The hidden scale of ‘business for good’ | Report shows scope of social enterprise in UK
The role and importance of social enterprise has continued to grow as a positive and inclusive response to the multiple economic, societal and environmental challenges of the past decade. A recent report, commissioned by the Department for Digital, Culture, Media and Sport (DCMS), examines the sector and identifies its scale in the UK.
Blog by FERGUS LYON
A close examination of one of the largest surveys of businesses in the UK has shown the hidden scale of those enterprises that put social good and environmental goals ahead of profit. These social enterprises offer an alternative to ‘business as usual’ and are addressing the biggest challenges of our times such as health, poverty and climate change. Research for the government, by CUSP colleagues at Middlesex University, shows the scale of the diverse types of social enterprise that range from charitable organisations to private businesses with a commitment to social and environmental goals.
The report, based on 2019 data in the Government’s Small Business Survey, found that there are an estimated 131,000 business employers and a further 325,000 self-employed people that meet the UK government’s definition of social enterprise. These all have an explicit social and environmental mission, and are reinvesting at least 50% of their surplus into their social mission. This is taking a very broad definition of social enterprise, with a large majority of these enterprises having a private sector legal form. The survey shows that social enterprises are concentrated in particular sectors such as health, education, arts, entertainment and personal services. They are also more likely to have women and minority ethnic groups in their leadership.
It should be noted that the social enterprise support community often takes a narrower definition of ‘social enterprise’ than that used by the government, which is focusing on organisations that restrict the distribution of profit and assets because of their legal form or changes to their articles of association.
The legal forms that restrict distributions include charities, Companies Limited by Guarantee and Community Interest Companies. The analysis suggests that 35,000 businesses are in these legal forms , but previous research from the CEEDR team at Middlesex shows that this may be an underestimation: the survey was underreporting on cooperative forms with an estimated 4300 Community Benefit Societies or Cooperative Societies that are also meeting the social enterprise definition used in the Government’s Small Business Survey. The focus on small businesses also excludes the estimated 5000 larger businesses that SEUK identified in its past research. The data from 2019 is also not recognising the growth of Community Interest Companies since then. We also find it is very hard to identify those private businesses that have made changes to their own articles to show a focus on social and environmental missions, although some of these businesses are now certified as B Corps.
The majority of the 131,000 enterprises identified in the report are a hidden force for good that are often ignored, despite their role as a basis of an alternative economy that puts people and planet ahead of profit. The estimated 325,000 self-employed in the sector who also put social and environmental goals ahead of profit could be hidden even further. All these businesses are the bedrock of many communities, offering vital health care, arts and wellbeing services.
A headline figure of 456,000 social enterprises might be misleading to the social enterprise community that is focussed on a tighter definition, but by looking beyond the usual social enterprise definitions, we can find a large part of the economy that is tackling the grand challenges of today, challenging the assumption that business is just about profit and growth at any cost.
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