CSR holds some opportunity says Triodos Bank
Do the dark clouds of the spending review hold a silver lining for social enterprise?
20-10-2010 | Commenting on the outcomes of the Spending Review, Charles Middleton, managing director of Triodos Bank, said:
"Although we recognise some sectors will be hit very hard, we need to look for the opportunities.
"With more of a focus on getting results, the delivery of public services will have to be more accountable and therefore more sustainable. This should encourage closer links with a greater number of smaller, community or social enterprise schemes; and favour service providers who are already taking a more entrepreneurial and sustainable approach.
"Decreased public sector funding should also help promote growth in alternative delivery models which can often be cheaper or more cost effective than more established models.
"At Triodos we have a strong track record of working with organisations that are very good at responding to these sorts of challenges through their strong entrepreneurial approach and we will continue to support them while recognising that some of the people and communities they are working with are those that will be most affected by these cuts. Banks like us, who work closely with organisations that are trying to find solutions, now have the chance to lead the way in developing alternative banking models to help deliver these different solutions and, ultimately, influence the mainstream banking community.
"And with today's announcement of the permanent Bank Levy and commitment to the banking Code of Conduct there is an indication that the Government wants mainstream banks to take some ownership for their part in the current economic crisis. This move should help ensure a similar situation is not repeated."
Case study: Triodos Bank-funded Sandwell Community Caring Trust
In 1997, faced with a similar economic climate of swinging public sector and local authority cuts, Sandwell Community Caring Trust (SCCT) stepped out of the public sector and reestablished itself as a social enterprise.
Realising that the cuts didn't have to mean the end of SCCT delivering public services, more creative routes were sought. A typical public sector approach in the face of cuts would be simply to do less. Instead, the team looked for a more sophisticated model. Since then SCCT has been at the forefront of successful public service delivery offering better value, improved quality and ensuring the long-term sustainability of its workforce with the same pay and benefits as before.
One example of the national frameworks and constraints making the public sector unsustainable is sick pay schemes. At the time of leaving the public sector, SCCT's average sick rate was 22 days per employee per annum. Doing away with national bureaucracy, and building the business into a successful social enterprise with a truly engaged workforce means that SCCT's average sick rate has shrunk to less than one day per employee per annum. Geoff believes such reductions could bring about savings of between £300,000 per year in an average elderly persons home.
SCCT has also managed to decrease the amount of staff time spent on management and administration. Previously, this figure was around 22 per cent now, with a more effective and more efficient delivery model, this figure is around seven per cent. Freeing the organisation from certain public sector restrictions has enabled the team to focus on the things that only deliver value. Previously, 67 per cent of SCCT's total income was spent on delivering people to the people they served, now this is 85 per cent.
SCCT's model proves costs can be improved too. For example, Geoff cites the average cost to provide a week's residential care which for local authorities three years ago was around £652. At the same time, SCCT provided the same level of care supported by a more engaged workforce on the same pay and benefits for £328.
Geoff puts it all down to a totally different relationship with his workforce, where staff are engaged and really do make a difference. Things matter, he says, unlike working with the council, where there's the perception that money will always come from somewhere. The team was never specifically looking for value for money. Rather, it came about as a nice by-product of focusing on the people they served, focusing on what they needed and engaging with the workforce differently.
Ultimately, the SCCT experience proves today's cuts could be positive for the public sector, if only those involved are able to look at the tasks at hand - managing resources and effective public service delivery - from a different point of view. It's down to the Government to offer the public sector a different vision and help them focus on different outcomes. Managers in local government know what the issues are, they just need to be able act differently and focus on what's important. Geoff urges the Government to really look for different ways of delivering public services - for example via a social enterprise model - rather than simply making cuts. Downsizing is ultimately as unsustainable as not making any cuts at all and is simply not enough.
Notes to editors
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About Triodos Bank
Triodos Bank only finances enterprises which create social, environmental or cultural added value. Key sectors include organic food and farming, renewable energy, social housing, and fair trade. Transparency is a core value: customers are informed about the bank's lending and can target their savings to particular areas of investment. A range of personal savings accounts is offered, and full banking services are available for businesses and charities. Triodos Bank is an independent bank founded in the Netherlands in 1980. Its principles and independence are protected through a special shareholding trust. The UK office opened in 1995 and is based in Bristol.