By Thomas Musau
In recent times, government policy and public-sector commissioning have placed increasing emphasis on social value, value for money, outcomes and measurable impact. Commissioners are interested not only in what a provider will deliver, but in the wider difference that public spending will make to service users, families and communities. For organisations bidding for care contracts, being able to demonstrate and, where possible, quantify these wider benefits can provide a significant competitive advantage.
This is where concepts such as theory of change, co-production and user involvement also become important. A provider should be able to explain how its activities will lead to identifiable outputs, improved outcomes and ultimately a measurable difference in people’s lives.
It is no longer always enough for a care provider to demonstrate that it can deliver the specified service at an acceptable price. Commissioners increasingly want to understand the wider difference their spending will make. What social value will be created? What outcomes will service users experience? How will families and communities benefit? And what additional value can the provider bring without simply increasing the cost to the commissioner?
This is where setting up a care business as a social enterprise can make a real difference.
A social-purpose care organisation can look beyond the commissioned hours of care and consider the person’s wider wellbeing. A service user may receive excellent personal care but still experience loneliness, social isolation, lack of confidence or limited opportunities to participate in their community.
Depending on its structure and eligibility, a social enterprise or charity may be able to attract grants and other funding for complementary projects such as social events, day trips, befriending schemes, volunteering opportunities, digital inclusion, gardening, arts and cultural activities, employment support, skills development and activities bringing service users, families and communities together.
This is potentially significant from a commissioning perspective. The core care service may be funded through a contract, while separately funded and properly accounted-for community projects can complement that service and contribute to wider outcomes for the people being supported.
These additional activities can produce measurable social value. They can improve wellbeing, independence, confidence, community participation and social inclusion while complementing the core service being delivered.
This can also strengthen a provider’s position when bidding for contracts. Where organisations are offering comparable core services, a provider that can demonstrate additional outcomes and legitimately bring other resources and partnerships into its wider community work may present a stronger value-for-money proposition.
Grant funding is only part of the picture. Depending on the legal structure, a social-purpose organisation can reinvest some or all of the surplus generated from its activities into achieving its social objectives rather than distributing profits to private owners. For registered charities, qualifying income and gains applied to charitable purposes may also benefit from significant tax reliefs. This does not mean that every social enterprise pays little or no tax; CICs and other social enterprises do not automatically receive the tax exemptions available to registered charities.
The ability to reinvest surpluses can nevertheless create a powerful cycle. Money generated through trading can help improve services, purchase equipment, develop staff, support activities and expand projects benefiting service users and communities.
Being genuinely user-led can provide another advantage. Service users, parents, guardians, carers and other stakeholders can be involved in consultation, advisory groups, project development and, where appropriate, governance. This can help ensure that services are shaped by the people who use them rather than entirely by management.
For commissioners, this can provide evidence of co-production. For families, it can demonstrate that their voices matter. For the organisation, it can result in services that better reflect people’s actual needs.
These additional services can also become a powerful form of marketing. Families choosing between providers are unlikely to consider only whether basic care tasks will be completed. Opportunities for social activities, community participation, volunteering, friendships and personal development can distinguish one provider from another.
A social-purpose structure can also attract professionals willing to contribute their expertise as trustees or non-executive directors. People with experience in health and social care, finance, safeguarding, law, HR, commissioning, property, fundraising or business development may be prepared to support an organisation because they believe in its social mission.
Premises may present further opportunities. Councils and other public bodies sometimes make community buildings available through subsidised leases, community asset transfers or concessionary arrangements. Registered charities occupying premises mainly for charitable purposes can also qualify for substantial business-rates relief.
Local authorities also fund and commission programmes supporting vulnerable people, reducing isolation, improving wellbeing, increasing independence, supporting employment and encouraging community participation. Depending on eligibility, social enterprises and charities may be able to participate in programmes that complement their core care activities.
Councils for Voluntary Service and similar organisations can often provide advice on governance, constitutions, policies, volunteering, project development and funding applications. This can be particularly valuable when those running the organisation are concentrating on developing its trading activities.
There are, of course, responsibilities. Charitable assets must be used for the organisation’s charitable purposes, while CICs are also subject to an asset lock. A founder can work for the organisation and receive reasonable payment for employment or services where the governing arrangements permit it, but being a trustee does not automatically create a right to remuneration. Decision-making may require agreement from fellow trustees or directors, but good governance brings additional expertise, accountability and protection.
The key is choosing the right structure. Options include a Community Interest Company (CIC), a Company Limited by Guarantee (which can also be established and registered as a charitable company where it meets the relevant requirements), a Charitable Incorporated Organisation (CIO), a charitable trust or an unincorporated charitable association.
For care entrepreneurs, the opportunity is much bigger than accessing grants. It is about building an organisation where commercial sustainability and social purpose reinforce each other.
If you are considering establishing a CIC, company limited by guarantee, charitable company, CIO, charity, community organisation or faith-based organisation — or already have one and need support identifying suitable grants or developing community projects — ACS-UK offers a free one-hour initial consultation with one of our experienced consultants.