Tuesday, February 21, 2017

does pursuing social investment reveal a weaking social enterprise sector?

As some of you will know, I'm an approved provider for various enterprise support programmes, one of which is Big Potential - funded development support for social enterprises to better explore, and develop their businesses cases to pursue, social investment.

There are various aspects of this programme that continue to impress me, some of which I've written about before, but one that I keep coming back to is its transparency and openness about its data. It's committed to undertaking an annual evaluation of both its performance, and the profiling of enterprises whom it engages with. (It's also started to publish performance data about how well us approved providers are doing as well...)

Last year, I blogged about the first of these published reports, seeking to better understand what it's data might tell us if we compared it to 'typical' social enterprises (spoiler alert: Big Potential seems to be attracting social enterprises who are younger, more ambitious for growth, and more locally rooted than your typical social enterprise). But this years' data gives us a bit more to consider as we can now start to compare year on year data - and my cursory analysis of the data tables while on the train seem to suggest that while Big Potential may either be getting more generous in awarding support or the sector is getting better at targeting whom it should support for support, (there's an increase in initial enquiries from social enterprises who go on to be awarded a development grant: 2.16% vs 0.6%), there are signs that the wider social enterprise sector may be weakening:

  1. enterprises being supported typically have a turnover that's 7% less than last year
  2. typical net profits have fallen from nearly £18,000 to £3,000 (equivalent to net profit margins falling from 6% of turnover to 1%)
  3. assets held by enterprises are roughly half of what they would have been expected to be in the previous year
  4. the self-reported standards of current social impact reporting, and assurances over data used within it, by applying social enterprises has fallen by 9% compared to the previous year
  5. the overall average investment readiness score of applying social enterprises has fallen from 59.3% to 48.7%
  6. and there have been increases in the incidences of poor governance, and poor financial performance on the part of social enterprises being the reason as to why Big Potential hasn't feel able to award support to them
All of this would also seem to reflect a wider narrative and sense of 'struggling' amongst charities and community groups in light of prolonged austerity and recessions...

But... there are also signs that the Big Potential programme is doing what it set out to do - as well as supported social enterprises securing around £3/4m in investment of different types, they are also reporting increases in turnover in the region of nearly £100,000. However, most of this increase seems to be from growing existing services, rather than entering new marketplaces, and the sample on which this part of the data is based is so small - 4% of enterprises supported, it can only be taken as highly anecdotal at best?

For those of us so inclined, there are also some other findings in the data of interest:

But these are only my initial playing with the tables in the report while on the train heading out of London this evening - as with my previous initial analyses of evaluation reports like these, I hope others in the sector will pick these up and explore them further, and in doing so, help us all to better understand this sector, and how we might best continue to support it in the future.

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