Fairer face of capitalism

Despite the credit crunch, wealthy individuals with a social conscience still want to give. But how long will this philanthropy last?

by Denise Kingsmill
Last Updated: 09 Oct 2013

Who could imagine that on a cold, wet Thursday evening in the middle of a banking crisis, 250 people would turn up at their bank, not to ask for their money back but to listen to a group of social entrepreneurs talk about their businesses and in some cases make an unashamed pitch for investment?

I recently spoke at such an event. It was hosted by Coutts - an institution better known as the posh bank in London's Strand - and held in its sub-tropical atrium, complete with golden koi carp and jungle foliage. Most of those present were high-net-worth individuals - people for whom profit most definitely is not a dirty word. But on this occasion, they were looking for a different kind of dividend.

With highly developed social consciences, their concerns were about the environment, fairness and equality, the adverse effects of globalisation on some communities, and other such matters. Not the kind of issues that bankers are usually asked to give advice on, but Coutts has made something of a speciality of bringing together social entrepreneurs and those who are interested in becoming involved with enterprises that use business methods to achieve social goals. Capitalism may be red in tooth and claw in some quarters, but there are those who favour a different way of doing business.

Social entrepreneurship could be defined as philanthropy with a business twist, or, perhaps more accurately, business with a social goal. It can also be more creative and more sustainable than the conventional charitable approach.

Many charities are badly managed, notwithstanding the worthiness of their aims, and often those who run them don't welcome the involvement of their benefactors once they have parted with their money. But an investor in a social enterprise is an owner and so has an incentive - as well as the right - to become closely engaged.

It can also be a two-way street, as investors are usually successful businesspeople who bring commercial acumen as well as money to fledgling enterprises, which may be rich in social worth but lack business skills and experience.

Jamie Oliver is perhaps the best-known contemporary example of a social entrepreneur, doing good and making money out of it - whether through Fifteen, his chain of cool restaurants that offer disadvantaged young people a chance to train as chefs, or through his TV production company, which makes programmes to draw attention to poor food in schools and to influence government policy and investment in the school meals service.

At the Coutts event, Penny Newman, Oliver's feisty CEO and a veteran of the social enterprise movement through her previous involvement with Cafedirect, gave a realistic view of the pitfalls and satisfactions along the way. She was particularly focused on how to retain the motivating integrity and vision of the founders as the business grew. She claims as her role model the late Anita Roddick, guru of social entrepreneurs and the creator of the Body Shop.

Of course, social enterprise is not new. The traditional role of building societies - before some, overcome by vaulting ambition, mutated into banks - was to take deposits from local people and make advances to enable them to buy their homes. They performed a role of huge importance, serving as a form of social glue by ploughing back profits into the business of housing the community. They knew their customers personally and their ability to repay their debts. No sub-prime here.

I served on the board of one such mutual building society. All directors were required to attend regular 'town hall meetings' to hear the complaints and concerns of customers - or 'members', as they were known. This was often a chastening experience, but it certainly brought home to us the real meaning of corporate social responsibility.

The Co-operative Bank, which prides itself on its ethical approach to its clientele and to the investment of their funds, has reported a 40% increase in deposits by personal customers in the past 12 months. Could this be down to the trust that people feel as a result of its historical connection with one of our oldest social enterprises?

A new banking model is emerging in the social enterprise space to facilitate person-to-person loans, cutting out the middleman (the conventional high street bank) and substituting a kind of eBay of consumer credit. Companies such as prosper.com and zopa.com are pioneers of this new kind of banking, which resembles the traditional credit union but in online form.

It's interesting that at this time of corporate anxiety and fragility, there seems to be a genuine desire among many to 'put something back' - a hackneyed expression, perhaps, but appropriate. There are more people than one might think who, having benefited greatly from the recent long period of economic growth and stability, feel a sense of social responsibility in the downturn. Far from rejecting capitalism as it falters in some sectors, they are choosing to build commercial ventures that put at their core helping those less fortunate than themselves.

Certainly in Coutts - not at first blush the most likely of sponsors of social enterprise - there was a community of interest. We sipped champagne afterwards and the buzz of earnest conversation was going on around me as those with money to invest exchanged contact details with entrepreneurs whose business ideas are designed to meet social need. The smiles of the bankers were those of happy matchmakers.

Baroness Kingsmill CBE has been a non-executive director of plc, private, charitable, arts and government boards. She is a non-executive director of British Airways

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