Real-life Tales of Earning - Ealing Community Transport

From asking to earning

Origins
Reasons for entering into service delivery
Government's motivation
Key challenges and critical success factors
Keeping close to mission
Investing in people
Future perfect?
Key signposts

Origins

This is the story of Ealing Community Transport (ECT), drawing out the key lessons learnt during its 25 years of dynamic growth in public service delivery, and from its inspiring journey of 'asking to earning'. ECT is a not-for-profit organisation with unrivalled experience in developing innovative transport and recycling solutions and in implementing projects effectively. It offers a 'can do' philosophy allied to a progressive vision.

'How does it feel to aspire to achieve a genuinely triple bottom-line - seeking social, environmental and economic results?'

Ealing Community Transport is just that - a community transport scheme, but which has diversified and grown, and now collects household waste and recycling material, which would otherwise be either incinerated or sent to a landfill.

ECT began life as a project of the Ealing Council for Voluntary Service in West London in 1979, becoming an independent organisation in 1987. It was set up, as the name implies, as a community transport scheme. In 1982 ECT had an annual turnover of around £30,000, and 64% of its income was derived from grants.

Twenty-two years later ECT employs over 600 people with an annual turnover approaching £24 million in 2004 - of which just over 1% is in grant aid.

This growth has come through diversification - through winning and delivering household waste and recycling contracts for local authorities, recycling material that would otherwise be either incinerated or sent to landfill. Currently, 5% of income is derived from minibus transport and 5% from vehicle maintenance contracts. The remaining 90% is from recycling services delivered under contract to ten London boroughs, two districts in Oxfordshire and one district in Warwickshire - and the list continues to grow. Since April 2003 ECT has also run the franchise for the 195 London bus route in West London, which a mere seven months later, was voted one of the most reliable bus services anywhere in the country - Transport for London's Bus Performance Tables (December 2003).

In May 2004, ECT branched out further, by entering a partnership with Dartmoor Railway in Devon. Dartmoor Railway is a unique operation. It is the first independent 'Community Railway' in the UK having secured the future of a rural railway, with no central government funding, by developing sustainable tourism traffic and retail activities. By bringing its expertise in business systems and its experience of community engagement, ECT will give the railway the strength to develop the tourism and community rail services increasingly needed by the people of this picturesque, rural area. ECT also see this as an exciting learning opportunity providing the potential to replicate Dartmoor Railway's success by expanding community rail services in other areas of the country, thereby enhancing its community transport portfolio.

Given the specific nature of their work, the story of ECT may not have direct relevance to many organisations' work. But in the two decades that the organisation has grown - and it has grown significantly on any index - there are generic lessons to share. The organisation has grown in terms of turnover, expanded geographically and diversified their activities, become more professional in their management and more entrepreneurial in their culture. And ECT has proved that the journey from 'asking to earning' is not only possible, but can also be an extremely positive experience for both the organisation itself, and its beneficiaries - those who use and rely on its services every day.

This is not a story of a welfare-focused voluntary organisation developing trading activity as 'another tool in the funding box', but of the journey from grant dependency to self-financing social business, or from 'asking to earning'.

And it is an important story because as ECT grew they didn't do anything different; they just started paying greater attention to their market and expertise.

Stephen Sears the co-founder and Chief Executive of the ECT Group takes up the story...

"We came to recognise that much of what we had was transferable beyond community transport. There is a difference between your products and your core competencies. Our knowledge and skills base was about vehicles and logistics. You can sell what you know.

So we diversified into furniture collection. This made us financially stronger and it enabled us to expand our broad social base. Refurbishing furniture saves items from incineration or landfill, returning an environmental dividend, not to mention employment creation and making essential household items fully affordable. We also recovered poisonous CFCs from the backs of fridges, ran a paint exchange and piloted a garden waste-recycling scheme. When, following a successful pilot, we embarked upon the recycling scheme. This represented a learning opportunity, a risk and a challenge, but it was based on a pilot and fitted into a long-term plan.

On occasions however, we have moved quickly and opportunistically. In Hounslow in West London, for example, we exploited a unique and fortuitous set of circumstances and were able to work with committed officers and understanding members to take on a recycling contract. Now we were operating a community-wide recycling service as a result of our willingness to take risks and rise to challenges.

In the London Borough of Lambeth we won a contract as part of a partnership. We provided the niche recycling functions in a larger bid and this time we were successful as a result of our Quality Assurance and information systems.

ECT is the now largest not-for-profit community-recycling group in the UK providing multi-material recycling to 645,000 households - that's 60,000 tonnes, 1.5 million people and 1 in 4 Londoners. It has created more than 280 jobs.

If you look at our growth trajectory, it is based on a number of inter-related themes:

Growing organically at a sustainable and measured rate.
Developing new ideas beyond our original mission yet related to our key and existing competencies.
Taking over existing projects.
Bidding for statutory contracts.
Reducing grant dependency.

And there have been some very real, and at times challenging, implications of growth. We have had to become a more formal organisation and have needed to develop robust systems. Growth may well impact upon an organisation's structure and culture in quite unforeseen ways. There may also be a need to recruit more specialist staff and look more to specialist outside advice."

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Reasons for entering into service delivery

But why might other voluntary and community organisations consider entering into public service delivery? Because:

Of external pressure - grants are being replaced by contracts.
There are significant benefits of scale to be achieved - a growing number of contracts can share central overheads and management capacity.
Diversification builds resilience, eroding dependence on one or a small number of income streams.

The discipline of winning and delivering a contract has led ECT and many others to provide better services. Most obviously, ECT does more socially and environmentally useful things than they did when they had one paid member of staff.

ECT believes that their journey has also made them more professional: they have developed robust quality assurance systems. Growth brings new challenges, which enable staff to find new challenges in situ. And ECT looks closely at their people's career development, rewards and motivation and has a high staff retention rate among key managers.

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Government's motivation

And what of the other side of the equation? Stephen continues...

"I think there are several driving factors behind the government's interest in non-for-private-profit organisations taking on public services. Reasons that are not about trying to offload essential services, but that are pragmatic and positive ones about looking to the third sector to provide value for money, quality, and a strong customer focus.

I also think that progressive public authorities are alive to the dangers of focusing too much on producer interests, and too keen to avoid private profiteering from essential public services. Questions have also been raised in some high-profile cases about the probity of certain service delivery businesses.

So all in all I think the future is potentially bright for a new model for public services delivered by independent organisations operating for the public good, not shareholder value, and thus able to prioritise social and environmental objectives.

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Key Challenges and Critical Success Factors

This said I do think there are some challenges ahead, and some tough strategic choices to be made by organisations seeking to engage in this agenda.

It is important not to run to contracting simply as a response to the limits of grant funding - it has to be mission driven.

Problems of scale may also prove difficult for small organisations entering into service delivery, although progressive councils are increasingly looking at unbundling contracts and opening niches for smaller providers to fill.

Organisations may also consider (as we have done) how pilot schemes and demonstration projects might pave the way to more involved service delivery. Looking to the future there is a major question as to how third sector organisations engage not only in the traditional welfare sphere, but also more widely in mainstream services such as waste disposal and leisure services.

So too are potential challenges thrown up by the workings of local government - workings which may not be open to 'non-traditional' tenders. Potential service deliverers may well have to contend with risk adverse officers and, dare I say it, sometimes capricious members.

There is also going to be a lot of competition - from councils' own in-house Direct Service Organisations, from sole traders to multi-nationals. We have recently competed for a contract with a subsidiary of Halliburton Group, the US conglomerate once headed by the US Vice President Dick Cheney.

If organisations are going to compete they have to compete on the basis of price and quality, not sentiment. It is vital that we are able to measure the value that we add through the use of social audit and/or similar tools.

If I had to set up a list of how voluntary and community organisations can compete I'd say it involves:

Business intelligence (non-profit organisations are often very good at knowing their market)
Commitment
Marketing
Organisation
Responsibility...
...and as Napoleon encouraged his generals: 'Be lucky!'

If I had to set out some key generic lessons, they would look like this:

Be prepared to market your own expertise.
Diversify on the basis of your knowledge.
Don't be afraid of growth.
Take responsibility, show leadership.
Be opportunistic.
Work with partners.
Be determined - don't give up.
Stay positive - it takes time to win work and confidence.
Hold your nerve.
Embrace change and look to the future.
Ignore administrative boundaries.

It is also important, surrounded as we are in the sector by animated discussion about core costs to ensure that we always charge on the basis of average, not marginal, costs. Demand the full amount of what it costs you to deliver the service, not just the project costs, but all the costs that go into making that project happen - lighting, heating, rent, the Chief Executive's salary - in other words, demand 'full cost recovery'.

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Keeping Close to Mission

The other key point to draw out relates not to money but to mission.

In case you're wondering, we haven't forgotten where we've come from. We are delivering the 195-bus route and are in negotiation to provide more Social Services and Education transport. The story of ECT is not about the abandonment of mission. I'd emphasise that it's vital when treading this enterprising route to retain clarity of mission and vision. Be prepared to adapt the mission but do so on the basis of conscious thought. Retain clarity and be prepared to adapt. We've changed our plans but we've always stayed focused on our purposes. We've consciously developed our mission - but that's different from having drifted. It is values not methods that are important. You have to be able to be opportunistic and work quickly, and be prepared to take proportionate risks and make sure you learn from your mistakes.

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Investing in People

Our success, clichéd though this may sound, is all about the people who work here. People are our greatest asset and so we invest in that heavily, in terms of training, and also in terms of where our priorities as leaders lie. We have also aimed to devolve decision-making to the front-line as far as is possible, running the organisation more on collegiate than hierarchical lines.

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Future Perfect?

So if today is about the future of funding, what do I think the future holds?

The best is yet to come. I believe that with the right management and sensible procurement policies, we will see larger scale and more geographically spread voluntary and community organisations delivering an ever-more diverse range of services. I am confident that we will see the continual improvement of such organisations, working more and more in partnership together. And most important of all, I honestly believe that we will see more and more social and environmental objectives being delivered by and through voluntary and community organisations. Undertaking social enterprise activity is not just a new way of doing charity - it's a new way of doing business too. 21^st century social enterprise needs to be and can be culturally entrepreneurial, socially responsible, environmentally sustainable, economically successful, collaborative, supportive and above all, excellent." The future's bright...

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Key Signposts

Visit Ealing Community Transport's website at www.ectgroup.co.uk.

The concept of the triple bottom line has been developed by John Elkington in 'Cannibals with Forks: The Triple Bottom Line of 21st Century Business' (1997).

The Small Business Service produce 'Tendering for Contracts - a guide for small businesses' obtainable on the DTI Publication Order line 0870 1502 500 quoting URN01/1398.

More details on sustainable development is available at www.sustainability.com.

Charity Commission publication CC 37, 'Charities and Contracts' is an excellent introductory guide setting out the basic considerations to be undertaken when entering into a service delivery contract. It is available on 01823 345427 or from the web at www.charity-commission.gov.uk.

Mutual Obligations, is a simple, practical NCVO guide to contracting with public bodies: further information on this publication is available from publicationsorders@ncvo-vol.org.uk.

The Directory of Social Change, on 020 7391 4800, or at their websitewww.dsc.org.uk publish 'Getting Ready for Contracts' written by the well-respected Sandy Adirondack and comprising information on contract negotiation, basic legal structures, financial planning and control, and assessing quality of service.

The Office of Government Commerce provides advice on procurement on their website at www.ogc.gov.uk. They also have a toolkit for successful procurement which describes proven good practice for procurement, programmes, projects, risk and service management. The Toolkit brings together policy and best practice in a single point of reference.

Julia Unwin's 'Funding our Future: core costs revisited' is available from ACEVO at www.acevo.org.uk. It is an excellent introduction enabling readers to develop a sophisticated understanding of the issue from all sides of the debate and establishing the accepted principles on which the ACEVO template has been developed. A summary document (incorporating key points from the Compact's Funding Code of Good Practice) is available in the Planning Chapter at www.ncvo-sfp.org.uk.

'Funding our future II: understand and allocate costs' is also available from ACEVO - an excellent, practical, thoughtful tool.www.acevo.org.uk.

We also have lots of information in our section on contracting.

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