The confused view of social enterprise at the FCO

"The idea of most business activity is to earn profits which can be paid to the shareholders who invested in the enterprise in the first place.  The difference with social entrepreneurship is that the profits from the initial start-up capital are ploughed back into local communities.  Such enterprises go back to 1844 in Britain after the industrial revolution, when the first co-operatives were founded in the mill towns of Lancashire in Northern England."

The words are those of former Ukraine ambassador Leigh Turner speaking about social enterprise development in Ukraine

As most of us in the movement know, social entrepreneurship, an approach developed by pioneers like Ashoka is driven by foundation funding. The cooperative which go back to 1844, were not ploughing back profit to the community but distributed to their membership.

The concept of autonomous business returning profit in the community is a more recent innovation and an example may be found in 2002 when put forward in a proposal for the Crimean Tatars. It was described as a Community Funding Enterprise.     

That's right, Crimea, which used to be part of Ukraine.

One of the key points in the Crimea proposal was that the Tatar community were ar risk of being provoked into terrorism by Russia, who saw access to their Black Sea Fleet at risk. The Tatars should be rewarded for their adherence to peaceful co-existence rather than quelling violence later.

If our FCO had missed this, then there was a far more prominent argument for business which applies profit for social benefit in a proposal delivered to Ukraine's government in February 2007 and published online 6 months later, in a prominent web journal.

Described as a 'Marshall Plan for Ukraine it said:

'An inherent assumption about capitalism is that profit is defined only in terms of monetary gain. This assumption is virtually unquestioned in most of the world. However, it is not a valid assumption. Business enterprise, capitalism, must be measured in terms of monetary profit. That rule is not arguable. A business enterprise must make monetary profit, or it will merely cease to exist. That is an absolute requirement. But it does not follow that this must necessarily be the final bottom line and the sole aim of the enterprise. How this profit is used is another question. It is commonly assumed that profit will enrich enterprise owners and investors, which in turn gives them incentive to participate financially in the enterprise to start with.

That, however, is not the only possible outcome for use of profits. Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples – the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise.'

Nobody else had argued this point, especially not in  Ukraine where we'd operated as a UK registered social enterprise since 2004.

In December 2008, we'd been told by the FCO that funding for projects in Ukraine was no longer available but they were now aware of our activities.

Earlier in 2008. USAID had declined our request for support saying that their limited budget could not extend to the group of retarded and handicapped children identified in our proposal. They said nothing about the 'Marshall Plan' or support for a local anti-corrution network requested.

Leigh Turner's article directs those interested in social enterprise to Lyudmila Tatchenko at the British Council with whom my late colleage Terry had an exchange of dialogue in 2010, where she was warned that their plans for social enterprise development violated our copyright. 

Here we have one of the great contradictions of social enterprise where many have been encouraged by our own government to do business which operates for the greater good. UK Prime Minister Tony Blair had made it part of government policy and business secretary Lord Mandelson had told us his department was "helping those who help others"    

Go too far however and youre' stepping on toes. Mandelson is no stranger to the company of oligarchs and Blair like Bill Clinton has received funding for his foundation from Viktor Pinchuk who's been making good use of English courts.

The British Council's Martin Davidson, when pressured by my MP to give reason for their non response to our partnership application would say that partners had been expexcted to make a financial contribution.  That is declared nowhere.

The obstacle was of course the "mentally retarded and handicaooed children" who represented a real social problem to be dealt with.

When Russia made its move on Criimea Leigh Turner was taken by surprise. His blog was removed from the site, but it can be found in web archives.

A confused diplomat, dishonest government funded agencies and politicians on the make. That's before any Ukrainiian is involved.  

Now Ukraine has another Ambassador, Judtith Gough, who says:

"Ukraine continues to face an unprecedented period of challenge and upheaval, which will shape the long-term future for all Ukrainians and have an impact on the wider region. The United Kingdom has been strong in support of Ukraine’s democratic, prosperous and secure future, and determined in its efforts to help promote reform, peace and stability throughout Ukraine. I am honoured to have been given the opportunity to play my part in continuing this work, in leading our Embassy in Ukraine at this critical time."

Come again?

The evolution of democracy in Ukraine was the subject of an interview for Forum magazine in May 2006, where Terry Hallman described his work in social enterprise:and history in Crimea

"- I still believe I can provide means for common people in Ukraine to change their own lives. I can’t do it for them, but I can help reorganize things, marshal resources, and organize new development programs, and so on. People can then participate as they wish. They’ll have new opportunities that they do not have now. I’m mainly aiming at the poorest people in Ukraine who have no real opportunities to improve their lives and get out of poverty. Helping them will provide significant economic benefit to Ukraine, not least by creating a stronger economy and larger annual national budget – which in turn makes possible helping improve social and economic conditions for more people. "

At this time, I'd introduced our work to the Social Enterprise Coalition, to be told it was beyond their current focus.

As I've described in an earlier article. USAID and the British Council would make their move 4 years later and it would lead to collaboration with some of the most avaricious businessmen and direputable politician known to mankind. Hence my conclusion:

Ukraine: Where social enterprise isn't

What a strange intepretation of helping build democracy it is, to undermine the efforts of one's own citizens and leave the neediest of all to die because a corporate vanity project was more important.

As anticipated in the Forum intreview, this would become part of the problem

"There will be people who disagree with childcare reform in particular, and who need Ukraine’s present orphanage system to remain as it is, with little regard to the well-being of the children. They are not only in Ukraine, but also in the US and possibly other countries. Many people are making very good income from Ukraine’s existing orphanage system, and therefore will almost certainly fight and try to undermine and sabotage any change. Unfortunately, I’m embarrassed to say, some of those people are in the US, calling themselves “charity” organizations. Ukraine’s orphanages supply them with a commodity they need to make money, and quite a bit of money. It is absolutely to Yushchenko’s credit, and one thing he has done absolutely correctly, in stopping foreign adoptions. It isn’t because he doesn’t care about the children, in my opinion, but because he has a very good understanding that many so-called charities are concerned with nothing more than their own bank accounts. The children in orphanages are their market commodity, and they want to keep it that way. Watch for them to appear. I'm sure they will. "