A report from Wales Co-op Centre has set out the social enterprise response to the Covid-19 crisis – and looked at what the sector needs when it tries to rebuild.
The report, out today, says common themes for the sector in Wales include “survival, hibernation, diversification, transformation and collaboration”.
Produced by Wales’ social enterprise support agencies – Development Trusts Association Wales, UnLtd, Social Firms Wales, Coalfields Regeneration Trust, Welsh Council for Voluntary Action (WCVA) and Wales Co-operative Centre – the report evaluates the response to the lockdown, the support the sector has received so far, the assistance it will need to re-build, and makes observations about future prospects and opportunities.
There are more 3,000 social businesses operating in Wales, employing around 55,000 people and contributing over £3bn to the local economy.
Derek Walker, chief executive of the Wales Co-operative Centre and spokesperson for the Social Enterprise Stakeholder Group in Wales, said: “There’s no escaping the fact that the focus for the majority of established social enterprises in Wales during this pandemic, if not all, has been survival.
“A large number have had no choice but to enter ‘hibernation mode’. Dealing with the consequences of lockdown has been a very stressful period for social businesses up and down the country, with some leaders finding it difficult to cope with the crisis, and it has taken its toll on their wellbeing.”
But he added: “Although we have all found the lockdown period extremely difficult, there have been a number a number of positive outcomes associated with this phase. We have seen people getting to know their local communities again and changing their purchasing habits with a more ‘buy local, buy social’ mentality.
“We have also seen social enterprises managing to rapidly diversify their services and transform their businesses on to online platforms, developing online sales and payment systems showing to all of us just how resourceful and innovative the sector can be in times of crisis.”
Much of this is good for the climate change agenda, says the report. But it warns the sector faces a series of challenges. Start-ups cannot source match-funding which will hamper an economic recovery. And social enterprises which have benefited from public sector contracts could be hit by public sector budgetary cuts in a post-Covid recession.
“There are also concerns about the time it will take to replenish traded income streams,” says the report. “Wales has a large number of ‘place based’ social enterprises operating in sectors such as leisure, tourism and the arts. Such organisations maybe among the last to exit the lockdown phase of the Covid-19 response.”
Such concerns have been heightened by government plans to scale back support for furloughed workers – with today’s announcement that businesses will have to shoulder a fifth of the cost.
The lockdown has also impacted development efforts start-up and early stage social enterprises. The report found these were using the time for work such as business planning, financial modelling and training. But development plans have been slowed where staff have been transferred to providing emergency Covid-19 support or furloughed.
Financial concerns include access to future capital funds – with money likely to be diverted to the recovery phase of Covid-19; and uncertainty over how long lockdown will last.
The report also includes case studies on the work of social enterprises during the crisis.
Examples include Cardiff Salad Garden, a social enterprise which grows and sells fresh-cut salad leaves with the active participation of disadvantaged groups in and around Cardiff. These mixed baby leaf salads are hand-picked to order, and normally sold to restaurants in Cardiff all year round.
Within days of the lockdown Cardiff Salad Garden had developed a new ordering system to enable the venture to survive and grow. They quickly transformed their business model and now the team is running a direct delivery service via bicycle to people’s homes. At the same time the social enterprise is maintaining a vital link between the vulnerable people that it supports, to look after their wellbeing.
The report found that many existing social enterprises had been able to access emergency funding and that business support had been readily available and well-coordinated. But there are many uncertainties and challenges highlighted within the report, with many social enterprises concerned about their future income. Emergency funding is likely to run out before income streams get back to levels seen pre-lockdown. As it stands, no one is certain how this gap will be bridged.
The report also cites the case of Galeri Caernarfon Cyf, a not for private profit community enterprise operating as a development trust in the historic town of Caernarfon, Gwynedd. Established in 1992, it contributes more than £5m per annum to the local economy, employs over 50 full-time, part-time and seasonal staff and supports an additional 50 jobs in the local economy.
It has also developed the flagship Galeri Creative Enterprise in the Victoria Harbour area of Caernarfon, housing a theatre, two cinema screens, 24 business office units, art space, rehearsal studios, conference and meeting rooms and a café bar.
Galeri, like many other social enterprises in the cultural industries, has been significantly impacted by the Covid 19 crisis and has had to close all its facilities and offices. Most staff have been furloughed. It has applied for a range of interim grant and loan financial support through Welsh Government and the Arts Council of Wales.
Mr Walker added: “The Social Enterprise Stakeholder Group in Wales, which has come together to produce this report, will continue to work together to address the concerns raised by our clients and members about the ongoing impact of COVID-19.
“The group will continue to lobby and raise awareness of how critical social enterprises is during the COVID-19 crisis and how important the sector will be to rebuilding communities, as well as local, regional and national economies. What is clear is that in the longer term we need to ensure the continuity of funding for sector specific business support in Wales. The support provided should be flexible and pertinent to the needs of the social enterprise sector.”