Today (19 November) is Social Enterprise Day across the UK, where the sector celebrates its achievements and promotes itself as a viable and growing business model.
But how are social enterprises performing?
‘Social enterprise’ is a relatively new term, which only started to become widespread in the 1990s. They aim to tackle social problems and improve communities, people’s life chances, or the environment by selling goods and services, but reinvesting the profits back into the business or local community.
Social Enterprises UK lays out the definition of a social enterprise as:
- Having a clear social and/or environmental mission set out in their governing documents
- Generating the majority of their income through trade
- Reinvesting the majority of their profits
- Being autonomous of state
- Being majority controlled in the interests of the social mission
- Being accountable and transparent.
This year three key reports have been published which give a good indication of the state of social enterprises in the UK today.
The State of Social Enterprise Survey 2015 was described by the chair of Social Enterprise UK, Claire Dove, as “the most rigorous and comprehensive we have ever undertaken”, compiled from 1,159 telephone and online interviews with senior figures in social enterprises. Co-operatives are still a minority with 14% of those surveyed identifying themselves as a co-op, 14% as a social firm, and 21% are also a registered charity.
It looked at where they operate, who and how they employ, and how they can achieve more. It also reported the economic contribution made by social enterprises across the country.
Over half (52%) of the social enterprises grew their turnover in the last 12 months. That compares with 40% of mainstream small and medium-size enterprises (SME). 50% of social enterprises reported a profit, with 26% breaking even.
They are leading the way in innovation: The number of social enterprises introducing a new product or service in the last 12 months has increased to 59% (among SMEs it has fallen to 38%).
Diversity is also a strong point. 40% of social enterprises are led by women; 31% have Black Asian Minority Ethnic directors; 40% have a director with a disability.
For the first time, a separate report also looked at social enterprises in Scotland, through the Social Enterprise in Scotland: Census 2015. The survey revealed there are 5,199 co-operatives in Scotland, with 112,409 employees. 60% are led by women and there are more than 200 new social enterprises forming each year.
Despite a strong history in Scotland, the social enterprise sector is still relatively youthful. 25% were formed in the last five years and 42% in the last decade. The average age of a Scottish social enterprise is 17 years.
Wales too published a report into the social enterprises, called Social Businesses in Wales: The State of the Sector. It found 1,470 social enterprises employing 38,000 people. 35% are led by women and 19% of the businesses have been formed in the last three years.
The three surveys showcased a problem of ‘common language’ among social enterprises. Many do not identify themselves as such, more often choosing to identify themselves by their origins – ‘community project’, ‘charity’, or ‘social care provider’. Despite the positive conclusions gleaned from the reports, there is still confusion about where the boundaries between social enterprises and other organisations – co-operatives, for example – can be drawn.