Critical Success Factors for Community and Social Enterprise in Deprived Communities

Overview Background to the study Policy and literature review Results of online survey (Case studies) Results of interviews with local authorities Provisional conclusions

Background to the study Three key areas of focus: Community enterprise; Deprived communities; Support needs Methodology Policy & literature review Online survey Case studies Interviews with local authorities Workshop Outputs Report Good practice guidance for local authorities

Policy & Literature Review 1 Definitions: Social Enterprise … A business with primarily social objectives, whose surpluses are principally reinvested rather than to maximise profit. Community enterprise … … as social enterprises but they seek to benefit a particular geographic area or community of interest … a focal point for local people to identify the needs of their local communities and to respond with the help of their own income-generating activities (CLG 2010)

Policy & Literature Review 2 Part of wider third sector Increasing focus in relation to public service delivery Recent focus on community enterprise Support needs and Business Link

Policy & Literature Review 3 Critical success factors for social enterprise: Pre-start up and early start up support Access to finance and funding Commissioning and procurement models Board membership and skills Shared vision Leadership succession Change in mindset

Online Survey Results

101 respondents …

… few CICs or IPSs

… otherwise very diverse: turnover

… otherwise very diverse: age

Most grew out of grant-dependent community groups

High level of community involvement

Enablers of success … People Grants Cashflow / contracts

Barriers to success … Money Perceptions / structures

Dependency on public sector …

… even for social enterprise Tiny amounts of normal business finance

Variation in support preferences Tiny amounts of normal business finance

Support needs: bidding, influence, efficiency

Interview Findings

Local authorities General level of awareness of social enterprise but significant variation in policy / strategy and support Recognition that community enterprise had further to travel in order to achieve financial viability Clear and detailed understanding of support needs: issues with targeting and delivery

Regional agencies Social enterprise is a key priority within RS2010 Significant support programmes through Business Link, NWDA ISUS, ERDF, Capacitybuilders Not targeted at community enterprise?

Initial Conclusions

Community vs Social Enterprise Key differences between community and social enterprise Origins / Focus Access to finance Access to support BUT both demonstrate surprisingly high levels of dependency on grants and public sector funding and lack of access to enterprise finance Regional variation or social enterprise myth?

Turning Points and Transition Most community and social enterprises have their roots as community groups depending on grants The change to an enterprise model often hangs on a turning point to move away from grant dependency Vision and leadership – people factors - are critical in this process Transition would appear to be slow and / or limited as levels of grant-dependency remain high

Finance Financial issues remain the main barriers to success Grants remain the dominant source of finance for community and social enterprises … and the first place to which people turn Few use more commercial sources of finance such as bank loans – lack of awareness / desire? Lack of access? Problems with commissioning and procurements models Awareness, size, bureaucracy

Support Cycle Need for greater co-ordination between providers to meet varying support needs at different stages: Pre-start up / turning points – mentoring / CVS Building capacity & business planning – mentoring / SE infrastructure organisations Commissioning & contracting – local authorities / SE infras. organistions Business growth – Business Link / SBS

General Prospects All political parties recognising the need for: Reduction in grant-dependency (there is no money) Transformation in public service provision (there is no money) Role of community hubs in strong neighbourhoods Community and social enterprise seen as a panacea BUT … Mismatch between need, capacity and desire Seen as cheap alternatives Support / capacity-building seen as an easy cut

Ed Cox ippr north