Friday, November 17, 2023

profiting from despair - the unfortunate truth about how social enterprises become successful?

There's a common narrative that social enterprises step-in where private businesses can't or won't, and when public services are lacking, to plug gaps in order to ensure people have access to support and activities that they need - something that has been re-iterated in every government national policy document for/about the sector since their first one in 2001.

And ongoing surveys by the likes of Social Enterprise UK into the sector show how it appears to be more resilient and diverse than its counterparts in the private sector.


I've come across a few studies and research reports recently which make me wonder if we should be having a discussion about the ethical implications of this, rather than keep congratulating ourselves each time the updated State of the Sector report is released?

And also, if we should be re-visiting our expectations and understanding about the factors that help drive the growth and successes of social enterprises? 

- A research paper about social enterprises in France found that they prospered more when the wider economy was suffering, and tended to simply 'get by' when the country's economy was performing well (in contrast to private businesses, who grew when the economy grew, and struggled when the economy struggled): 

This trend would also seem to be evident here in the UK, based on data reported by the ongoing VCSE Barometer study, which shows that charities seem to have an opposite hiring trend to private businesses: when private businesses slow the rate at which they're investing in growing their staff, charities are increasing their recruitment, and vice versa:

spider plant
Could this suggest that social enterprises are a bit like spider plants (also sometimes referred to as the entrepreneur in plant form): if you tend to it too much, it'll wilt. It tends to prosper best when faced with harsher circumstances (less water, less light, etc) than most plants need in order to survive. 

And this is potentially a key understanding - we know our economies go through rounds of repeating recessions and boom periods, as part of natural cycles that will always happen (despite what politicians might like to otherwise hope and believe).

And we know that just as booms tend to create more opportunities for people, recessions tend to see jobs being lost, firms being wound up, etc.

We therefore need to recognise the important role of social enterprises in helping to 'prop things up' in those times of recession (a period when the data seems to suggest that they perform at their best), to help mitigate the negative impacts of the downturn in the wider economy; and crucially to provide a hope and assurance that things will keep going and remain open for people.

But what is it about such harsher trading environments that force private businesses to struggle, but enable social enterprise to thrive?


- Also, Social Enterprise UK's State of the Sector mapping raises some potentially important questions that may merit exploring further, through an ethical lens?

* while social enterprises are more likely to have women, BAME, and people with disabilities in leadership roles than private businesses, those that do are usually smaller and generate less income than those that don't.

* those social enterprises that are based in areas of higher deprivation are more likely to be profitable than those that aren't. And as most social enterprises' main customer is usually the general public, this surely prompts a question about how far should social enterprises go in ensuring that they're financially sustainable by generating a profit, but how much should that profit be, if it seems to be increasing where their customers are in greater need of support?

* and social enterprises seem to be less present in sectors and services relating to supporting employment, housing, and social care - areas where there's widespread agreement about there being the most need. 

As with (mostly) all of my blog posts like these, this isn't intended as a bashing of the sector, or the bodies that support and advocate for it - but a reflection on what various sets of data are potentially highlighting. 

That's because I've an idea that we need to get better at looking at numbers like these, if we're to properly understand how to best make sure that we're enabling social enterprises to realise their full potential for all of us - and surely we can only design support that we can be sure works for the benefit of everyone, if we keep asking questions like these?

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