Charity enterprise Q&A: Using your assets
Homelessness charity House of St Barnabas has an amazing building in the heart of London. CEO Sandra Schembri explains how the team has successfully “sweated its asset” to further its social purpose.
Q: What is House of St Barnabas and how is it enterprising?
A: House of St Barnabas is a homelessness charity established in 1846 as part of the Victorian philanthropy movement to provide bed and board for the homeless. We now offer hospitality skills and job training for people to break the cycle of homelessness through our Employment Academy.
Additionally, we developed the idea for a social business which would be a private members’ club and venue hire which makes better use of our wonderful heritage building in the heart of Soho in London.
Q: How did you develop your enterprise?
A: It’s a been long road to get to this point. Around 2008, we knew we needed to diversify, so we started testing ideas. We didn’t have a clear vision of what to do but we were very clear that the location and the building were to die for – and I’m not ashamed to say we focused on finding ways to sweat the asset to further our social purpose.
We opened up the building to members of the public. Ideas started to flow. We did bigger and bigger events, and we created a joint venture with an events company. But then we had to close the business because we didn’t have the right planning consents: we needed to be safe and legal.
“I’m not ashamed to say we focused on finding ways to
sweat the asset to further our social purpose”
Since reopening in 2013, the business has grown. We now have a membership of 2,000 paying customers, a venue-hire business and we make good sales in our restaurant.
The trading activities contribute £1.1m towards the charity’s turnover of £2.1m and the members’ club makes a surplus of £200,000-£300,000 annually which is gift-aided back to the charity. We’re very clear that it must make profit.
Q: How have you balanced the competing pressures of making a difference versus making a buck?
A: The motivation is very clear for us. Our social business is an important income stream for us. It pays for most (but not all) of the running costs of the Employment Academy and contributes to the ongoing maintenance costs of the building. Although it also brings us in to touch with interesting people that become mentors for our young people and supporters, its primary purpose is as a wonderful income generator.
But you’re right, we are constantly having to balance the pressures between making an impact and making money. For instance, how much capital should we keep in the social business to reinvest in the members’ club because we’re in a competitive location? We know that if we don’t look after the social business it will become less successful and, in the long term, will reduce what we can afford to do in the charity.
These tensions are something that we grapple with daily. This is not a simple situation. And what I’ve learnt is that you don’t just resolve this issue with a spreadsheet. It needs to be an ongoing dialogue within your organisation.
Q: What barriers have you faced in running the private members’ club?
Even though the location is brilliant, we needed to go through a number of different models to get to this point. There are three key barriers that we faced.
Firstly, planning issues. We had to close for a while to undergo a change of use with Westminster council. This setback enabled us to take a pause and to strengthen the business model. Originally, we outsourced the management to a private company, but this created a barrier between the social business and the charity. When we opened the doors in 2013, the charity was running the whole thing.
Secondly, the other reason we wanted to put the business on hold was to renovate the building. It took us 14 months to raise a loan with Charity Bank. It takes a lot to navigate through the social investment sector. (For more about social investment, see our interview with Seb Elsworth here.)
And thirdly, we had risk aversion within the organisational culture. It was a challenge to create the conditions for some big risks to be taken and to enable some big changes to happen. Taking on social investment and putting a charge on the building was particularly difficult. The key was to win over hearts and minds.
Q: What tips would you give to a charity considering embarking upon trading?
Don’t do it without talking to others. I talked to many people and organisations to bring in the know-how that we needed to make a success of the enterprise.
This is a big piece of change management. Find a champion and don’t expect existing staff to get how to run an enterprise. Look for people in the team who have energy, enthusiasm and drive. But then look outside to bring in know-how, whether it’s consultants or other specialists.
You’ll almost certainly need a mixed funding model. We have a combination of capital fundraising, loan, trading income and other grants which we use to enhance our charitable support.
And, finally, be very honest with yourself about what your asset is and how to make money from it. For us, it’s clearly our building and the location. Let’s cherry pick the good bits from business and repurpose for a social context. It’s absolutely the right thing to do to sweat the asset – that’s profit with purpose.