In this article, Carole Donnelly (an award-winning Social Entrepreneur and Co-Chair of the West Midlands Combined Authority’s Social Economy Taskforce), looks at what the Social Enterprise sector needs to do to reassert itself and ensure it plays a key role in the nation’s future post pandemic.
Nationally, the Social Enterprise (SE) sector contributes over £60 billion to the UK economy and employs 5% of the workforce (SEUK, 2019). The SE sector has tried to get a seat at the table of influence across the West Midlands, often without much success. However, in 2018, a new Taskforce was established by the West Midlands Combined Authority (WMCA) to look at how we can grow the Social Economy over a 10-year period, with additional support for the sector built in. We need to build on the work of the Taskforce and give the SE sector the prominent voice it needs and help the region ‘build back better’.
SE businesses make a difference in our communities every day, bringing about change by trading rather than an over reliance on grant funding and handouts. You may have heard of a few such as Change Coffee, The Big Issue, Devine Chocolate, Bleu Water and BrewDog. The range of SE businesses is vast and many in the social housing sector now refer to themselves as SE businesses. What they all have in common is how they do business by trading, i.e. selling a product/service and reinvesting the profits into communities they serve.
As of June 2020, we have over 20,000 Community Interest Companies (CIC) registered with many more working as a SE business in other formats; at the last count there were over 100,000 businesses who defined themselves as a social enterprise. So, it is only right that we have a seat at the table isn’t it?
Well maybe not! Like, many in the Voluntary, Charity & Social Enterprise (VCSE) sector, Covid-19 not only stopped us in our tracks but for many it could also be the end of what they were doing before and possible extinction.
The SE sector was originally excluded from the Government support packages and it took an excellent campaign by the leading organisations, such as Social Enterprise UK, Plunkett Foundation, School for Social Entrepreneurs, UnLtd, Localities and several others others to get social enterprise funding back onto the Government agenda and to provide a lifeline of financial support.
You see, SE’s do not fit the normal charity or business set up and that is where our problems start. If people & those in power do not understand your business model or what you do and come to think of it WHY you do what you do, how can you have a seat at the table?
Time for Change
Myself and a few others are now starting to believe it really is time for a complete re-think of the VCSE sector and to take the opportunity to look at what a social enterprise business really is.
The traditional SE has trading at the heart of their business model with profits being reinvested back into the community or passion they serve. This is what differentiates SE’s from the charity & voluntary sector organisations. SE’s need to trade to survive; grants (free money) are great but unreliable and takes many SE’s away with ‘mission creep’ and trying to fit to what the funder is looking for, rather than what the SE was set up to achieve. So, is it really time to change and kickstart an SE revolution?
Covid-19 has led many to review their business plans, their finances and ultimately their ‘why’. Many are considering moving to the charitable sector just to survive or even worse closing down the business. This does not mean their services are not needed; it means the funding is not there to support them to grow this part of the business other than via charitable grants.
Where next?
Two of the key recommendations from the WMCA Social Economy Taskforce are:
1: “To encourage all regional public sector bodies & publicly funded bodies to spend at least 5% of their commissioning and procurement with VCSE organisations”
2: “WMCA to lead a campaign to encourage closer links between social enterprises and the wider private sector”
In June 2020, Locality published a report ‘We were built for this’ which emphasises the role of spending locally and procuring services locally, particularly with social enterprises. There are a few examples nationally of local councils spending over 25% of their procurement budget direct with the SE sector. This is something we need to adopt in the Midlands region and I would urge the leaders of Local Authorities who signed off the SE Taskforce report to put this principle into action as a matter of urgency.
However, to achieve this target, the SE sector needs to grow in confidence and become more diverse in our offer. SE’s need to develop sustainable and solvent businesses in a wide variety of sectors to be able to take on the procurement opportunities. We lack social enterprise building contractors, scaffolding companies, technical services, construction workers in this area – but why? These will be the growth sectors over the next few years alongside technology companies. If we were to start investment now and really develop a more community minded social economy where profits get reinvested into the local economy, we really can start to ‘Build Back Better’ and create an army of social entrepreneurs who will challenge; demand a seat at the table and truly compete for procurement tenders.
A further recommendation was linked to reducing the perceived ‘silo’ working that still exists across the VCSE sector. So how can we grow the sector and knock down the barriers that competing for scarce grant funding has created? That is a difficult question to answer but for the sector to really grow it needs this to happen and it needs to happen quickly.
To really grow the social economy, we need to invest in the sector. We need to grab the procurement opportunities presented within the region such as the forthcoming Commonwealth Games (Birmingham 2022); UK City of Culture (Coventry 2021); HS2 & any new infrastructure opportunities, particularly housing. Birmingham has a few community based housing providers that really understand how to develop and grow the social economy sector, and these can be used as a model to show how social enterprises can lead the recovery and build back better.
Until then the SE sector will struggle to maintain a seat at the table, to compete and win tenders. But as we enter the ‘New Normal’ we have an opportunity to ‘build back better’ and create a thriving social enterprise sector with a real seat at the table guaranteed.
About Carole Donnelly:
Carole Donnelly is an award-winning Social Entrepreneur, Fellow of the School for Social Entrepreneurs and Co-Chaired the West Midlands Combined Authority Social Economy Taskforce. Carole now works as a freelance Consultant across the West Midlands to help support & grow community based social enterprises. She is also the Social Enterprise Development Manager at Witton Lodge Community Association.
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