New evidence out today shows that social enterprises are recession-busters

Results of the first ever ‘State of Social Enterprise' survey were released today, Social Enterprise Day (November 19), and they find optimism and growth in the sector, particularly when compared with other businesses.

Social enterprises are businesses run for social and environmental purposes. There are 62,000 social enterprises in the UK contributing £24billion to the UK economy. ‘The State of Social Enterprise Survey 2009' was commissioned by the Social Enterprise Coalition with fieldwork carried out by CELLO mruk research. It was sponsored by Office of the Third Sector and supported by the Commission for Rural Communities, the Community Interest Company Regulator, the Scottish Social Enterprise Coalition and the Social Economy Network in Northern Ireland.

The survey found that despite the recession, social enterprises are twice as confident of future growth as  typical small to medium enterprises (SMEs), with 48% of social enterprises responding positively as opposed to just 24% of SMEs.

Additionally, since the economic downturn began, 56% have increased their turnover from the previous year whilst less than 20% have seen it go down. This is a considerably better performance than SMEs in the UK, where only 28% increased their turnover and 43% saw it go down.

The survey also found that social enterprises challenge the glass ceiling: 26% of social enterprises could be described as ‘women-led' - almost twice as many compared to small businesses (26% compared to 14%).  Furthermore, 41.1% of all board members are women, compared to just 11.7% of board members in FTSE 100 companies and 4.9% in AIM-listed companies.  

Other findings include:

 

• Social enterprises are ambitious, and are as capital-hungry as small business: One-third of social enterprises have sought finance over the past 12 months. The finance sought is mainly for growth: 60% of all funding required by social enterprise is expansionary - investment for new projects/service development, capital investment such as plant or buildings and expansion.

  

• Social enterprises are focused on employment: There are few business sectors that don't include social enterprises: however, within those sectors, many have a focus on developing human capital through employment and training.

 

• Social enterprises have  diverse beginnings: Whilst roughly half of the organisations surveyed came from a voluntary or community sector background, the other half come from every possible source - from entrepreneurial individuals all the way through to former public-sector organisations. 

 

• Social enterprises are motivated by community: The most frequently cited reasons for starting up or working for a social enterprise were: ‘putting something back into the community' (included in 45% of all responses), ‘a better way to achieve social or environmental goals' (24%) and ‘make a lasting difference' (20%).

 

Jonathan Bland, CEO of the Social Enterprise Coalition said: "This important research gives us much needed evidence about the state of the social enterprise sector. Through it we can learn what in the sector is working and what needs greater attention, and how best to support the continued growth of social enterprise.

"Some results were unexpectedly powerful, such as learning that social enterprises are doing well overall despite tough economic times. That was very heartening, as this is an incredibly tough climate for all businesses. 

"I believe this shows that business models that are built to be sustainable and accountable to a wide variety of stakeholders are often better able to withstand economic uncertainty. Additionally, it is evidence of a shift towards more people engaging with businesses whose bottom line includes social and environmental benefit.

"There is every reason to consider social enterprise an emergent business sector that is ambitious, growing and dedicated to providing meaningful employment."

Speaking about the findings on female entrepreneurship, Sophi Tranchell, managing director of Divine Chocolate, a Fairtrade chocolate company that is majority owned by the Ghanaian farmers who supply the cocoa, said: "It is not a surprise to learn that social enterprises are a natural home for women entrepreneurs. They are challenging, rewarding businesses to run, and critical for our economy and society. I hope that many more women are inspired to start or work for social enterprises, and the numbers continue to grow."

Lord Victor Adebowale, chief executive of social care organisation Turning Point said: "In these recessionary times, it's important that public services can be run efficiently and effectively, without compromising quality.  Social enterprises such as Turning Point deliver on these priorities, reinvesting any surplus that is made back into our services with innovation in order to turn more lives around. 

At Turning Point we operate with business goals and have a business identity, operating with efficiency and competitively within the commercial world, winning contracts to run social programmes.   We've seen growth in revenue this year.  Our business drive is underpinned by our commitment to delivering effective social programmes, working with local communities to design services they use.

Dai Powell, CEO of HCT Group, a social enterprise transport company that provides 10 million passenger journeys a year said: ‘HCT has been growing at a steady rate of 27% each year for the past five years. We're working every day for our mission to provide transport for all, and are proof that you can combine good business with doing good."

Angela Smith, Minister for the Third Sector said "I am very pleased to have supported this piece of work. The survey has provided some excellent evidence on the growth and hugely important impact of the social enterprise sector on society and the economy. This sector will continue to grow and develop as a very important part of the UK's future, and it has my full support."

The research was commissioned by the Social Enterprise Coalition, sponsored by the Office of the Third Sector and supported by the Commission for Rural Communities, the Community Interest Company Regulator, the  Scottish Social Enterprise Coalition, the Social Economy Network in Northern Ireland .

http://www.socialenterprise.org.uk/data/files/stateofsocialenterprise2009.pdf

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