How can businesses put social purpose before profit?
The idea of trading for social purpose has a rich history. In fact it has been argued that it wasn’t until mid 19th century England that the private interests of shareholders overtook the purpose of doing business for public benefit.
However, some ideas of public benefit around in those days, such as colonisation, would not fit with progressive principles today. And corporations were certainly not all benefiting the public before that time. There were already examples of organisations forming in order to bring a fairer deal to customers.
In 1795 an “anti-mill” was set up in Hull, to provide an alternative to the high flour prices charged by commercial millers. In 1844 the Rochdale Pioneers, often seen as founders of the modern Cooperative Movement, set up their first shop in Lancashire, England. They provided affordable alternatives to poor-quality and adulterated food, and used any surplus to benefit the community.
From the 1970s, new generations of political activists founded workers’ co-operatives – a popular model for setting up independent enterprises that provide decent livelihoods; where workers could manage the business together, rather than working for a boss that siphons off the profits at their expense.
From the mid 1990s ‘social enterprises’ became popular, as a means to achieving social aims through trading, where income from sales are reinvested into the mission of the business. Social enterprises can be structured as for-profit or non-profit, and may take various legal forms, including cooperative, community interest company (CIC) or charity. They can also be a ‘company limited by guarantee’, as long as they have a board of three or more directors, and a suitable mission statement in their Articles.
Experimentation around the idea of ‘regenerative enterprise’ also has much to contribute to shaping mission driven businesses.
FIND YOUR LOCAL BETTER FOOD TRADER
How can I spot a mission driven business?
Not-for-profit aims written into business structures
It’s about the culture as well as the company type
The legal form of a company is important, but so are the structures and culture within the organisation – to keep the commitment to wider benefit alive. This can be hard to see from the outside of an organisation, but may be visible in newsletters or online blogs or social media.
Many mission driven organisations will have mailing lists, open days or membership options, allowing you to gain more insight into their internal culture, whilst sometimes offering the ability to influence or contribute to its development.
Members and supporters can help to hold organisations to account, keep them aligned with their mission statements and guard against the possibility of them selling out. There are many examples of people trying to take mission-driven businesses or organisations into private hands. This can occur at every level of the movement – from the very top (an attempt in 1997 to ‘demutualise’ the Cooperative Wholesale Society, the CWS, descended from the original Rochdale Pioneers), to small housing cooperatives being taken over.
The Radical Routes ‘How to set up a worker coop’ booklet states: “unfortunately, at the end of the day there is no 100% effective way to stop undesirable changes to the constitution, other than making sure you only take on people with a commitment to the co-operative principles and values, and regularly review your aims and principles.”
There is better legislative protection for new organisational forms such as community benefit societies, and Community Interest Companies (CICs), which have a stronger ‘asset lock’ built in, ensuring any profits or other surpluses generated are used for the benefit of the community. A Company Limited by Guarantee can also choose to include an asset disposal statement in its Articles.
On the flip side, it’s possible to rescue or transform privately-owned businesses by changing the ownership model. There was a flourishing of cooperatives in Argentina when the economy collapsed in the early 2000’s. Some Community Supported Agriculture projects such as Fordhall Farm, have also made use of community shares.
FIND YOUR LOCAL BETTER FOOD TRADER
Case stUdy: Cooperation Jackson in Jackson, Mississippi
Cooperation Jackson believes that it can replace the current socio-economic system of exploitation, exclusion and the destruction of the environment with a proven democratic alternative.
Its emerging network includes Freedom Farms Cooperative and The Green Team Landscaping Coop.
The cooperatives of Cooperation Jackson reinvest a major portion of their surpluses in Jackson and Kush District (the contiguously Afrikan counties of western Mississippi). Following the Mondragón model, a significant portion of its surplus goes towards new job development, to community development (through the use of social funds), to a social security system based on mutual solidarity and responsibility, to cooperation with other institutions advancing the cause of workers in Mississippi, and to collaborative efforts to developing a transformative culture in Mississippi.”
Case study: Teikei Coffee, Germany
Teikei Coffee takes a ‘community-supported agriculture approach’ to coffee- its community of consumers in Germany pays for its coffee one year in advance, providing the entire production chain with security and sharing the risk. If the harvest is bad, each community member receives a little bit less coffee. If the harvest is good, every member gets a little bit more coffee.
“Teikei” is a Japanese term which means ‘working together’ and is also the name given to community-supported agriculture in Japan.
Teikei’s prices are set through dialogue, not through market prices, with the aim of setting the true cost of coffee – providing fair prices for every part of the Teikei value chain.
What sort of society do you dream of?
How can this dream be applied to food businesses?
Can you think of examples where this dream has been made a reality?
When thinking through the role of business in society, what else could pick up this role?