Adrenaline Alley in Northamptonshire draws tens of thousands of young people annually to its skating and biking parks. But the social enterprise has also inspired other visitors.
“We weren’t sure how to approach the sector in Croatia … there were so many discussions [about] what exactly social entrepreneurship is,” said Filip Miličević from Croatia’s Ministry of Labour and Pension System, who spent two weeks with Adrenaline Alley in 2013 on a social enterprise study visit. The experience enhanced his understanding of how such organisations function and what they can do.
Social businesses – those seeking social impact alongside or before profit – make up an estimated one in five of all small and medium-sized enterprises (SMEs) in the UK. They contribute £55bn annually to the economy and employ over 2 million people, many of whom are typically excluded from the labour market such as ex-offenders.
This is attracting the attention of foreign policy makers like Miličević, who returned to the UK in March with peers from six other EU countries on a social enterprise employment and skills visit, organised by the British Council. At a time when unemployment in the EU exceeds 11% visits to UK social enterprises such as Shoreditch Trust, Livity and Adviza demonstrated successful models to address youth unemployment.
Delegates were also keen to learn about “mechanisms, acts or policy documents – how to support, how to finance, how to measure social impact,” said Miličević. For if social enterprise is not new to Europe, where one in four start-ups is a social business, growth has been largely organic, and high-level support patchy.
The visit included discussions at the House of Commons on how government can drive the social economy, featuring Paula Woodman, the British Council’s social enterprise adviser; Hazel Blears, a Labour MP and longstanding proponent of the social economy; and Kieron Boyle, head of social investment at the Cabinet Office. What were the key takeaways?
1. Infect the mainstream
Cross-party support for social enterprise in the UK has led to over a decade of policy experience but the sector is still seen as “niche - the icing on the cake”, said Blears. The goal, she said, should be to “infect the mainstream economy of your country, so that the social economy starts to change the mainstream way of doing things.”
2. Make laws - and improve them
The UK’s Social Value Act, enacted in 2013, requires officials to consider social and environmental impact as well as cost when procuring services. According to a recent review, the act has produced savings by cutting waste and by fostering outcomes, such as decreasing re-offending rates, which reduce public spending.
Blears considers this legislation “transformational,” saying it has influenced private companies to consider social impact in their own supply chains.
For German delegate Wolfgang Spiess-Knafl of the Civil Society Center at Zeppelin University this shift was “impressive”, he said, adding that “a smarter use of these significant funds is more necessary than ever across the whole of Europe.”
3. Get the funding flowing
Access to finance is the biggest barrier to growth for social businesses in the UK.
So the UK government has taken steps to attract more investment by, for instance, offering tax relief to individuals investing in social entreprises and promoting social impact bonds (SIBs), which raise capital to achieve both a social outcome and financial return.
Another UK innovation is Big Society Capital (BSC), the world’s first social investment wholesaler, which has £600m to invest through a network of social lenders.
SIBs are “a powerful model”, said Kieron Boyle of the Cabinet Office. Youth charity Adviza, for instance, delivers a government programme to vulnerable 14-15 year-olds, with investors providing the upfront £3.7m funding through an SIB – and taking on the financial risk.
Though born in the UK, SIBs are spreading wider. The municipality of Rotterdam, in the Netherlands, for example, floated a €680,000 SIB in 2013 that could provide investors with returns of 12% per year if the delivery agency gets 160 unemployed young people into work or to school.
4. Create support structures
Small social ventures often lack the processes or business models that investors want to see.
But focused support can achieve impressive results: the UK’s £14m Investment Contract and Readiness Fund, which ran to 2015, matched social sector organisations with approved providers to help them raise investment or compete for public contracts - drawing in over £25 of investment for every £1 of government grant.
It’s also about building networks of specialist fund managers, lawyers and others to support social investment. And about building markets: the government has helped Social Enterprise UK, the national body, assemble its Buy Social directory, listing over 10,000 social enterprises offering products and services.
5. Consult, listen, and talk
As Croatia prepares to roll out its first social enterprise strategy, a pressing question is “how to cooperate with all the organisations in this field”, Miličević told the group.
“It’s very easy… to describe what the requirements of social enterprises are – and to be dead wrong,” Boyle warned, recommending that policymakers use “whatever devices you have to hear a range of [voices within] the social economy.”
His team is in daily contact with small enterprises, umbrella groups and industry bodies. Such conversations support a quicker shift towards the social economy. But this “big culture change”, said Blears, can also be driven through public statements of support or raising awareness of laws like the Social Value Act.
6. Prioritise impact measurement
There are numerous frameworks to measure social impact. Consensus on how to track social value will be crucial, both for investors and for officials assessing bids under the Social Value Act.
And it will be crucial to whether businesses buy in to the act - or to any other measure.
“The private sector have said very clearly: ‘We want to do this, but we want credit for it, we want it to be measured and transparent’”, said Blears. “And they’re absolutely right.”
Content on this page is paid for and provided by the British Council, sponsor of the international social enterprise hub
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