This, the first of two case studies, illustrates some of the issues third sector economic projects encounter when organising projects in the local economy. Both case studies are snapshots of real projects. Any case study is necessarily a snapshot in time. So, if anyone thinks they can identify these projects please remember my purpose is to describe the issues these projects faced at a certain time in their development. I do not intend to evaluate their response to the issues they faced. These issues do not necessarily apply to these organisations today; they probably struggle with entirely different problems!
Fairly Traded Grocers’ Shop
Today’s example is a shop selling fairly traded goods, mostly groceries. It is still going and as far as I know it is doing well. In its early days it struggled with the contradictions of straddling two sectors. Its values are pro-fair trade, organic food, against animal cruelty, etc. They use window displays for example to get their message across.
Volunteers ran the shop. Its profits were for charitable purposes. This sets up some interesting contradictions. First, it means the shop is competing with other shops who pay their staff. This must mean it has an unfair advantage in the marketplace. No-ones livelihood depended on this shop. So, the balance is between its charitable aims and the likely impact it might have on its competitors who may be dependent upon the success of their businesses.
There is a more subtle issue. At one time, the shop was under-performing, unable to generate the income you might expect given its location. The reason seemed to be, not having the overheads of similar businesses, there was no incentive to exploit its advantage.
At the same time, it set up a second shop in a disadvantaged area. It was unable to support it financially and so the second project closed. The second shop did not attract volunteers from the first and had to find its own in a community that questioned the idea of working for nothing. But the first shop was not at the time generating sufficient income to support the second. The second shop arguably supported the charitable aims of the shops’ parent charity.
Leadership
This highlights some of the issues when taking a third sector approach to private sector activity. This project brought its own bureaucracy not so much from the statutory sector, it was never grant aided, but from the church.
Its leadership was ideological, not practical and used bureaucracy for control. This is a common problem in any organisation but is less of an issue where there are clear lines of ownership and/or leadership. If you don’t have to do well financially, it opens up the path to management by whim.
Because it could survive without staffing overheads, it had no incentive to exploit its advantage in the marketplace. Consequently it found it was unable to grow naturally and so contribute to the second shop.
The charity could have used the first shop to fund the second but it was unable to manage effectively a shop with significant advantages in the marketplace, namely reduced overheads, so it could support the charity’s other activities. This undermined the fairness of its activities competing in the local economy.
The problem was in part lack of experience and an over-complicated management structure. Most small shops are managed by their owners and rarely by a committee of people with little day-to-day involvement in the enterprise. The focus of the organisation was on its charitable activities and not on the local economy.
However, nothing is ever achieved without trying new things. The shop is still going and seems to be doing well. Maybe they are finding a place in the local economy and a role that makes sense. Their low overheads provides them with the time they need to experiment and make mistakes. This is a luxury not always available to small businesses.
