Mr. Seán Coughlan:

I was asked about the pitfalls facing people who may be looking to set up a social enterprise. I am making something of a generalisation but I believe when people are setting up, the biggest pitfall is that they believe their greatest need is money. The view is that the person needs someone to write him a cheque because he has a great idea and only then can he go out and change the world. The experience in Social Entrepreneurs Ireland has been that this approach is wrong. If we wrote a cheque for everyone who held that view, there would be many cheques written but the social impact might not be as significant as we would wish.

There are two answers to the question. The first answer is from the social entrepreneur side. A social entrepreneur may believe that the biggest pitfall is money but I contend that the biggest pitfall is getting good robust planning, which involves thinking through the idea first. Many people have the enthusiasm and the passion but if a venture is to succeed more is required.

At Social Entrepreneurs Ireland we are interested in more than funding organisations for two years. Although, we do that as well and we allocated funding of €500,000, all of which was privately raised, last week to eight projects. That is pointless if our funding finishes and then they fold as organisations. One could argue that is simply a wasted investment. How do we stop that from happening? We need to have an organisation in place that has thought through what it is going to do, how it is going to get to the people it seeks to serve, how it will grow and what it will do in terms of income or funding and related planning. There are huge resources available for people to take that step. If someone comes to us with a robust plan, the likelihood of that person getting the money is significantly increased. I point social entrepreneurs to resources like information from our website. The Carmichael Centre has information. The Wheel, a co-ordinating body, has plenty of information on its website. The social enterprise and entrepreneurship task force has a resources section. In a way, it is not sexy work but for the people who really want to make this happen, it is possible to see the potential.

Not everyone is going to be a leader. Everyone has a role to play but not everyone will be in start-up mode. I am referring to people who drive the enterprise forward. Other people need to come behind them. We need to get behind the leaders and, for the other people, we need to point them towards different opportunities for engagement.

The second answer to the question is how to encourage people to take the step of thinking through and planning first, before they go looking for a cheque. There is an analogy with investment in the commercial sector. In the commercial sector there are investors at all stages of the development of a company. There are friends and family when a business is starting out first. There are angels who, typically, put a small amount of money behind a person because they believe the person has potential. There are early-stage venture capital firms, private equity firms and banks to provide financing. As a company grows there is money and there are investors who are prepared to have those conversations across all stages of development.

One of the greatest challenges we face as a sector is that we do not have investors or funders at all stages of development. That dynamic means it is possible to have the hard conversations and that the people involved realise they have to get their planning and structure together to have a chance of getting support from a particular class of investor. That is why the Social Innovation Fund is critical. Social Entrepreneurs Ireland plays a role at early stages. There are other types of funding from well-established trusts and foundations and various philanthropic sources at later stages. However, there are gaps.

That means that we do not have conversations with social entrepreneurs, they do not put in place robust plans and their chances of success are somewhat diminished. It does not cost a lot of money to develop a structure. If funders are concentrated on each stage of the journey then social entrepreneurs will have a much more robust organisations. I would point them towards the resources needed to come up with plans because that is where they will get the money. The money will follow; it is not the other way around.