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Fad or the future? The social entrepreneurs

Special Report : Entrepreneurialism In Europe

Jane Simms is a freelance journalist based in the UK.

Management philosopher Charles Handy claims that "Generosity is fashionable again" in his book The New Philanthropists. He makes the point that across the world the wealthy are giving away their money and time in unprecedented amounts to address major social problems.

For many family businesses, this urge is in their DNA and has been an important and integral part of the way they do business from the outset. They are closely identified with the community in which they operate, and helping those communities thrive is a matter of enlightened self-interest.

"We are firm believers that the company has to be involved in the community in which it operates, or we won't be able to do business locally," says Michael Oglesby, executive chairman of Bruntwood, a leading commercial property firm in the north of England.

Around 20 years ago Michael decided that a major part of the long-term equity of the company would go into a charitable foundation and, since he handed over the day-to-day running of the business to his son six years ago, he has focused on ensuring that the trust, which he runs together with his wife, daughter and daughter-in-law, "runs the way I want it to." They are obviously doing something right; the Oglesby Charitable Trust, which is heavily involved with some 40 local charities, has become one the region's biggest charitable giving organisations.

The Oglesbys donate 10% of their company's profit to social causes and Michael chairs the board of the Royal Northern College of Music, sits on the boards of the Manchester Methodist Housing Association and the Manchester International Festival, and is a member of the steering group for the Manchester Cancer Research Centre.

What's more, the family encourages all 350 employees to get involved in charitable and community activities, which leads to many of them joining the boards of organisations they work with. "Their help, time and expertise is worth far more than cash," says Michael. The staff also raise money for a chosen charity, currently the Manchester Children's Hospital, which is about to name a ward after the company as a signal of Bruntwood's long-term involvement.

Michael, 67, spends half his time on such activities and admits that they have given him a new sense of purpose after handing over the reins of the business to his son. "My role is to ensure that the company is rounded and focuses on other things than the bottom line," he says.

Helping social causes
According to Mark Evans, head of family business and philanthropy at the private bank Coutts, Oglesby is the nearest thing in a family business context to the fashionable new concept of a "social entrepreneur". Handy uses the term interchangeably with "entrepreneurial philanthropists" and "catalytic philanthropists", and defines the breed as entrepreneurs who have made fortunes at a relatively young age and have turned their energy and money-making talents to helping social causes.

The examples he cites include the likes of Sir Tom Hunter, the Scottish retail tycoon, who has invested more than £100m in charitable causes; Irish property developer Niall Mellon, who is building houses in the townships of South Africa with planeloads of Irish volunteers; eBay founder Jeff Skoll, who is sponsoring and underwriting major Hollywood films that raise issues of social justice or moral concern; and Gordon Roddick, joint founder of Body Shop, who invests in a range of social businesses, including The Big Issue and Freeplay.

What characterises these new philanthropists is their determination to be deeply involved in the causes they choose to support, rather than just writing a cheque. "[They] want to be in the driving seat, because that's where they belong and, being by nature entrepreneurs ... they like to fill gaps and meet needs neglected by others," writes Handy. They are also distinguished by their ability to "kick-start an enterprise without going begging" – an approach he dubs "volunteering with leverage".

Resolving social market failures
The Skoll Centre for Social Entrepren­eurship at Oxford Saïd Business School defines social entrepreneurship more narrowly. On its website it states: "Social entrepreneurship may be defined as a professional, innovative and sustainable approach to systemic change that resolves social market failures and grasps opportunities. Social entrepreneurs engage with a wide range of business and organisational models, both non- and for-profit, but the success of their activities is measured first and foremost by their social impact."

Tim Watts, who describes himself as an "ambassador" of the highly successful recruitment group Pertemps, which was started by his mother Connie in 1961, is, along with his company, deeply involved in a vast range of social causes, including a national programme to get the long-term unemployed back to work. But, he admits: "We went into business to be successful, not to do good works. Our success gave us the ability to be philanthropic. But I also believe that a business and its employees are all part of the community, so in a sense we are really just looking after ourselves."

As Evans says, few family businesses are driven more by the desire to create a social and environmental impact than they are by creating wealth: if they were they would be unlikely to have survived. And, unlike Handy's new philanthropists, most family businesses believe the way to benefit society is by continuing to run their businesses, rather than selling out.

Nevertheless, Evans believes that while there may be only a few examples of true social entrepreneurship among family businesses, "there is a huge opportunity for family businesses to look at this area much more closely." There are three main reasons for this, continues Evans. "Perhaps the biggest benefit is that it is a way of leveraging the experience, talent and enthusiasm of older family members who are not ready to let go," he says, pointing to Michael Oglesby as an obvious example. "It is also a great way to unite the family, who may not all be involved in the business, in a common purpose. It is far more satisfying working to benefit causes you believe in strongly than it is just writing a cheque."

Engaging with social enterprise is also, says Evans, "a great way of preparing the next generation for the responsibilities of becoming owner-managers themselves, or for managing their wealth. You can hand them a challenge – 'There is something wrong in the community, go and sort it out and we will fund you' – that gives them a tremendous opportunity to learn all kinds of new skills."

Starting young
Nigel Harris, chief executive of New Philanthropy Capital, which advises would-be donors about where the greatest needs are and how they can be met, says that the family businesses he works with increasingly encourage their young members to gain experience in non-governmental organisations or other charitable bodies.

Waymade Healthcare, the pharmaceutical company run by brothers Vijay and Bhikhu Patel, is one such business. One of the brothers' daughters helped fund a new school building in Mexico and another spent time in medical camps in India as a young doctor.

From the time Vijay set the company up in 1975 it has had a strong social purpose, inspired by the Patels' mother who brought them up alone after their father died and who, though poor, always gave 10% of her income to food charities and orphanages. "The desire to give to those who are less fortunate was deeply ingrained in us from an early age," says Vijay, and the company has a significant charitable involvement with health, housing and education in the UK, India and Africa.

One of the things it does is take over a hospital in Gujurat for two weeks every year, funding the treatment of poor sick people, feeding them and their relatives, and ensuring they have enough money for their medication. It also runs health camps in villages across Gujurat. "We work with established charities, but we and our families go out there ourselves and get closely involved to ensure that everything is done correctly," says Vijay.

A strong social purpose
Waymade's strategic approach to philanthropy ensures that the company makes both a strong social and financial return, and he is confident that the business's strong social purpose will help to bind the younger family members to it. "They are doctors, lawyers, accountants and pharmacists, but I am confident that they will choose to come into the business," he says.

Handy calls philanthropy "a new status symbol" – an association that sits uncomfortably with Vijay Patel and other family business philanthropists. "Money is almost a by-product of our work, but though I won't tell you how much we give away every year you can be sure that we are very concerned about how we spend it," he says.

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