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The Big Issue

Author: Julie Caulier Grice
Published Date: 10 April 2008

Purpose: to provide homeless people with a means to generate income. The Big Issue is a street newspaper that homeless people purchase at 40 – 50 per cent off the cover price and then sell at profit to the public.

The Big Issue was founded to address the rising problem of visible street homelessness at a time of economic recession. St. Mungo’s homeless charity estimated that on a typical night, 1,275 people were sleeping rough in England. Seeking to avoid a paternalistic top-down approach, they created a means of empowering the homeless through financial inclusion and self help.

The Big Issue was established by John Bird and supported by Gordon Roddick of The Body Shop. The concept was simple – a street newspaper, compiled by professionals and then sold to homeless people to sell on the street at a profit, providing legitimate income for some of society’s most vulnerable people. The idea for the business came from Street News, a newspaper sold by homeless people in New York, which Roddick saw when he was visiting the US. With the help of The Body Shop International, Roddick and Bird launched The Big Issue in London in September 1991, initially as a monthly publication. The Big Issue works by ‘badging up’ vendors, who have to complete a training period and sign a vendor code of conduct in order to receive an official badge which they must display at all times when selling the paper. They are provided with an initial allocation of papers on credit (in London they are given ten papers, but this varies across the country). When they have sold these, they are able to buy copies of the magazine upfront at a cost of 40-50 per cent of the cover price, and keep their sales profits. The current price of The Big Issue is £1.40 on which the vendor earns 80p.

The connection with the Body Shop International was crucial from the start. The Big Issue was set up as a business response to a social crisis, not as a charity, and it never had statutory funding. The only start-up funding it received was from The Body Shop Foundation, and this imbued it with a culture of profitability. It is now financed through sales and advertising revenues, with surplus revenues going to The Big Issue Foundation. Nigel Kershaw, Chief Executive of BIGinvest and The Big Issue Foundation and Chair of The Big Issue, stresses the advantage of not having set up the organisation as a charity, as it meant there was no board of trustees to consult before taking decisions, allowing boardroom decision-making to be unusually quick and effective.

Initially, The Big Issue was produced monthly, but due to increasing demand from customers, it began to be produced on a fortnightly basis. However, it lost money as a fortnightly publication and in June 1993, the paper was launched as a weekly. Nigel Kershaw attributes success during the pilot stages of the magazine to the rapid way in which the business adapted its model at the onset. Much of the magazine’s initial success can be attributed to founder John Bird. His entrepreneurial spirit, character and flair, combined with the business acumen and financial backing of Gordon Roddick, made for a powerful team and was crucial for getting the business off the ground. However, Bird’s idiosyncratic style has also been blamed for difficulties in the day-to-day running of the business. As Roddick says of Bird: “He refuses to accept the norms or rules of conventional behaviour … a complete nightmare to deal with but entertaining, and things happen”. Bird admits to being “an entrepreneur, an ideas man” and someone who likes risk: “You’ve got to be somebody who takes risks – with your money and other people’s – but you can’t get frightened. I don’t lose any sleep over the risks I take. In fact I wouldn’t describe myself as a risk taker – I’m reckless.” His tendency to start new initiatives and then move too soon onto other projects contributed to financial difficulties, while his combative and ad hoc management style often alienated staff. The decision in 2002 to have the magazine produced by a team straddling the London and Manchester Big Issues (previously two separate companies) in an attempt to revive the magazine in a ‘changing commercial marketplace’, brought widespread criticism. It also meant a cut back in staff and budgets.

There was great demand for The Big Issue when it launched and this, according to Kershaw, was the main driver to scaling up the business. Its success attracted others who wanted to establish their own versions of the magazine in their own areas. In 1993 the management team were approached by Mel Young and Tricia Hughes who wanted to set up The Big Issue Scotland. John Bird was supportive in principle, but did not have the capacity at that moment to undertake expansion himself. He therefore encouraged Young and Hughes to establish The Big Issue Scotland, which they did in June of that year as an independent fortnightly magazine. The Big Issue Scotland cost 50p with 20p of the cover price going to the vendor. Due to the speed with which the business took off and its lack of capacity to expand when approached by those who wanted to take the model forward, a franchise licence model evolved, to pave the way for domestic expansion. As Kershaw says, “People owning the mission and licensing it out actually led to the growth of the business.”

Although a licence or franchise agreement was planned, it never materialised, and when new start-ups took on the mission and values of The Big Issue, they did so without formal agreements or payment of a licence fee to the parent company. Each region established its own separate company, which proved to be a very effective way of rolling out the model and growing the business swiftly without funding from a central point. However, this mode of expansion also had drawbacks, as it was difficult for the parent company to regain control of publication due to the absence of formal agreements about the exact nature of relationships with regional start-ups. The domestic expansion continued, to include The Big Issue South West, founded in Bristol in November 1993, The Big Issue Cymru (Wales) in Cardiff in May 1994, and Newcastle and the North East in September 1995. Editorial content was provided from London, but, increasingly, the other titles found ways to adapt the magazine to their local market (The Big Issue Cymru, for example, published its content in Welsh). The regional coverage of The Big Issue meant that the companies could respond to local needs, adapting the basic principles to provide the best opportunities for local people facing homelessness.

The Big Issue has always reinvested the money it makes above its turnover back into the welfare of the vendors (usually around 14 per cent). There came a point when others wanted to contribute funds to The Big Issue’s work, but as a company limited by share ownership, the organisation was not able to accept donations. Therefore, in 1995 The Big Issue established a foundation as a separate organisation with its own governance structure, to which donations could be made. In 2005, organisational changes were made to ensure that The Big Issue and The Big Issue Foundation shared common personnel and worked closely towards the same aims. Nigel Kershaw became Chief Executive of the Foundation as well as Chair of the company. The final arm of The Big Issue is BIGInvest (of which Nigel Kershaw is also Chief Executive), which is a body that awards grant funding to other social enterprises. It is owned by the Big Issue Company and comprises a team of financiers from a range of sectors including private equity, the World Bank and social banks. It is a specialist company for social enterprise and differs from a social bank due to what Kershaw describes as its ability to be much more creative in the ways it lends money.

After the initial success of the magazine, John Bird soon had further ambitions for it. He did not think it should merely be a domestic enterprise, but an international one. In July 1994, The International Network of Street Papers (INSP) was launched in London and later joined the international department of The Big Issue in Scotland. The INSP Foundation soon became a registered UK Charity that advises international members on how to set up their own street newspapers or improve operation of existing ones. It also works to raise the profile of the street paper movement more broadly. Until February 1997, the network was financed by the European Commission. The INSP Foundation has hosted a number of international conferences where members have been able to share experiences and expertise and has proven crucial to supporting the diffusion of ideas for street newspapers around the world.

This approach to international expansion (establishing advisory networks) enabled The Big Issue to encourage and foster other street newspapers without having to retain central control or financial liability. The Big Issue did itself attempt some expansion into international markets, but with mixed success, and its attempt to move into the US was perhaps the most controversial. According to some critics, when the magazine first attempted to establish itself in New York, it was perceived as competing directly with the existing street paper, Street News, which ironically, was the original inspiration for The Big Issue in the UK. There was also a move to set up in San Francisco, which again was unsuccessful, partly due to strong competition from The San Francisco Street Sheet edited by Paul Boden, and Street Spirit edited by Terry Messman. A final attempt to establish The Big Issue in Los Angeles also failed. Some critics have argued that these efforts went against the mission of the International Network of Street Papers, which states that no paper should set itself against another member in direct competition.

The Big Issue finally achieved success in Australia, where The Big Issue Australia was set up in 1996 and has been operating ever since. This success mainly lies in the start-up funding and help from the Body Shop’s franchise (and Gordon Roddick’s involvement) in Australia and the Australia Post. There are also successful versions of The Big Issue in South Africa, Namibia and Japan. Nigel Kershaw attributes these successes to the fact that, aside from The Big Issue name, London does not control or finance international versions of the magazine (although the strength of the name and brand, and the ability to withdraw it from partners, does provide the London head office with a reasonably strong mechanism of censure). In retrospect, Kershaw sees the lack of central control as the main driver of their success internationally, but also as an obstacle to regain control after power had been tran

John Bird, although providing the original drive behind The Big Issue, was also seen as the magazine’s biggest liability. Financial woes and consequent restructuring of the organisation have been blamed on his reckless approach and his tendency to spend substantial resources on schemes for which he rapidly loses enthusiasm. His combative management style often alienated staff. As a former staff journalist stated, “John could be a complete nightmare - he would walk in ten minutes before press time and demand that the cover be changed. He can also be a bit of a bully, though he is immensely charismatic. He preferred us to be in a state of crisis, as he thought we'd be more cutting edge.”

The decision in 2002 to have the magazine produced by a team straddling the London and Manchester publications brought widespread criticism. A former Big Issue senior journalist offered a different interpretation of Bird's strategy to revive the magazine: “This is his program, a chance to clear out everyone that he's wanted to lose for a while. It will be a backbreaking blow for it as a quality magazine.” This blow to quality refers to way in which The Big Issue was regionally produced. As Andrew Jaspan, former managing director of the magazine, said at the time: “The strength of The Big Issue is that it isn't a uniform, single issue publication, but is based round regional editions, with each speaking to its area. I'd be concerned if these reports are true: it would be a risky approach and I don't know how it would impact on sales. By getting rid of the editor and keeping just a couple of journalists here [in London], he's neutered it.” Former staff lay the blame firmly with Bird's own role in The Big Issue: “It's founder's syndrome. He set it up and couldn't let go, and really resented not being a good enough editor to run the magazine. As a result, he made his editors' lives absolute hell.”