The Social Enterprise Coalition describes social enterprises as businesses trading for social and environmental purposes. There are approximately 62,000 of them in the UK, with a total turnover of at least £27 billion. A few, such as The Big Issue, Jamie Oliver’s restaurant Fifteen, and Divine, the fair-trade chocolate company, are household names, but the majority are quietly working to turn bright ideas into outcomes for their communities. Many of the organisations we work with at Pilotlight generate some of their income through the sale of goods or services.
Pilotlight Cymru’s first partner organisation is called Arts Factory, which works in the Rhondda valley, one of the most economically disadvantaged areas in Europe. Arts Factory delivers a range of services to local people including pre-school, health and fitness, arts and crafts and youth clubs. The organisation generates income from a number of small social enterprises including a graphic design service, online bookstore and the rental of managed space, some of which provide training and paid work for people with disabilities. Arts Factory values its independence from government and Pilotlight will be helping it with their aim of generating all of their core costs from the enterprises.
Arts Factory operates in a social enterprise sector which is relatively young, vibrant and growing. According to a report by Global Entrepreneurship Monitor, two million of the UK’s working age population (5.8%) is engaged in some early stage entrepreneurial activity, 235,000 are trying to start a social venture.
The government has recognised the potential of the sector and the bulk of new funding initiatives for the third sector are being targeted at social enterprise. The Scottish Government launched the £30m Social Investment Fund last December to give investment packages of between £100k and £1m to social enterprises with successful track records who are ready to grow. The funding will be a mixture of loans with low interest rates and grants. Funding for the first year will be focused on social care, environmental health and employment, disability and health services.
In May bidding opened on the £1billion UK-wide Future Jobs Fund to create 150,000 new jobs. The social enterprise sector has been asked to create 10% of those. Councils have been instructed to lead funding bids, and will be expected to work closely with social enterprises to achieve this goal.
With such high expectations, the sector needs to be prepared for growth. Craig Dearden-Phillips, founder of disability services users advocacy business Speaking Up has become an ambassador for the sector. He identifies barriers to growth for small successful social enterprises in all fields citing undercapitalisation, entrepreneurs having to spend too much time and energy looking for funding, and a culture of suspicion in the voluntary sector about people and organisations who aim for scale.
Dearden-Phillips recommends that ambitious enterprises poised for growth first identify whatever makes the idea work well on a small-scale and protect that at all costs, second invest in equipment and infrastructure (i.e. first class people and systems) and, last but not least, acquire the right skills. 'This isn’t always easy in the third sector,' he writes. ‘If growth is to happen, you need people who can model, then implement, rapid change.’