A report from New Philanthropy Capital (NPC) into the ‘impact economy’ has drawn flak for excluding co-ops, building societies and employee-owned businesses.
The report from the think tank, Impact UK: The size and story of our impact economy, defines the impact economy as an “ecosystem of individuals, organisations, and capital intending to prioritise public benefit over private gain. It’s also an ecosystem which is continuously evolving and so there is not one uniform definition.”
Making the case for impact-led business, the report estimates the UK’s impact economy at £428Bn, representing 15% of the UK’s GDP.
In his introduction, think tank CEO Jonathan Simmons said: “As a community we must commit to having a genuine impact, being independently analysed, and continuously striving to improve.
“But being part of the impact economy is a starting point, not the finish line, and we must be careful of excluding organisations from ‘our club’ before they have even begun.
“I believe the impact economy is the most exciting ecosystem to work within. There is real momentum in this space, catalysed by government, funders, practitioners, organisations like NPC, and clear shifts in policy, funding, and practice.”
Related:A record-breaking year for UK co-operatives and mutuals
The report splits the impact economy into two related parts – firstly, “the regulated impact economy, consisting of organisations that are legally required, and structured in a way to, provide benefit to society or the environment, including registered charities (both trading and non-trading), universities, trade unions, political parties, community benefit societies, housing associations, leisure trusts and community interest companies (CICs).”
Secondly, it identified “the self-regulated impact economy … organisations that are impact-led and may be appraised externally or internally but it is not a legal requirement, including impact-led businesses (excluding CICs and trading charities) friendly societies and mutual insurers.”
But while this list includes some parts of the mutual economy, the report says the definition does not include building societies, employee-owned businesses or co-operatives.
While welcome attention to the purpose-led business sector, Co-operatives UK posted on LinkedIn: “We need to challenge critical elements. We do back the impact economy agenda – and welcome NPC’s work to estimate its contribution to UK GDP. However, our view is that NPC’s generalisation that co-operatives, building societies and employee-owned business are not part of the impact economy, is incorrect and does not hold up under scrutiny.
“It is telling that most of us in the co-operative and mutual world only found out about this report after it had been published. Based on the methodology and analysis used, we question whether the authors and those they consulted, knew enough about co-operatives and mutuals to make informed pronouncements on whether they were ‘in’ or ‘out’ of the impact economy. If this is the case, it would have been better to state this clearly, rather than making sweeping pronouncements that could result in poor policy.”
Co-operatives UK noted the report’s acknowledgment that is “imperfect and a starting point”, and invited NPC and the Office for Impact Economy (the main recipient of the report) “to engage more with co-operatives and mutuals, so together we can arrive at a better-informed assessment of their place in the impact economy”.
Arguing for co-ops and mutuals as sharing, by design, “value, wealth, power, and opportunity through day-to-day activity”, the apex warned: “To succeed, government’s impact economy agenda must harness their unique ability to combine a strong economic contribution, with reduced inequalities and a high propensity to pursue and deliver other social and environmental impact.
“If it does not, it will be yet another damp squib that our country can ill-afford.”
Peter Holbrook, from Social Enterprise UK, congratulated NPC on a successful launch for the report but added: “its boundary‑drawing should trouble anyone who cares about the future of public services, inequality, and democratic ownership”.
He also criticised the current exclusion of co‑ops and employee‑owned businesses “while fully including privately owned, ‘purpose‑led’ firms, mostly B-corps, whose primary legal obligations still run to shareholders.”
Holbrook warned: “This is not a neutral decision – it risks hard‑coding investor‑compatible models as the default language of impact.
“This matters because the UK has already lived through decades of growing outsourcing and marketisation. Independent analysis shows private outsourcing plays a major role in public services, and research has linked forms of for‑profit outsourcing, in health to worse outcomes.
“At the same time, the government’s new Office for the Impact Economy creates a central ‘front door’ for investors and philanthropists to shape public‑facing activity. Without safeguards, we risk normalising the view that social problems are investment markets.”
Insisint that “purpose alone is not protection”, Holbrook argued that “UK law still places shareholder primacy at the centre of company governance, reaffirmed by the Supreme Court. Certifications like B Corp help inspire better behaviours, but cannot change the underlying duty owed to shareholders.
“Contrast that with social enterprise models … that embed mission in ownership. SEUK’s latest State of Social Enterprise research shows social enterprises contribute around £78bn in turnover and 2.3 million jobs, reinvesting in people and places.
“These are proven, resilient structures that reduce inequality by design, not aspiration.
“Ownership is the missing lever in today’s impact debate. Who owns, who decides, and who benefits determines whether the impact economy closes or widens inequality and is capable of building a Britain where prosperity is shared fairly and transparently.”
New Philanthropy Capital has been approached for comment.
