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The voice of Scotland’s vibrant voluntary sector

Published by Scottish Council for Voluntary Organisations

TFN is published by the Scottish Council for Voluntary Organisations, Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh, EH3 6BB. The Scottish Council for Voluntary Organisations (SCVO) is a Scottish Charitable Incorporated Organisation. Registration number SC003558.

You can’t run a charity on good will alone

This opinion piece is about 7 years old

Active4All’s rapid demise show’s how precarious trading can be for Scotland’s hard pressed social enterprises – and how reputation is everything.

Just last year the social firm’s trading arm Yooz employed 29 either long-term unemployed or disabled young people, turning over an estimated £1.2m for the social economy.

It was a great example of how social capital is created: recycled goods resold at a profit with those profits helping to employ those who can’t find work easily.

Such was its success one councillor described the charity as “the darling of the county” – and then it all went wrong.

There's appears to have been a range of reason for this, but one was that it seems the organisation was driven more by social aims than business goals – and this ultimately proved fatal.

As Strachan himself said, he couldn’t get board members with business expertise and instead had a board gleaned from the third sector whose knowledge and expertise lay in disability and employment initiatives.

So when a particularly wet summer hit the firm, resulting in a sharp fall in income, the board found itself struggling to find business solutions to see out the downturn.

Although Strachan believes it was the reputational damage linked to an OSCR investigation that sealed his charity’s fate, the reality seems that the organisation was firmly on a downward trajectory by that point.

Active4All wasn’t best equipped when it came to governance. Despite OSCR’s intervention being initiated on a malicious complaint, it nevertheless found issues with the way the organisation was being run and Strachan didn't have the skills to address these properly.

At times it feels like there is a mass of support and guidance out there for social enterprises in Scotland but there will be risks as there are with any business. Why Strachan wasn't able to access more help and support remains a mystery.

In the end though it was reputational damage that explains why the firm was able to woo funders in March but six months later was filing for insolvency. When your business is dependent on the good will of others, one whiff of alleged mismanagement can be enough to send supporters scarpering for a better cause.

This is a lesson that social enterprise is not an easy route into business; if anything they have to be more competant than their mainstream competitors.



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Sandra Marshall
about 7 years ago
I am sorry that this happened. It did not need to happen. I can tell you the possible truth behind this story and it is not to do with business acumen it is to do with support. You see the business bit is not that difficult. What is difficult is the lack of understanding around social enterprise and how it works or should work. The development of long term social business is a must in today's society. But very few people are prepared to honestly invest in social enterprise because even though the risks are less not more because of the ethical nature of the business and business owner and the fact that profit is invested back into the business not the directors partners or shareholders of the company, investors still cannot get their heads round the fact of profit not going to shareholders. Very short timescales are given within which to meet social and business targets and the funding criteria put companies into straightjackets. Preventing them from being effective, developmental, innovative and sustainable. I would like to turn the way social business as seen by private corporate individualistic organisations is viewed. A social business follows the same course as private business with one,differennce it has a social aim as well as a private corporate one. I know what happens to a lot of social enterprises is that the founders end up doing most of the work on all fronts and are put under extra pressure because they are stretched to the limit. What investors or funders don't realise is that their unrealistic goals and expectations are main reasons for social enterprise or social charitable Interest organisations failing.
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