Time to Invest in the Community

Posted: 01 April 2010, in Press Release

Social enterprise is a phrase which seems to have crept into the language in recent years, describing businesses trading to deliver a social purpose.

Today in the UK there are around 64,000 social enterprises, with a £24billion turnover. Scotland’s figures may be modest – around 3,000 social enterprises with a combined turnover of £2-2.5bn p.a., however, our own social enterprises are both well-respected and doing good business, despite or maybe because of recession.

According to the February IPSOS Mori poll, 65 per cent of adults in Scotland understood the term social enterprise, up 11 per cent in just six months – in contrast to awareness south of the border which hovers at around 20 per cent. The survey also revealed 81 per cent of those thought the UK Government should do more to encourage investment in social enterprise, with 79 per cent agreeing that there should be specific tax incentives – accountants and policy makers take note.

The term ‘social enterprise’ describes a range of models developed to deliver specific needs – community-owned businesses limited by guarantee with charitable status, social firms, development trusts, housing associations, co-ops, credit unions and community interest companies (CICs). Trading across 30+ business sectors – from employability training and social care to recycling, renewable energy and sport – well known examples include the Wise Group and Big Issue in Glasgow; Aberdeen Foyer in Aberdeen; Kibble in Paisley, Falkirk’s Stenhousemuir FC now a CIC as well as Forth Sector and the Engine Shed in Edinburgh.

What differentiates them from the conventional voluntary sector, is their attitude to trade which can be summed up as ‘no margin, no mission.’ Where these businesses differ from private sector companies is that profits are reinvested for community good.

Over the past three years, the Scottish Social Enterprise Coalition, the collective voice for social enterprise in Scotland, has partnered the Scottish Chambers of Commerce and SCDI to raise awareness to business of social enterprise as potential clients, suppliers and partners. Success stories such as Haven Products’ long standing relationship with Standard Life in document processing, or the purchase of family businesses by leading social enterprises – Aberdeen Foyer and Dalkeith-based McSence Group – have excited considerable interest.

Now, however, conversation centres on procurement and how social enterprise can help private business win public sector contracts. Driven by the SNP administration’s commitment to ensure social enterprises gear up to bid for public service contracts, the introduction of community benefit clauses is rising fast up the agenda in the public sector procurement community as a means of delivering added social value to contracts.

Raploch Urban Regeneration Company made headlines in 2008 when it introduced CBCs to deliver 225 jobs and training into its £120million, 10-year plan to build 900 homes.

However, the highest profile push has been the recent introduction of CBCs into infrastructure contracts in the 2014 Commonwealth Games by Glasgow City Council, which is now looking to introduce them into other council tenders.

The Ready for Business Programme set up last year to help social enterprises prepare for public tenders, now has 167 businesses – both social enterprises and private businesses registered on their directory and is currently matching clusters of businesses for public tenders.

“The great news for small local businesses is that CBCs also apply to them”, says Pauline Graham, chief executive of Ready for Business partner Social Firms Scotland, “plus we find growing interest from primary contractors coming to us keen to learn who is out there whom they can work with. The trick is to understand and evaluate the social added value these businesses can contribute to larger contracts.”

Scotland’s social enterprises have been as affected by the recession as any SMEs, yet they show definite signs of self confidence. On April 21 over 100 exhibitors and 650 guests will pack into the annual S2S Social Enterprise Trade Fair in Edinburgh’s Corn Exchange, a must-go for anyone keen to engage and trade with social enterprise.

Bookings are up 20 per cent on 2009 with increasing numbers of private businesses looking for potential partners.

One exhibitor will be Edinburgh’s Forth Sector, which next month launches an ambitious prospectus to raise £4m in loans, grants and equity to double both its current £2m turnover and the number of adults with mental health conditions working in its five businesses, which cover tourism, retail, manufacturing and business development.

This is just the start of a new business conversation in Scotland; both sides seem to be listening and it could prove an exciting story.