Once upon a time it was simple. Businesses were efficient machines that existed to maximise returns for shareholders, while charities were badly run institutions that existed to do good. Occasionally the two would come together and business would put on its black tie for a fundraising ball, making sure the press knew all about it.

But we live in an age of complexity. The interactions between business and what’s now called the social (or third) sector are more complex than ever. The severity of a recession precipitated by greed in the financial markets has forced some to question free-market capitalism, and many to rethink the purpose of business and its role in society. Even before the markets tumbled, wise voices, notably Director columnist John Elkington, had begun to talk of the “triple bottom line” and the importance of applying a much broader meaning to profit.

Some of those wise voices attended the latest Enterprise Manifesto discussion, which focused on social enterprise. Those veterans of the sector, including Nick Temple from the School for Social Entrepreneurs and Sam Conniff at Livity, expressed a strong desire not to get drawn into a discussion on terminology or definitions. But this discussion needs to be had. That’s because the needs of social entrepreneurs mirror the needs of other entrepreneurs. Both require access to funding, affordable workspace, good networks, a well educated, entrepreneurial workforce and mentors able to act as inspirational role models but also capable of offering sound practical advice.

Social entrepreneurs operate in the spaces between business and charity and have a clear objective to serve a public good over and above wealth and job creation. The needs of investors and shareholders have to fit alongside the needs of a local community or other beneficiary. While many people, especially younger entrepreneurs, starting new businesses now do so with this broader duty of care in mind, if we want to encourage social entrepreneurs, we have to help them identify themselves as such. It may be a drag, but handing out government grants to social start-ups needs to be carefully managed and fully transparent. It would be irresponsible for any government to do otherwise. That requires some measurement of the social impact a new business might have.

In the meantime larger, more established firms should also be looking at their own operations and considering what they can do to place social concerns at the heart of their businesses. There may be short-term costs that shareholders will grumble about. But the long-term benefits will soon outweigh those costs. More engaged employees (who tend to grab at, rather than grumble about employer-funded opportunities to help others) and a happier community can only be good news for those shareholders. It’s not quite time for business to put away the black tie, but it is time to re-think our definition of profit and look again at engaging with a broader community of stakeholders.

To have your say on the best ideas presented, visit the Enterprise Manifesto at www.director.co.uk/manifesto

Richard Cree

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