Alex Sobel General Manager The contribution of Social Enterprise to economic growth in the current climate Alex Sobel General Manager

What is a Social Enterprise? Variety of legal forms but really defined by characteristics Enterprise orientation: They are directly involved in producing goods or providing services to a market. They seek to be viable trading organisations, with an operating surplus. Social Aims: They have explicit social aims such as job creation, training or the provision of local services. They have ethical values including a commitment to local capacity building, and they are accountable to their members and the wider community for their social environmental and economic impact. Social ownership: They are autonomous organisations with governance and ownership structures based on participation by stakeholder groups (users or clients, local community groups etc.) or by trustees. Profits are distributed as profit sharing to stakeholders or used for the benefit of the community.1 1 Social Enterprise London

Okun believed that wealth transfers by taxation from the relatively rich to the relatively poor are an appropriate policy for government. But he recognized the loss of efficiency inherent in the redistribution process. In Equality and Efficiency: The Big Tradeoff Okun introduced the metaphor of the leaky bucket, which has become famous among economists. He wrote: "The money must be carried from the rich to the poor in a leaky bucket. Some of it will simply disappear in transit, so the poor will not receive all the money that is taken from the rich.“ The “Leaky Bucket” is a useful tool for understanding how a local economy works. By imagining the neigbourhood’s economy as a bucket with money flowing in and leaking out, people can understand the importance of retaining money within the neigbourhood. They can start to identify ways of increasing the flow of income into the neigbourhood and preventing the leakage of money out of the neigbourhood which happens when goods and services are purchased outside.

What difference does it make? Local Economic Multiplier Added Value Re-investment Employing the hard to reach Ownership linked to organisation The Multiplier starts with 1) a source of income (say total income into a social enterprise) and follows how it is 2) spent and then 3) re-spent within a defined geographic area (that is called the ‘local economy’). The ‘multiplier’ is an economics concept that puts a label on a concept we understand intuitively: money that enters an economy has a multiplied impact on that economy based on the way people spend and respend money. More re-spending in the local economy means a higher multiplier effect because more income is generated.

Does it help in a recession The sector is still growing Local Sourcing and Labour Market Penetration Option for redundancy and employee buy-out Ownership models inspire employee trust Inspires confidence in Govt caught behind Keynesian and Freedman economic models Not all good news – reduced funding and corporate marketing threaten sector Since the start of the recession, 56% have increased their turnover whilst less than 20% have seen it go down. This is a considerably better performance than SMEs in the UK, where only 28% increased their turnover, and 43% saw it go down. IFF Research (2009) BERR SME Business Barometer February 2009. Department for Business, Enterprise and Regulatory Reforms (BERR)

Represent, inform and network Increase public understanding What is SEYH Regional Body Represent, inform and network Increase public understanding Mainstream Social Enterprise Create new markets Create new partnerships Signpost www.seyh.org.uk

What next? You can engage with SEYH in number of ways: Learning Visits Knowledge Transfer Partnerships Social Franchising and Licensing Developing new markets