Burgess COMMENTARY

Peter Burgess

British Council in Ukraine: 'You're not rich enough to be partners' #socent It took a letter to my MP, Mark Harper to discover yet one more of the clubs that wouldn't have us as members. In 2010 The British Council were soliciting partners in international social enterprise development and we sent in our application We'd been in Ukraine since 2004 working alongside Maidan activists who'd helped us break the silence over corruption in orphanages In the proposal delivered to Ukraine's government in October 2006. we'd set out a strategy for microecomomic development and social enterprise. The social enterprise component was to be established at Kharkiv National University. In 2008 we'd made direct call for support to USAID copying our letter to the Senate Commitee on Foreign Relations. I'd also made direct contact with the UK's Foreign and Commonwealth office who replied to say that they and the British Embassy were both aware of our work in Ukraine.

The Foreign and Commonwealth Office provide funding for the British Council, so we all pay for them through taxation.

More to the point, we'd provided a software product to the British Council for a number of years and they'd opted out of paying the annual maintenance charges. At £400 a year, that wasn't going to make us too wealthy but it had helped keep our mission funded.

It was only by calling on my MP that I learned that one of their selection criteria for partnership was the ability to make a financial contrbution.

Erste Bank, one of the corporate partners was also in the picture since we had introduced them to the 'Marshall Plan' in their Social Business Ideas Compettition. In December 2010 we wrote to Price Waterhouse Coopers, pointing out the IPR violation of the proposed project.

All to no avail and today Ukraine is on the brink of civil war, with our friends at Maidan in the middle of it

Allegedy their most prominent oligarch, Rinat Akmetov, has fled to England

In Kyiv Post as you may read, he along with Viktor Pinchuk, host of the Davos Philanthropic Roundtable are described as 'Ukraine's Scrooges' for their unwiillingness to make a social contribution from their immense wealth.

On the other hand as you may see quite clearly, from the USAID website, they are partners with the same people who turned us down

As a business for social benefit all surplus revenue and our own deferred incomes were dedicated to the 7 years in Ukraine. The financial cost to us being in the order of £500,000 without considering the value of our IP.

To be fair to Ukraine's oligarchs, they have been most generous on the other hand to politicians. Tony Blair to the tune of $500,000 from Pinchuk for his Faith Foundation from Pinchuk, for example . Lord Mandelson's has allegedly benfited from Akmetov's hospitality.

Is something beginning to smell a little?

The British Council may not pay its suppliers but they can afford to sponsor the Guardian where they are still soliciting for partners with no mention of making financial contributions.

Unsurpisingly Guardian editors do not welcome my blog contributions, they are always unsuitable for their audience.

For founder Terry Hallman the final payment was his death in Ukraine. The US Embassy told me that as an American without health insurances there was no treatment facilty which matched his budget. He left friends at Maidan with the message 'Whether these kids live or die is of little, if any, concern to Mafia' It was a quote from his 2008 letter to USAID.

What Terry left behind in the 'Marshall Plan' for Ukraine was his original thinking on business for social benefit which we'd introduced to the UK social enterprise community in 2004. It makes a key point about the application of profit for social benefit:

'Enterprise is any organizational activity aimed at a specific output or outcome. Once the output or outcome – the primary objective – is clear, an organization operating to fulfill the objective is by definition an enterprise. Business is the most prominent example of enterprise. A business plan, or organizational map, provides a reference regarding how an organizational scheme will operate to produce a specific outcome: provision of products or services in a way to create profit. Profit in turn is measured numerically in terms of monetary gains, the “bottom line.”

This is the function of classic capitalism, which has proven to be the most powerful economic engine ever devised.

An inherent assumption about capitalism is that profit is defined only in terms of monetary gain. This assumption is virtually unquestioned in most of the world. However, it is not a valid assumption. Business enterprise, capitalism, must be measured in terms of monetary profit. That rule is not arguable. A business enterprise must make monetary profit, or it will merely cease to exist. That is an absolute requirement. But it does not follow that this must necessarily be the final bottom line and the sole aim of the enterprise. How this profit is used is another question. It is commonly assumed that profit will enrich enterprise owners and investors, which in turn gives them incentive to participate financially in the enterprise to start with.

That, however, is not the only possible outcome for use of profits. Profits can be directly applied to help resolve a broad range of social problems: poverty relief, improving childcare, seeding scientific research for nationwide economic advancement, improving communications infrastructure and accessibility, for examples – the target objectives of this particular project plan. The same financial discipline required of any conventional for-profit business can be applied to projects with the primary aim of improving socioeconomic conditions. Profitability provides money needed to be self-sustaining for the purpose of achieving social and economic objectives such as benefit of a nation’s poorest, neediest people. In which case, the enterprise is a social enterprise.

In this case, for the project now being proposed, it is constructed precisely along these lines. Childcare reform as outlined above will pay for itself in reduced costs to the state. It will need investment for about five years in order to cover the cost of running two programs in parallel: the existing, extremely problematic state childcare scheme, and the new program needed to replace it for the purpose of giving children a decent life. The old program will be phased out as the new program is phased in. After this phase transition is complete, the state will from that time forward pay out less money for state childcare. Children will have a better life, and will be more likely to become healthy, productive assets to the nation rather than liabilities with diminished human development, diminished education, and the message that they are not important – the basis for serious trouble. There is no need whatsoever to give these children less than a good quality of life as they grow and mature. The only problem is reorganization of existing resources. '

The infuence on Ukraine's government policy is something I describe in 'Every Child Deserves a Loving Family', The impact on the thinking of business is perhaps less well known.

To illustrate that infuence I return to the Davos Philanthropic Roundtable, its sponsor and the beneficiary of his generosity, Tony Blair who offers his opinions on business for social benefit as if we had never existed. He's building his reputation on the efforts of a colleague who died in poverty and the graves of children that could not be saved.

'The power of enclosing land and owning property was brought into the creation by your ancestors by the sword; which first did murder their fellow creatures, men, and after plunder or steal away their land, and left this land successively to you, their children. And therefore, though you did not kill or thieve, yet you hold that cursed thing in your hand by the power of the sword; and so you justify the wicked deeds of your fathers, and that sin of your fathers shall be visited upon the head of you and your children to the third and fourth generation, and longer too, till your bloody and thieving power be rooted out of the land.' - Gerard Winstanley