Dai Powell, HCT Group

Social Enterprise: Going for growth

Dai PowellChief executive, HCT Group

2 November 2011

HCT Group: Origins

■ Founded in 1982 as Hackney Community Transport

“To deliver social change through enterprise, empowerment and partnership”

■ In 1993 we won our first commercial transport contract

“To be a sustainable social enterprise, we must also be an effective enterprise”

■ A business model for hundredfold growth– from a turnover of £202k in 1993– to a turnover of £28.1m in 2010/11– 630 employees and a fleet of 325 vehicles

■ Surpluses reinvested to support the core mission

Our enterprise model

Our social model

Social impact

■ Profits reinvested in the communities where they are earned

■ Transport for community groups– deeply discounted accessible minibus hire– 93,000 passenger trips in 10/11– 39% of groups say they would fold without it

■ Transport projects– 812 community bus – YourCar

■ Training for transport projects – nearly 400 qualifications for hard-to-reach unemployed– 74 job outcomes (10/11)– often delivered in partnership

HCT Group – A growth story

■ A conscious ambition of rapid growth■ Growth driven by trade■ Eliminates dependency on grants ■ 20% per year, every year■ An industry that rewards scale

“The more we grow the business, the more we grow our social impact”

Geographical Growth

Turnover growth

Growing away from grants

Profit reinvestment outstrips grants

Governance for growth

■ For-profit company board legal duty: – Maximise shareholder value

■ Traditional charity board legal duty:– Minimise risk to the charity

■ Creates a ‘can’t do’ culture■ HCT Group board culture (within legal

constraints):

“Maximise the good that we do”

A culture for growth

■ A focus on growing the business■ Celebrating business wins ■ All staff know what success looks like■ Tomorrow won’t look like today■ Invest in growth■ Stay hungry!

Investment for growth

■ Cost of grant-seeking vs investment-seeking■ Social investment a key part of our story■ Social investors seek both social and financial

returns■ They will need you to measure both – building

your capabilities

“When charities invest their reserves, do they also seek a mission-based social return?”

The Social Loan

■ Adventures in high finance ■ £4m raised to finance expansion in 2010■ Quasi-equity – based on turnover growth■ Covenants based on social impact■ Allows investors to share in success■ Controversial?

Questions? Comments?