Community recyclers urged to be “commercially aggressive”

The call came from Community Recycling Network UK chair Lucy Danger, at the end of an event highlighting a number of new financial and contractual directions for groups seeking to move to more of a business-like “social enterprise” model, rather than being treated as some kind of cheap labour in the recycling sector.

” Community recycling is in the foothills of what it can achieve. “
– Ed Miliband
Groups are increasingly keen to secure proper contracts with local authorities to provide their recycling services, rather than relying on the good will of loose partnerships.

Many groups are looking at a new emphasis on “social accounting” to strengthen auditing systems so that the benefits of their work can be recognised in competing for contracts or funding.

And as grant funding streams like the CRED programme and BREW close their doors, community groups are now exploring new routes to financial sustainability – including the prospect of new ways to borrow money from banks or investors.

However, while city investors are becoming very keen to fund the profitable recycling activities of social enterprises, this new funding opportunity appears to be less keen to support the social aspects of groups – the training programmes and support for vulnerable sections of society.

But for those now “chasing” funding, the warning came that social enterprise groups need to continue the community benefit part of their work “so they are not just seen as projects that are interested in making profit”.

Addressing the conference via video, third sector minister Ed Miliband said the government's new waste strategy would support the role of the community sector in local services. He said: “Community recycling is in the foothills of what it can achieve.”

“Closed out”
But with Defra encouraging councils to link up to offer bigger waste and recycling contracts that benefit from economies of scale, community groups at the CRN conference were feeling “closed out” from providing local services.

Some ill-feeling has arisen particularly where community groups have lost their role in local recycling without a contract to defend them.

Mal Williams of Wales community recycling network Cylch said groups were “still suffering the bruises” from broken partnership agreements. He said: “Overall the learning is that we don't want to go into partnerships any more – partnerships can be ripped up, divorce can be very quick. Everything has to be put on a contractual basis.”

” We don't want to go into partnerships any more – partnerships can be ripped up, divorce can be very quick. Everything has to be put on a contractual basis “
– Mal Williams, Cylch
The emphasis on social accounting is increasingly being seen as important to demonstrate the value of social enterprises, since the public sector is in danger of missing the value of all services offered by community groups because of its compartmentalised – or “silo” approach to service budgets.

Colin Keynes, director of the Wales Re-investment Trust, pointed out that community groups are often addressing several social problems at once – but may only get the recognition for the recycling they carry out.

As an example, he suggested keeping an offender in prison might cost 40,000 a year, but that community groups employing ex-offenders might prevent re-offending, and therefore prevent potential prison costs.

Scotland
Two schemes being developed in Scotland are looking to help increase community access to local recycling services – the Public-Social Partnership (PSP) and the SWF 150 scheme – which are being monitored closely by community recyclers elsewhere in the UK.

The PSP process involves the tendering of council services in which the service users – the community and householders – are involved in the design of the service before it is formally tendered. A trial was launched last June with furniture re-use groups in North Lanarkshire, in which services are even piloted before the tendering process.

Ian Gulland, chair of the Community Recycling Network Scotland, explained: “It's about supporting innovative projects and building social clauses into the contract.”

The SWF 150 scheme allows local authorities to bid for funding from the Scottish Executive's Strategic Waste Fund to support community recycling services up to the value of 150 per tonne for material diverted from landfill. This 150 per tonne figure refers to the potential fine councils are facing for failing their government landfill targets.

Mr Gulland said some 850,000 had already been committed to help community recycling or re-use projects so far.

Mr Gulland said community groups in Scotland are now diverting 73,000 tonnes of material from landfill each year – the equivalent of one of the “better performing local authorities”. He said as a result, the Scottish Executive was keen to support the sector.

London
Interesting funding noises are also coming out of London's Community Recycling Network (LCRN), where new chief executive Matthew Thomson and his team are looking into ways to help bring together investors and community groups.

Addressing a workshop on financing in community recycling, he said investors were offering millions of pounds for recycling initiatives – but the warning was that the money was an investment, not a grant, and therefore ultimately would have to be paid back.

Mr Thomson said: “One of the biggest mistakes at the moment is dissing grants – we're all talking about weaning ourselves off grants, like it's some kind of addiction. I'm a great believer in grant funding.”

That said, the LCRN chief executive spoke of the possibilities of charity banks, loans including payment “holiday” periods, bridging finance and special purpose vehicles for bringing in investment without threatening the sustainability of groups.

His recommendation was that groups should only consider borrowing money if they are profitable in the first place, and advised groups to challenge investors on interest rates.