Social businesses in Wales are collectively worth £1.7bn across 1,400 businesses.
The Wales Co-operative Centre, which also represents social enterprises and employee-owned businesses, took a look at the entire social sector and found there were at least 1,470 organisations currently trading.
The report ‘Social Businesses in Wales: The State of the Sector’ outlines the scope and scale of the social business sector, its performance and opportunities for development.
Within those businesses there are 38,000 people employed and 38,500 volunteers within the sector. Thirty-five per cent of social businesses are led by women, compared to 19% of normal small to medium enterprises.
It finds that the sector has a high prevalence of young organisations with nearly one in five social businesses established within the last three years. And 69% of social businesses expect turnover to increase in the next two to three years.
Most social businesses are active locally with 53% operating within a single local authority area. But many others are active across a wider area with 42% operating in three or more local authority areas and 17% covering the whole of Wales.
Social businesses operate in a range of sectors including the culture and leisure, education, environmental and health sectors with younger businesses more likely to be in the environmental and creative industries than more mature organisations.
Economy minister Edwina Hart said: “This report demonstrates the value of the co-operative and mutual business model and social enterprises to the Welsh economy. These businesses offer significant economic benefits and have the potential to transform the fortunes of some of our most deprived areas. It is particularly encouraging to see the optimism within the sector and the potential for further growth.”
Funded by the European Regional Development Fund and the Welsh government, the report found that trade is the single most important source of finance for social businesses, although grant funding does play an important role for many organisations.
The general public is the single most important trading partner for social businesses, which accounts for 41% of turnover of the organisations surveyed. Social businesses in more affluent areas are more likely to trade with the public sector, while those in more deprived areas become more reliant on other sources of income such as trade with the third sector.
The main challenge facing social businesses continues to be a lack of access to finance. Cash flow issues are commonly stated as barriers to continued sustainability. To help combat this, 24% of social businesses have entered into consortia or partnerships to bid for contracts where third sector organisations are the most common partner.
Many social businesses focus their social impact on a local area, while 53% of organisations have objectives which centre on improving particular communities. Approximately 92% of social businesses measure their social impact, but most do so informally rather than through recognised measurement tools.
Derek Walker, chief executive of the Wales Co-operative Centre, said: “This survey demonstrates the importance of the social business sector in Wales. It is responsible for a sizeable amount of economic activity. Social businesses provide thousands of jobs, often in areas of deprivation and to those people furthest away from employment”.
• Download the full report online: www.walescooperative.org