Sector debate poses - can traditional charities survive the advent of social enterprises?

A high profile debate exploring the ‘traditional’ charity model and whether the future may lie in social enterprises (and other alternative vehicles), left the floor and panellists with ample food for thought.

Leading charity law firm Stone King hosted the sector debate on the motion ‘to be, or not to be (a registered charity)’, chaired by Baroness Pitkeathley, President of NCVO, with an expert panel defending their respective positions to a room filled with sector professionals.

“Charities are the eyes, ears and conscience of society. They mobilise, they provide, they inspire, they advocate, and they unite”, quoted panellist Rosie Chapman, Chair of the Charity Governance Code Steering Group, citing the 2017 House of Lords Committee report ‘Stronger charities for a Stronger Society’. Putting forward her case for charities she highlighted that the voluntary nature of trusteeship is one of charities’ distinguishing features, with transparency and regulation giving registered charities credibility. Kathy Evans, Children England’s Chief Executive, echoed the view that gift-giving, be it financial or a gift of time such as volunteering, is one to be cherished that should never go out of fashion. She laid out charities’ distinctive traits, emphasising that the charitable mission comes before money.

In support of alternative models, Chris Wright, Chief Executive of Catch 22, argued that social enterprises are more responsive to people’s needs and lend themselves to entrepreneurship, with fellow panellist Precious Sithole, CEO of the Social Practice ENT, highlighting that limited funding coupled with a high level of regulation can impede particularly smaller charities from engaging with some of the time’s most pressing issues, with high expectations laid at the feet of voluntary trustees.

Julian Blake, Stone King Partner who joined the ‘not to be’ panel, said: “One of the restricting factors for charities is the law. Whilst the law has flexibility built into it, it is still inherently traditional where social enterprises offer the opportunity to be more progressive, with the community acting as the judge of what is for the public benefit.”

Panellists agreed their own position to be far more nuanced than the cases they put for the purpose of debate, with an overall conclusion that there is no binary choice. The development of social enterprises was welcomed with consensus that the two models, and their various incarnations, can co-exist.

Nonetheless, in a series of yes / no questions that Stone King posed to the floor at the close of the debate, 67% voted in favour of the motion defending the ‘traditional’ charity model. Among other notable responses, 73% of attendees believed there should be a legal definition of ‘social enterprise’ and 67% agreed they should be subject to specific regulation. Furthermore, 70% of attendees were in favour of charities having paid executive trustees and 71% felt charities should be allowed to undertake purely commercial trading to raise funds.

Tim Rutherford, Head of Charity & Social Enterprise Sector at Stone King, said: “For the time being at least, we have identified that there is a consensus that the different vehicles for delivering public benefit can develop and coexist amicably. As Kathy Evans eloquently put it, gift making is often a human response to suffering. This makes it a very complex, subjective and important topic, and one we need to keep revisiting.”