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The third sector needs to better focus its energies

Bill Swan

Charities, voluntary groups, not-for-profits, have a long history of involvement in waste and recycling. Now known as the third sector, they received many millions of pounds in public funding under Labour and remain politically popular with the Conservatives’ ‘big society’.

However, while the motives of all concerned are very laudable, we must acknowledge that the track record of the third sector in recycling is very chequered; grants have been squandered, resources wasted, markets distorted.

Before you dismiss me as a private sector capitalist nut, I would like to say that my own company initially started out as a not-for-profit and I spent eight years as a volunteer unpaid director. I have also spent many hours advising third sector organisations on how to operate successfully, again all unpaid. I do feel that I have some genuine insight.

So, let’s talk first about the positives. Third sector organisations have proved very successful in identifying niche recycling opportunities that the private sector dismissed as too unattractive to bother with.

Paper Round started out with office paper recycling in 1988. No-one did it then and very few offices recycled their waste paper. We demonstrated that the service was viable and we were followed by a host of other not-for-profits many of whom flourished in the early 1990s.

Today, office recycling is very much established as a substantial market serviced by a wide variety of players and all the not-for-profits have disappeared.

Third sector organisations have led the way in other areas too, furniture and white goods reuse, waste electrical and electronic equipment recycling, wood and construction waste reuse.

Food recycling is another area.  Aardvark, another not-for-profit, was one of the very first organisations to offer commercial food waste collection services in London. Now, of course, it is joined by big private sector companies like SITA.

All positive points and the hard work and dedication of many individuals is to be applauded.

But why is it then that third sector organisations regularly run into serious problems and go bust? Why do local authorities struggle to work with them and often prefer the services of the big waste contractors? BPR Group has just acquired three struggling not-for-profits in the last three months. What is wrong with the third sector in the recycling world?

I offer my own thoughts on these points; the third sector is confused, like most people, as to what not-for-profit actually means. It does not mean the organisation shouldn’t make a profit. Profit is not a dirty word. Profits are vital for any organisation to grow and invest, without them stagnation and rapid decline beckon. Not-for-profit simply should mean no shareholders, profits are reinvested in the business or used to support wider social aims.

Third sector organisations can become addicted to grants and like any addiction it is easy to start and hard to wean oneself off. Grants should help with start-up costs and mustn’t be a replacement for a viable business model.

I have seen countless free or subsidised recycling schemes in the industry. Supported by grants they can only ever have a limited life expectancy and will inevitably fail. But before they crash and burn they distort markets with taxpayers’ money and make life difficult for the rest of us.

Finally, third sector organisations can become victims of their own success. When they prove that a particular niche is viable inevitably other private sector organisations move in and start to compete. In my experience not-for-profits hardly ever compete successfully head on with the private sector.

Does the third sector have a role in mainstream waste management and recycling? I would say no. Should it be more careful with taxpayers’ money? Yes. But does it have a role to ginger us up, challenge us as to what might be doable? I would say that the answer is definitely yes, and that’s where its energies are best spent.

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