Today is Social Enterprise Day, and a fitting day indeed to find out that social enterprises are bucking the trend during the recession and are optimistic about future growth.
The most detailed survey ever done on social enterprise was released today and shows that despite the challenging economic climate, social enterprises are twice as confident of future growth as typical small and medium enterprises (SMEs) with 48% of social enterprises responding positively as opposed to just 24% of SMEs.
On top of this, since the economic downturn began, 56% have actually 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.
So why does this matter? It matters because social enterprises are businesses that are run for social and environmental purposes. Instead of working to maximise private profit, their main aim is to generate profit to further their social and environmental goals. There are 62,000 social enterprises in the UK working in every possible sector, including employment, training, health, childcare, recycling, and housing.
HCT Group is an award-winning social enterprise that exemplifies the strong performance the survey found. They provide a wide range of public transport and related training services in the UK, reinvesting their profits back into the communities where they are earned. Originally founded in Hackney in 1982, HCT Group has grown from a community transport organisation with two minibuses to now providing over 10 million passenger journeys a year across the UK. They have had an average growth of 27% per year over the past five years.
Another social enterprise is the Big Life Group, who last year had over 97,000 visitors to its centres that aim to improve the quality of life for people living in disadvantaged areas, including some of the country’s most vulnerable people – people with drug addictions, mental health needs, and families living in poverty. The Big Life Group believes that in order to create positive change, we need to stop isolating problems and find holistic solutions. They work to enable the people they serve to make choices for themselves.
HCT and the Big Life Group demonstrate some of the key aspects of social enterprises – local intelligence in developing services and reinvestment into communities. When our survey asked why people set up or wanted to work for a social enterprise, the most frequently cited reasons were a desire for social impact such as ‘putting something back into the community’ (45%), ‘a better way to achieve social or environmental goals’ (24%) and ‘make a lasting difference’ (20%).
This kind of social ambition often leads people to dismiss social enterprises as too ‘woolly’ or ‘worthy’ (when did worthy become a bad thing?). But social enterprises are not a lesser form of business – quite the opposite, they are innovative and responsive, and what we now know is that businesses that “do good” can also do well. This is a good thing for social enterprise, but it is relevant to all of us.
One reason for their good performance in the recession could be based on how they are set up. Because social enterprise business models are built to be sustainable and accountable to a wide variety of stakeholders, they might be better able to withstand economic uncertainty.
Also, it would not be surprising if their success was evidence of more people engaging with businesses whose bottom line includes social and environmental benefit.
Could this be evidence of real change in the economy? Some might call it wishful thinking, but it’s something I hope people begin to debate in a serious way.
This is not to imply that social enterprises are exempt from the issues that every business will face during during a recession, nor are they the only solution to how business should be done, but there is no doubt in my mind that a healthy social enterprise sector is absolutely vital to a balanced economy.
Since the Social Enterprise Coalition was founded in 2003 we have been working hard to get the word out about the multiple benefits social enterprise can offer the economy. And the message certainly seems to be spreading. Just last week social enterprise was on the agenda for a range of mainstream media including the Today programme and Newsnight.
Its profile was further boosted following Conservative leader David Cameron’s ‘Big Society’ speech which envisaged a greater role for social enterprises in a period of reduced public spending and today the Prime Minister is holding a special reception at Downing Street to celebrate Social Enterprise Day and the winners of the 2009 Social Enterprise Awards.
We have come far, but we still have much work to do. This research represents a great foundation for the future development of the social enterprise sector. It helps us see where social enterprise is doing well but it also will help to identify those areas in which further work and support is needed.
In the wake of the recession we need to rebuild a more diverse and balanced economy to avoid any repeat of the upheavals and disaster inflicted by the old model of profit maximisation at all costs.
Social enterprise can play a key role in this - the coalition clearly believes this, but so do the individual businesses themselves who, the survey found, are feeling optimistic about the future.
Jonathan Bland is chief executive of the Social Enterprise Coalition. To read the full survey report visit the Social Enterprise Coalition website
