‘Hidden Social Enterprises’ in the UK
In search and praise of the social entrepreneur:
By Naomi Conrad
Banks, particularly the big, bailed-out ones with dubious, yet creatively accounted balance sheets, but also the better-behaved ones are in most peoples’ bad books. The financial crisis has seen to that: banks and their greedy managers are nigh universally blamed for rising unemployment, foreclosures and a generally gloomy global outlook. Pushing the world into a financial furnace while splurging with and on bonuses in the midst of the meltdown you have allegedly created is not a particularly nice thing to do. In fact, it is not nice at all. The banks have dragged others’ reputations down with them; everyone deemed to have been implicated in the System is viewed with suspicion and distain. And so, businesses, both big and not so big, receive daily bashings. Any entrepreneur persona non grata est.
So it comes as a bit of a relief that the findings of a recent report dealing with the question of the social enterprise sector in the UK, set about partially redeeming the enterprise sector. At least the more socially-oriented side of the spectrum, that is. The report ‘Hidden Social Enterprises’ was launched during a conference jointly organised by Delta Economics and IFF Research on the 11th March and set out to map social enterprise in the UK.
Now there is actually no universally agreed definition of social entrepreneurship and enterprise; a social enterprise being the business model an entrepreneur may chose to adopt, thereby making him, you’ve guessed it, a social entrepreneur. Both remain somewhat vague terms, making “it difficult to know what you are counting”, according to Steve Lomax, Director of IFF Research. A broad definition used in this research, conducted between August and October 2009, was that of a social enterprise as a company that is motivated primarily by making a difference, i.e. to pursue social or environmental goals. – The lid on Pandora’s box what exactly ‘social’ is remained firmly closed. Yet other questions remain: Does this definition include the local post office or shop in a small village or the organic farmer? Or even, one shudders, a local branch of a big evil bank?
To fit a narrower definition, one that the UK government has put forward, the enterprise reinvests its surplus to pursue its social goals, does not pay a dividend to shareholders and has a sales revenue stream that is compromised of more than 25 % of total revenues. But what of those enterprises that do not have shareholders or entrepreneurs that pay their salaries in dividends. Thus, what ultimately constitutes the social enterprise remains fluent in terms of his or her social context and environment, explains Rebecca Harding, managing director of Delta Economics.
Thus, while the concept of what defines a social entrepreneur and his enterprise remains woolly, the researchers nevertheless set about counting them. The researchers drew their material from a sample of 2,121 for profit, growth-oriented businesses, that is enterprises with turnovers of more than £200,000 per year that had been running for more than two but less than ten years. Within this sample, the researchers separated those that defined to a broad and narrower definition of social enterprise from the flock of ‘mainstream’, value-less enterprises.
Some interesting findings emerged from those that jumped through the social hoop. 21 percent of the enterprises interviewed had ‘making a difference’, MAD in the report’s acronym - although the findings show the acronym to be somewhat of a misnomer, as their primary trigger for setting up the business. Aggregated up to the general population of growth-oriented, i.e. expanding, enterprises the report therefore estimates that that are some 232,000 businesses in the UK motivated by social or environmental goals. Or be it, a group of profit-making businesses that care, contributing some £97 billion to GDP annually. A sum that is surely not to be sniffed at.
Some ten percent of the sample confirmed to the narrower definition of social enterprise, or be it MAD plus. One aggregated, this means some 109,371 businesses in the UK are pure social enterprises, according to the report, with an annual turnover of £162,000 and an estimated contribution of £17.7bn to GDP and the social economy.
The overall sample was made up of some 16.5 percent women and 7.5 percent were ethnic minorities. Yet once those were isolated whose primary goal in setting up a business was to make a difference, some 62 percent of MAD entrepreneurs were women and in their majority highly educated, falling in the age band of 31-40 or over sixty. Many of the pure social enterprises operate in the services sector, with turnover rates quite similar to those of mainstream businesses.
Ultimately, what the research boils down to, is that businesses with a social purpose and profitability can go hand in hand and survive. “Pure social enterprises can make money, create jobs, and give money back”, according to Rebecca Harding, although they too have been hit by the financial storm. A reassuring message in these dark times. So it may be time to redeem the entrepreneur maybe, persona grata est again. At least some of them, the MAD ones.
For a full summary of the report’s findings, see http://www.deltaeconomics.com/COGS/Hidden%20Social%20Enterprises/Hidden%20Social%20Enteprise%20Report.aspx
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