Want to set up a mutual?

There are many sources of help and advice if you are considering setting up a mutual or cooperative organisation to run public services. Whilst they all generally have their own names for the process, or a different number of steps, they tend to follow the same route:

  1. Identifying who needs to be involved and what collectively you want to achieve – for new delivery arrangements to succeed in improving services it is vital that service users and the local community are at the heart of any new organisation. Having ‘professional’ input is also important, and this could involve current council employees or people with expertise or experience in similar projects. Coming together this group of people will want to look at issues such as:
  • What are the needs and priorities in the local area?
  • What services are currently provided, where are they provided and who uses them?
  • Do these services meet current needs or are there other services that are needed?
  • Who pays to deliver the current service? Who might pay to use the service in the future?
  • Who needs to have a voice in the new organisation? How are they involved?
  1. Developing the model for the new service and organisation – when the ideas for the service that will be delivered and the new organisation begin to emerge, a business case will need to be produced. Typically this will be the document that will be the foundation for discussions with the council about how the service will “spin out” from council ownership into a new entity. It will include information about the services that will be delivered, and the resources (e.g. money, property, systems) that will be needed to do so.
    At this stage the council will have to consider whether the changes will be in the wider public interest. This will include looking at whether there any people in the community who will be adversely affected by the potential new arrangements, whether there is broad support from the community, whether the new organisation is likely to be viable and how involved service users and the local community will be in the new arrangements.
  2. Developing a business plan for the new organisation – if there is agreement between the council and the people setting up the new organisation, the next step is to develop a business plan for the organisation. The business plan will guide the new organisation in its activities and ensure that it is a viable business.
  3. Transition and launch – the business case should have set out the timescale for moving to the new organisation, and will often include a transition period where the new organisation exists in “shadow” form. This means that it is operated like a separate organisation from the council, but it is actually still within the council for legal and financial purposes. This allows any issues to be addressed before the formal launch of the new organisation.

This is a condensed explanation of the process for establishing a public service mutual – there are many issues – some of them fairly complex – that need to be considered during this process. But there are several organisations who provide advice to people thinking of setting up a mutual or cooperative.

A great first resource to look at is Co-operative Business District published by Co-operatives UK, and covers:

  • The Big Idea: what are public sector mutuals and are they for you?
  • Getting Started: your first steps in setting up a new organisation;
  • Your Business Plan: setting down the key features of your idea in a clear, concise and organised way;
  • From Plan to Reality: some of the main hurdles facing public sector staff “spinning-out”.

Co-operatives UK also have other useful resources looking at specific aspects of setting up a new organisation, as part of their “Simply” series of resources. Simply Finance is a comprehensive guide to the different options for financing a community enterprise or mutual organisation; Simply Governance is a guide to understanding the systems and processes concerned with the running of a sustainable community enterprise; and Simply Legal covers the legal and governance processes required to support the third sector – from co-operatives to social enterprises.

Social Enterprise UK have also produced some very useful resources. In particular, Right To Run follows the journey from working in the public sector to starting a mutual or social enterprise. It goes through each stage of setting up the new organisation with a checklist at each stage to ensure you’ve considered all the necessary actions. It also includes case studies of successful examples, and links to further resources. Enjoy What You Do provides stories from people who have moved into the world of social enterprise and highlights the benefits and challenges that this entails.

4 Responses to Want to set up a mutual?

  1. John Bennett says:

    The Co-operative also offer support to people thinking of starting a co-operative, either with a new or existing business. They have set up an “enterprise hub” which can put you in touch with a co-operative business adviser. They also offer some free consultancy (if you meet their criteria) and might be able to help with access to finance.

    You can find more information on their website http://www.co-operative.coop/enterprisehub/start-a-co-operative/

  2. Matt Skinner says:

    The Social Return on Investment Network (SORI) has recently published a guide to accounting for value ‘Making it count’. The guide which can be downloaded from their website here: http://goo.gl/KlhGt outlines some of the current thinking and practice around accounting for value.

    The guide looks to crack some of the myths and challenges and provides an insight into why and how investors, commissioners and intermediary organisations are assessing the value created by the organisations they fund and support.

    – Well recommended!

  3. Matt Skinner says:

    There is a whole host of fantastic resources available online to download from the Co-operatives UK website, for example see http://www.uk.coop/simplystartup. The Simply Start up guide gives advice and guidance on the process for setting up co-operatives or community enterprises.

    The guide also gives details of useful resources such as guides and websites along with case studies. The guide focuses on community food enterprises but the process and information given are applicable to any community enterprises.

    The web link above also links to a number of sister guides on a whole host of topics to help you start up including finance, law and governance.

  4. Matt Skinner says:

    A recent blog post by Craig Dearden-Phillips (see here http://goo.gl/H9jpe) discusses the procurement issues faced by mutual or cooperative service spin outs.

    Dearden-Phillips sets out five delivery ways to avoid some of the procurement issues:

    1) Setting up a shadow company
    2) Setting up a Teckal company
    3) Setting up a joint venture
    4) Set up as an LA trading arm
    5) Prove there is no market for what you do

    In particular he discusses how joint ventures may offer the most advantages for those wanting to spin out.

    A really interesting blog post, worth checking out.

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