable with the notion of being more commercial.

 

Classification of social enterprises based on their mission orientation (source: Alter 2007)

Amongst the youth organisations taking part in the EDP, there is often a feeling that there is no, or at most a limited, role for being commercial and profit-orientated in the charitable youth sector. ‘Profit’ is one manifestation of commercialisation, and commercialisation is a fundamental aspect of enterprise. Commercialisation can feel as though it sits uneasily with accepted ways of working as a charity.  This extends to being able to define and articulate ‘what is our offer?’, i.e. what are we selling and why customers should buy from us over others? This is particularly the case when organisations strive to be collaborative, rather than competitive and market-orientated.

 

“Within our mindset we’re non-competitive, we’re collaborative, so that bit about really knowing and understanding the market, that’s a new thing for us. We never used to think about market, we just did what we did.” [EDP case-study organisation]

 

Whilst some organisations were very comfortable with the concept of selling and competing in the ‘market’, others found it hard to be able to define their offer and feel confident in selling it competitively. For one organisation this is the case where they are selling a programme to schools and are keen not to duplicate what is already out there and “where young people are already getting a good service from somebody else”. 

From this perspective, EDP grantees have benefited from both financial support and dedicated expertise to conduct market research and help them understand their position in the market. Alongside the schools ‘market’, these include retail, food and drink, venue hire and consultancy work. Many organisations have also made use of business support to build their confidence and skill in running a social enterprise where first-hand experience is limited. These elements of the EDP have supported grantees to make the step to enterprise feel less like an organisational - or mission-related - risk.

Organisations have also discussed the negative perceptions, or lack of public understanding, around their mission if they (re)brand themselves as a Social Enterprise or Community Interest Company (CIC), as opposed to a charity. Whilst there are important practical differences in the legal form an organisation takes, in principle, this should not change the social ambition that organisation has. However, as one sector interviewee suggested,

 

“CIC is difficult to get your head around [for those external to the organisation] [...] It sounds like you are making money and doesn’t give the same impression [as a Charity].”

 

Alongside breaking down negative perceptions around organisational form and title, interviewees have discussed the challenge of staying true to a business model where they are also expected to act in more ‘charitable ways’. It is often expected they will take a charitable approach to their social enterprise, but the reality is that to be income-generating, organisations engaging in enterprise need to be brave and clear about what they are selling. As one EDP case study organisation suggested, there is a reality around costing, contracting and quality assurance - business rules and regulations need to be considered alongside youth work ethics and process.

 

For one sector interviewee whose business model involves space hire, it was recognised that to be successful you have to: 

 

“Stick to your guns about an enterprise culture, being very clear what that is and what that means. [...] [We are] very firm about charging people proper market rates, we have a charity rate but there are no mates rates. If you want a good building, you pay the money.”

 

It seems that in the third sector, market-orientated behaviours are often perceived as a negative influence, and some youth organisations using social enterprise are having to justify their motives for generating income through trading, or remind others of how this works. As one interviewee observed, “you have to have reserves, you can’t run an organisation without reserves and you don’t have to be ashamed of it!”. 

Many organisations are embracing enterprise as a mechanism for both financial security and social impact. However, it appears there is some work to do to change perceptions both within the sector and beyond - and stop the notion of commercialisation being the elephant in the room. The art of balancing business regulations and youth work delivery is at the heart of understanding the relationship between enterprise and the youth sector. Through this research we will continue to explore the ways in which enterprise may undermine or enhance an organisation’s social mission. 
 

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If you’d like to find out more about our research into social enterprise in the youth sector, please get in touch with Jo (jo.hickmandunne@youthimpact.uk).