No Going Back — SEUK’s state of the social enterprise sector survey 2021

In 2009 Social Enterprise UK carried out its first state of the sector survey and with each passing survey these exercises have become more sophisticated and arguably more valuable. The latest, No Going Back: State of the Social Enterprise Sector 2021, has just been published and it is probably the best yet. It casts deeply needed light on the impact of COVID on the sector but manages to do this without allowing the pandemic to dominate or crowd out other important concerns. A brilliant piece of work.

Everyone reading the report will have their own particular priorities. The following are simply some of the findings that struck me most forcefully.

Workforce and leadership diversity in the sector have continued to increase

47% of social enterprises are led by women. 31% have directors from BAME backgrounds. 83% of leadership teams include a woman and 47% of social enterprises are led by women. This is far higher than other forms of business — only 6% of FTSE100 companies have female CEOs and only 18% of SMEs are 50%+ owned by a woman. 

Across the UK, and in every region and devolved nation, social enterprise staff teams include a higher proportion of staff from BAME communities than is present in the corresponding national and regional society as a whole.

But the picture on diversity is also a complex one

It is still the case that 40% of social enterprises nationwide have no staff from BAME backgrounds, with White-led social enterprises more likely (44%) not to have staff from BAME backgrounds, compared to just 5% of those social enterprises that are led by people from BAME backgrounds.

There are stark differences in turnover when compared by ethnicity and gender. The median turnover of social enterprises led by Black women, for instance, is £31,900. This could be accounted for by higher levels of new-starts in this category and requires further investigation.

Led by their values

22% operate in the most deprived areas of the UK. Almost three-quarters (72%) are Living Wage employers. 84% seek to source products and services from ethical, environmentally-friendly and socially responsible sources — and consider this more important than the increased cost that may result in some areas of their operational spending.

20% regard addressing the climate emergency as a core part of their social mission. 67% plan to embed action on climate change further still by writing this into their constitutions or articles of association.

Age-profile

The trend of recent years has been an ever increasing proportion of younger and new-start enterprises. Surprisingly, the survey reveals that this trend continued throughout the pandemic.

The proportion of SEs established within the past three years has increased from 25% in 2017 to 34% currently. Approaching half of all social enterprises (47%) are under five years old — compared to just 10% of conventional SMEs. Sector surveys in Birmingham over recent years strongly confirm this trend and indeed suggest that the age profile of social enterprises in Birmingham has for some time been younger than the national profile: in 2019, for instance, we found that 41% of all SEs had been formed in the preceding three years.

Conversely, however, the survey identifies a significant decline in the proportion of SEs trading for 21 years or more. In 2019 this accounted for 24% of the sector. In 2021 the proportion is down to 10%. SEUK notes that this could result from sampling anomalies as much as from long-term decline amongst older, established enterprises and acknowledges that it requires further investigation.

Decline in turnover

This survey identifies the greatest decline in trading turnovers in the sector since the 2008-09 financial crisis. In 2011, 20% of SEs reported a reduction in turnover, with some recovery in trading evident by 2019 when only 11% were reporting a reduction in turnover.

In 2021, however, 34% report a reduction in turnover, with this reduction most likely amongst older, longer-established social enterprises (e.g. 26% of those trading for up to 3 yrs, and 41% of those trading for 11 years or more). BAME-led social enterprises and smaller, neighbourhood-based social enterprises are also more likely to have experienced a fall in turnover.

Impact of COVID

The survey contains a particularly useful section on the impact of COVID and take-up and usage of the government’s COVID support schemes (p.52).

32% of SEs made no applications for COVID-19 schemes. 38% applied for business grants funded by government or local authorities. 36% applied for funds from the Coronavirus Job Retention Scheme (the furlough scheme) — far smaller proportion when compared to the conventional SME sector, where 68% of businesses applied. 23% of SEs applied for government-backed accredited loans or finance agreements. 

Social enterprises are less likely than conventional SMEs to have used business rates holidays (11%, cf. 17%), deferred VAT payments (8%, cf. 28%) and are less likely to have secured government or local authority grants (34%, cf. 42%). 

In terms of receipt of the schemes, most of those who applied were successful but social enterprises led by people with disabilities are an exception, with 53% reporting their applications to have been unsuccessful.

What this generally poorer access to (or lower take-up of) government COVID support schemes may mean in terms of the sector’s recovery prospects raises some very big questions.

I know I shall keep No Going Back to hand because it is packed with information and my first reading has only really scratched the surface.

You can read the key findings at SEUK and download the report when you register (free) with a valid email address.

Birmingham UK. Freelance research, evaluation and policy consultant specialising in social enterprise and the third sector. I maintain the BSSEC blog and website

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