Everyone a winner in this sector; Focus on the Third Sector Community profits from charity firms.

Byline: By SUE SCOTT 

WHEN David Cameron called earlier this year for charities to be allowed to compete on an equal footing with commercial enterprises in supplying the public sector, Chris Beety allowed himself a wry smile. Because that's precisely what Community Ventures (Middlesbrough) Ltd has been doing with nationally recognised success for the past nine years.

Led by Chris, the charity, set up in 1989, trades through its six shamelessly profit-driven subsidiaries with clients including Middlesbrough Council and Advantage West Midlands. And it has no problem reconciling its philanthropic roots with its money making imperative.

Chris is no Gordon Gekko, but he doesn't blush when he admits: "We deliberately set out to make profits. I'm often accused of being too profit focused, but we are still here and many others are not."

Last year, what's been described as a flagship in social enterprise, turned over pounds 1.5m and returned about pounds 200,000 to the parent trust, which put it directly back into the work of charities throughout the Tees Valley.

Not only is CVL good at what it does - running, among other things, the town centre's award-winning closed circuit TV system - but it is unique in its management structure, which has given it the freedom to expand and take the inevitable risks that come with the running a business. At the same time it allows it to protect its core values.

Behind CVL's public persona, is a two-tier board. On one sit volunteers from the business sector who drive its growth. The other, which resembles a more traditional charitable hierarchy, decides where those gains are spent.

Although it is ranked second in the country for earnings from public sector contracts by a development trust, 80% of CVL's income is spent on operating costs - not because it is profligate or overladen with back-office staff, but because it deliberately chooses to work in labour intensive sectors that can offer paid employment to people who would otherwise struggle to find a job.

Simon Pearson of Pearsons marketing company in Middlesbrough, who recently joined CVL's commercial operations board, says it's been a refreshingly liberating experience.

"The private sector is dragged in different directions by shareholders. The public sector is similarly dragged in different directions by stakeholders, but the third sector can be single-minded in its objective. It's coming out of the Victorian era of do-gooders working in the community whom you would never let run a business.

"There are some pretty sharp third sector organisations of all sizes doing cutting edge work."

Which is the conclusion the Government reached when, two years ago, it set up a Third Sector department within the Cabinet Office - the closest to the heart of government - and appointed a minister (currently Phil Hope) to bring the third sector into the mainstream economy. There, according to the minister, it can "play an even greater role in our social, environmental and economic lives".

The Government recently announced a pounds 6m social enterprise fund to improve business support services to the sector and only last week alluded to social enterprises' future role in delivering some of the health provision it is contemplating hiving off from the NHS.

According to Simon Pearson, organisations like CVL have the rigour and experience to deliver.

In the fields of social housing, children and family work "social enterprises are far better qualified than so-called experts in central government", he says.

They still, however, suffer from a somewhat ambiguous image.

Even CVL deputy chief executive Terry Murphy admits to a schizophrenic first few weeks in the job.

"I had to remember which hat I had on. Was I working for CS Security (the charity's security firm) or a charity. But that's part of the energy and entrepreneurial approach of working in the third sector."

Chris Beety says that when bidding for private contracts he deliberately underplays the "double bottom line" aspect of the business for fear that clients might perceive them to be amateur do-gooders.

"We make profits, but our other bottom line is the social input we make into the communities.

"We don't make much of the social enterprise status with the private sector."

But as corporate social responsibility climbs the boardroom agenda, that could change.

Terry Murphy believes organisations like CVL have a lot to offer the so-called "first sector" of private enterprise.

"We can get a lot more sophisticated. We have a lot to offer in terms of helping them achieve their CSR agenda, even running it for them rather than having their own department."

Meanwhile, CVL is already mentoring others operating in the same sphere.

"From being a 100% public financed organisation that grew out of the City Challenge to being a purely 100% commercially funded organisation took us six to seven years," says Chris Beety.

"There's no quick fix, but the difference is that most publicly funded bodies wait until the year before the money runs out before they realise they've got to do something about it. There's lots of resistance to the third sector being dragged down the enterprise route, partly for fear they will lose their credentials.

"They have been very happy going along on private donations and public money - but that isn't going to continue."

We make profits, but our other bottom line is the social input we make into the communities - Chris Beety, left

Diverse and passionate ...

WHAT is the Third Sector?

The Government's Cabinet Office defines the Third Sector as a 'diverse, active and passionate' collection of organisations that are 'non-governmental', 'value-driven' and principally 'set up to reinvest any financial services to further social, environmental or cultural objectives'.

In practice, the Third Sector, which stands in the queue behind the First Sector (private business) and the Second Sector (public services), includes not-for-profit companies, development trusts and social enterprises, all of whom are engaged, through various trading divisions in making money for charitable purposes.

CAPTION(S):

SPREADING MESSAGE: Terry Murphy, deputy chief executive of Community Ventures Ltd, talks with Dr Ashok Kumar MP, above; and David Cameron left; CUTTING EDGE WORK: CVL's new director Simon Pearson