In December 2023, I penned a piece titled ‘Poverty Alleviation vs Wealth Creation: A Better Approach to Change’. Now, a year on, here are some reflections on those thoughts…
It’s time to have an honest conversation about the social sector’s heavy focus on poverty alleviation,over the much-needed focus on equitable wealth creation.
1720 was marked by the signing of war treaties, a plague in France, and the signing of the Bubble Acts to avoid stock market manipulation. In 1820, 86 free slaves left New York for Sierra Leone, a new king rose to the throne in England, and slavery started to see more resistance – while continuing to operate. In 1920 prohibition began in the USA, the Russian Civil War thrived, the Ottoman Empire was partitioned, the Spanish Flu ended with 15-50M deaths, and the Irish War of Independence raged. In 2020, COVID19 began.
Why the history lesson? The world has changed drastically every century – and within the span of many of our lifetimes, 2020 was that radical rupture, that world-changing inflection point. I believe we need to use this moment to change how we approach the social sector. There is too much wrong with it – and the parts that are working well are under-resourced and undervalued. The sector has not let go of its Victorian roots; its paternalistic, white saviour complex, continues to be a running theme, and although existing in a different context, it’s still a case of learned people typically splashing uniformed cash on communities via a typically white/professional-led intermediary. These intermediaries typically intercept and slice a piece of the resource for themselves – all through a charity form that, in my view, focuses on, and perpetuates a poverty alleviation mindset to maintain its existence.
In this article I’m going to provide a view of this prism, which stops us from moving to a better prism – one I call Fair Wealth Creation (FWC). Indeed, FWC is alive and well. There are great examples of it operating in practice, but it needs powering up, and proliferation beyond the minority (sometimes privileged minority) that claims such a dominating stake within it. I’m not stupid. Poverty alleviation helped me get out of poverty and live my dreams, but pursuing fair wealth creation is what helped me kick on and do even more. It’s all about balance.
So what’s wrong with the social sector?
The social sector is stuck in 19th and 20th century-esque models of human existence. We are no longer serfs and lords. The 24-hour news cycle and the internet means we are in a place in which people have access to the information and resources they need to learn and understand how the world works. How the world works is not a secret anymore – so it’s only in some situations that are perhaps of immediate, emergency and/ or sensitive in nature, that a purely charitable response is needed – and even then, the use of grants in match trading shows we can use those grants in somewhat better ways. In the contexts in which slower and greater levels of capacity building support is needed (workforce, long-term health, education, and lifelong learning) – we can benefit from more enterprise-based approaches. We are seeing this in the EdTech space, conversations relating to the future of the workspace, and even more so in the net zero drive.
A focus on poverty alleviation that sells stories and pulls heart strings, rather than addressing the deeply discriminatory system that facilitated the wealth disparity, is problematic. This worries me deeply. I’ve been aware of it and tried to avoid falling in the trap myself – though, I know I’ve probably gone there, because the system forces are so strong. But it’s got to be reeled-back. Indeed, in the short-term, it can raise funds but in the long term it pushes the wealthy to see those communities in need as broken, damaged, and requiring charity. This is not always the case, in fact, in many cases it’s about a fair opportunity – taking a risk and trusting people’s intentions to build their own fair wealth while they deliver social impact. Social Enterprise UK is at the heart of this work.
There is simply not enough focus on fair wealth creation. In the context of social enterprise, we need to focus on the importance of ownership and focus on transforming the impact investment space, to be a sector that works for social enterprise… rather than something that works for impact investors, only. The recent movement led by Access in response to the Adebowale Commission speaks to the need to change the social investment space in the UK – The Community Enterprise Growth Plan’s work is important in the UK. I have tried to have an impact on this space with some wonderful colleagues and The Pathway Fund, which is focused on Black and Ethnically Minioritised enterprise growth.
A culture in philanthropy that focuses on deploying capital in the least efficient way e.g. funds proven and de-risked, small amounts to new ideas, those deploying don’t typically have deep experience or enough knowledge of the cause, limited engagement with grantees (the list goes on). This is very much the work that I will be pursuing through my work at the Black Global Trust and Pathway Fund, which should generate learning for the whole sector.
The non-profit status dominates the social sector space to our detriment: often, those with wealth are less likely to get involved in our industry if there’s nothing in it for them / if they don’t receive a high rate of return. Indeed, a social enterprise is unlikely to deliver 10x or 50x because there is no market, and where there is a market, the infrastructure and customer base is not there to facilitate its growth. We are seeing a little of this with the growth of VC-backed start-ups working with families with ADHD in the USA, or the growth of impact investment helping to secure affordable housing for refugee/migrant/vulnerable families, in the UK. These are opportunistic and very much driven forward because people can see that capital will provide a clear return, due to guaranteed government spending (i.e. health insurance for ADHD or government rent payments for refugee housing). My question is: can we take these examples and build even better examples for our sector, driven by us, social enterprise leaders?
So what could an evolved social sector look like in the 21st century?
- A deeper focus on Fair Wealth Creation: an approach that champions ownership and social enterprise would ultimately allow an equitable distribution of wealth; whether that be through government investment into impact funds, or, more directly, the organisations those impact funds support, that generate a greater level of social impact on their local communities. In addition, incentivising businesses to explore more co-ownership models as they scale.
Indeed, the UK’s Government now has an unrivalled opportunity to harness social enterprise and the impact economy, it being the case that those spaces offer outcomes that hit many of the administration’s policy objectives – in one go. Mission-driven, inclusive, growth. A rate of return on investment. Net zero advanced. Racial equity delivered. International connectivity. The list goes on. And at a time when the market wants to see sensible, income-generating initiatives, ahead of the Spring Statement on the 26 March 2025, that list’s difficult to ignore.
We need a hopeful, and ambitious narrative – and a language of hope and belief – for our local communities. We need to recognise that it’s not 50 percent of intractable issues that need charity – it’s probably more like 10-20 percent of those issues that need charity support. The vast majority need fair access to opportunity. These next four years are going to be critical – we must lift communities up through fair wealth creation and be wary of over-indexing on charity for our communities. We want a piece of the pie, not a pie donated after the main pie has been consumed.
- Funding new and innovative models: accepting failure and growing the newest innovations is key. The social enterprise space just doesn’t embrace this, and it’s a cultural and people issue that is enshrined in its institutions. We need new social impact institutions that are geared-up to bring risk and innovative thinking to the sector. Organisations like Nesta need to push further to play this role, as it’s within their remit to do this in the UK. r Equally, philanthropic organisations in the USA like Ford or Gates, should be pushing more on this front.
- Changing philanthropy: to behave like a venture capital fund – but with purpose. This increases the likelihood of greater funding within the field, therefore extending a greater number of scalable opportunities, for smaller enterprises to grow. This means philanthropy and the Government are trying to build the whole ecosystem so that social enterprises can go from friends and family to some kind of IPO-style exit. Is this possible? How would it work? Who should lead this process?
- Driving a mixed team approach: the involvement of lived experience and proximate leadership alongside learned experience and data is key to exerting the most efficient and targeted social impact. With those who have experience in the social cause participating in the designing of the solution, as well as those with a diverse and innovative thinking, there is a greater chance of achieving positive outcomes.
My learning from imitative leaders with lived experience and supporting the development community research approaches, is that in pursuing such approaches we also need to focus on the psychological and therapeutic investment we need to make. What we have in learnt and lived experience are two sets of helpful insights, that also come with their own baggage and trauma. This means trust can be quickly formed between fellow lived and learnt colleagues.
However, when bringing together – trust recedes rather than grows, and genuine, authentic, and independent expertise is needed to hold space for people individually and collaboratively so that progress can be made. The emotional labour is real. Real world work cannot be done effectively, unless the interpersonal and psychological work is done initially, throughout and on an ongoing basis. The best performing businesses are investing in their talent’s psychology systematically, so, why aren’t we?
I do not claim to have the answers here. I’m really asking questions, whilst sharing thoughts and perspectives from my experience, my work. I’d love to hear others’ thoughts,reflections, and to continue the conversation with all those who might wish to speak further on it.
Stephen Bediako OBE