Social Enterprises impact gender inequality, poverty and employment diversity – but need help to survive in post-Brexit Britain, new report reveals

‘Trading for Good’ - a report published today by Social Enterprise UK and funded by Lloyds Bank Foundation for England and Wales - shows the important impact social enterprises are having on some of the poorest communities in the UK and calls for more to be done to encourage Government, funders and the public to ensure social enterprises are supported.

The report revealed that:

  • Almost half of the newest wave of social enterprise start-ups are led by women and 21% have BAME leaders
  • 27% are based in the top 20% poorest areas in the UK, nearly double the proportion of similar sized charities
  • 18% of smaller social enterprises in the poorest parts of the country are receiving income from European funding and are threatened by Brexit

Social enterprises are businesses set up to tackle social and environmental issues, there are over 70,000 in the UK, and a high proportion of these are SMEs with a turnover of under £1 million. The report focuses on smaller social enterprises (turnover under £1m), looking at where they work, who they employ, what they do and how they make their money. It shows that social enterprises are working directly in the communities that need them most, with over half of small and medium-sized social enterprises based in the top 40% of the most deprived areas in the UK and 27% working in 20% of the country’s poorest communities. This is nearly double the proportion of similarly sized registered charities operating in these areas. 69% of these businesses also support individuals from disadvantaged groups.

The report also showed that they have an important role to play in creating growth and opportunities at a local level, revealing that many small and medium-sized social enterprises have a local focus, with 62% employing all their staff from their local area, and 41% have their main social objective as improving their community. They are commonly found to be working with residents to find solutions to social issues, from unemployment to mental health.

Smaller social enterprises tend to be more representative of the places they work, being more diverse in their leadership than traditional SMEs. 49% are led by women with 21% having a BAME leader.

The findings show a dynamic sector with a high start-up rate, 43% being established in the last 5 years. These start-ups co-exist with a stable band of older social enterprises with 35% having been operating for over 20 years. 

Recommendations

The report, however also finds that more needs to be done to ensure these businesses are supported, including:

  • Understanding needs to increase amongst Government, foundations and investors to ensure social enterprises’ potential to reduce poverty and unemployment is realised.
  • Councils and other public bodies should develop strategies to better work with small and medium-sized social enterprises to help boost their impact through building transparency in contracting, placing a greater emphasis on social value not just cost in commissioning, and in factoring in social enterprises into their own planning and programmes around resolving social and environmental issues.

Commenting on the report’s findings, Peter Holbrook, CEO of Social Enterprise UK said:

“The evidence is becoming increasingly clear that if we are to tackle social and economic inequalities we need to be adopting radically different solutions to create an economy that works for everyone.

Social enterprises are working in the areas where they are needed most – creating jobs, changing lives and keeping wealth and opportunities within communities. Social enterprises based in the most challenging areas are unsurprisingly those that are also the most likely to add European funding into their mix; Brexit poses potential jeopardy for these social businesses.

Government, funders and the public need to do their part to support this growing and important part of the economy through creating a conducive policy framework, buying from social enterprises and incorporating these businesses into plans to tackle poverty and unemployment.”

Paul Streets, Chief Executive of Lloyds Bank Foundation for England and Wales said:

“In these times of shrinking public resources but rising demand for support, we all need to look for new approaches to generating income and providing services. This report highlights the important and growing role that small and medium-sized social enterprises are playing and, in particular, how their impact is concentrated in some of our most deprived communities. They are creating jobs, helping communities help themselves and have a more diverse workforce.

But social enterprises need help to set up, grow and develop, providing funding, a supportive policy framework and perhaps most importantly buyers of their goods and services. We would encourage this report to be widely read, shared and acted upon to help more social enterprises have a greater impact in our local communities.”

Notes

Trading for Good can be downloaded here - https://www.socialenterprise.org.uk/Handlers/Download.ashx?IDMF=2fd3af34-6102-4739-9feb-490d196b8672

For more information, contact the Social Enterprise UK press office: shehan.perera@socialenterprise.org.uk or 020 3589 4959.