An overview of the social enterprise sector

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An overview of the social enterprise sector

• L
• Upkar Pardesi

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What is a Social Enterprise?

• A social enterprise is a business with primarily
  social objectives whose surpluses are principally
  reinvested for that purpose in the business or in
  the community, rather than being driven by the
  need to maximise profit for shareholders and
  owners. The Department for Trade and Industry
• Trade for social and/or environmental purposes
• Generate at least 50 of their income from
  trading activity (i.e. selling goods or services)
• Largely reinvest their profits back into the
  business to achieve their social or environmental
  goals
• Have governance and legal structures that
  enable staff, members, representatives from the
  local community, or other stakeholders to own and
  run the business.
• Well known examples include The Big Issue, Divine
  Chocolate and Jamie Olivers restaurant
  chain Fifteen.

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Types of Social Enterprises

• Many different types of venture meet SE criteria
  including  
• Worker cooperatives that provide employment for
  their members
• Consumer cooperatives that provide goods and
  services for members
• Community Businesses supplying goods and
  services that meet the needs
• of a particular local community. 
• Development Trusts and other community-based
  regeneration groups
• The trading arms of charities
• Social Firms small businesses providing
  integrated employment and training mainly for
  people with disabilities
• Credit Unions supplying low cost savings and
  loans to specific communities
• Community Development Finance Institutions
  providing access to finance for

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Types of Legal Entities

• Many different forms of legal entity
• Usually companies limited by guarantee
• Registered charities
• Industrial and provident societies.
• Now include Community Interest Companies (CIC)

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Statistics on VCOs and Social Enterprises

• Statistics on VCOs and Social Enterprises
• 22,000 faith based organisations
• 11,400 working with women
• 11,700 working with BME Groups
• 37,000 working with people with disabilities
• 200 working with LGBT Groups
• 2005-2007 data from the Annual Survey of Small
  Business UK
• 5 of all businesses
• 62,000 Social Enterprises
• Contribution 24b to the economy
• Employing 800,000

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Baseline survey in September 2007 Found

• Social enterprises in Birmingham Solihull
  employ almost 12,500 staff.
• The main service activities provided by social
  enterprises are
• Training 55
• Counseling /advice services 51
• Education research 43
• Services for people with disabilities 41
• Health and social care 37
• Youth services 37

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Statistics on VCOs and Social Enterprises

• Statistics on failure rates of small firms
  including Third Sector Organisations
• One Third of all start-ups fail in the 1st year.
• Two Thirds fail within three years.

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Statistics on VCOs and Social Enterprises

• Statistics on recent deregistration of Charities
• Year end Aug 2010 3,262
• Year end Aug 2009 2392
• Year end Aug 2008 1,630
• Charities with turnover of gt5,000
• Source Charities Commission

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Sustainability Reasons Why So Many Charities and
VCOs Fail?

• Service or Funding Lead No real knowledge of
  what the community needs or wants.
• ME TOO or COPY CAT For same or similar
  communities and causes Little or no
  differentiation. (we want one too!!)
• Little or no business planning or skills for long
  term planning. No business development/fund
  raising skills rely on consultants to prepare
  bids.
• Become heavily reliant on funding and handouts
  no real marketing and business development skills
  to build sustainability.

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Sustainability Reasons Why So Many Charities and
VCOs Fail?

• Lack of leadership and good governance from the
  Board. Active volunteers become Trustees not
  because of their skills and independent views and
  judgement. Lack of representation of young and
  women.
• Lack of strong leadership and management skills
  in the team. Volunteers take up senior
  officer/CEO/Director role(s)
• Closed shop volunteers get paid jobs without
  having the right skills.
• Undercapitalised lack of investment. No real
  business model.

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Why faith inspired Social Enterprises Fail?

• Many BME faith organisations are dominated by
  older men who may or may not be fluent in
  English.
• Many become Trustees because they are founders of
  the places of worship/community organisations.
• Many continue to employ priests and other faith
  leaders/specialists from overseas and therefore
  not able to fully engage with British born young
  people and women.
• Many places of worship also create faith inspired
  community centres, voluntary associations and
  associated charities that are governed by
  Trustees selected from congregations but again
  tend to be dominated by older men who are not
  fluent in English language, culture and wider
  society.
• CEO/MD/Senior Officers tend to be appointed from
  within the same faith community tend to be men
  and not always with high level skills of
  leadership/management

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Development of Sustainable Social Enterprises

• Success Criteria
• Strong Board with diverse skills set and
  knowledge of good Governance and led by committed
  and well connected Chair.
• Access to potential new Trustees/Non-Executive
  Directors.
• Strong CEO/MD/Senior Executive Director with
  strong leadership skills.
• Small team of capable functional managers.
• Medium to long-term strategic plan and planning
  processes in place.
• Marketing orientation and a diverse
  income/customer base Marketing and fund raising
  capability is in place.
• Access to investment funding.
• Well developed partnerships in place.

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Government Position on SE SectorGrowing the
Social Investment Market A vision and strategy
Feb 2011
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Government Position on SE SectorGrowing the
Social Investment Market A vision and strategy
Feb 2011
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Government Position on SE SectorGrowing the
Social Investment Market A vision and strategy
Feb 2011
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Opportunities

• Proposed creation of The Big Society Bank
• Emergence of Local Enterprise Partnerships (LEPs)
  with the 1.4b Regional Growth Fund.
• The fund will provide focused investment for
  projects that offer significant potential for
  private sector-led economic growth and
  sustainable employment.
• Government includes social enterprise within its
  definition of private sector.
• Biggest opportunities are in the Health, social
  care, education, training and youth sectors.

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Funding Opportunities

• SEIF Capital Growth Fund For SEs to help them
  to deliver innovative health and social care
  services, enable them to grow, and become more
  sustainable. Open till March 2012. Grants and
  loans from 50K to 150K.
• Social Action Fund
• Social action in the community projects that
  will encourage people to come together in their
  neighbourhoods to support each other.
• Social action inspired by the Olympics and
  Paralympics
• Social action for all ages projects that
  motivate people across all generations to get
  involved in volunteering and charitable giving-
  For scaling up a successful project From 500K
  to 1m
• The Capital Adventure Fund for community
  enterprises
• Community Builder Fund Look for the 6 best
  projects
• The minimum investment is 250,000 and the
  maximum is 750,000. Closing date 9 December 2011