Social innovators – the hidden revolutionaries
By Jennifer Davis, The Essex Alliance
When we think of social enterprise, The Big Issue, fair trade chocolate, or even our reliable Co-op might spring to mind. But in recent years there has been a “hidden revolution” in the way business is being done in the UK and we have seen an impressive growth surge in the third sector. The third sector encompasses charities, social enterprises, community interest companies (CICs), and any other organisations with a social soul. According to Social Enterprise UK (2017), there are now over 80,000 social enterprises contributing £24 billion to the UK economy, employing around a million people. “The UK is viewed by many other countries as a pioneer of social enterprise” says the report.
Social enterprises can be defined as organisations that have at their heart a social mission. They make products or provide services that benefit their local communities, provide employment for disadvantaged or disaffected groups, or have as their main purpose the goal of investing their profits into good causes. In turn, customers of social enterprises are also on the increase – those who actively seek to buy local, sustainable and fairly traded are adding ‘socially aware’ to their portfolio.
Possibly the most exciting thing about this growing sector is that social enterprises are run by a far more diverse range of people than mainstream businesses – often by those disaffected by or disinterested in getting involved with the rat-race. They are set up by young, dynamic, forward-thinking entrepreneurs with an inventive take on the business world, and who as a necessity think creatively to make their ventures work.
Often the inspiration for a social enterprise comes from a requirement to meet a specific need, often in and for the communities in which they operate. Over one-third of social enterprises has a director with a disability, nearly all have a female director (over 40 percent are entirely female-led), and over a third has black Asian minority ethnic (BAME) representation. Two-thirds of social enterprises support people from disadvantaged groups, with 44 percent employing them. “A large proportion are also supporting and creating opportunities for groups that most other businesses ignore; often, in places where other businesses do not operate” (Social Enterprise UK, 2018).
Make no mistake – this is not a sector purely for hippie do-gooders. There are significant successes and actual profits to be made here. Social enterprise has proved itself to be commercially resilient, outperforming mainstream small and medium enterprises (SMEs) against a range of business metrics: turnover, innovation, start-up rates, diversity in leadership and more. Over 70 percent made a profit or broke even in the last year – the bottom line is that social innovation makes business sense. “Social enterprises have put reality to the rhetoric of the late 90s and mid-2000s: financially sustainable, commercially competitive, profitable (and reinvesting to achieve their social goals), and creating jobs and opportunities, often for those who need it most” (Social Enterprise UK, 2018).
Most (around three-quarters) of social enterprises earn the majority of their income from selling products to an increasingly socially aware general public, open to shifting their buying habits. And in this sense they are more innovative – 50 percent of social enterprises introduced a new product or service in the last twelve months compared with just 33 percent (and falling) by SMEs. For big ticket items, the public sector is the main source of income for the 20 percent of social enterprises with high (over £5m) turnover.
Despite all this, and however promising the statistics look, social enterprises remain “finance-hungry”, and access to finance remains a struggle for social enterprises. As Social Enterprise UK says, “The social enterprise sector is a powerful part of the UK economy and has been significantly underestimated”. With no signs of the sector letting up in the near future, and with growth continuing to prove resilient, canny investors would be wise to look in their direction.
Social Enterprise UK, The Future of Business – State of Social Enterprise Survey 2017. Available at www.socialenterprise.org.uk/the-future-of-business-state-of-social-enterprise-survey-2017.
Social Enterprise UK, Hidden Revolution – Size and Scale of Social Enterprise in 2018. Available at www.socialenterprise.org.uk/the-hidden-revolution.