Number of social enterprises could be half government estimate, says Findlay

Lucy Findlay of the Social Enterprise Mark Company says there are flaws in the government's research

Lucy Findlay
Lucy Findlay

The number of social enterprises in the UK is likely to be half the official government figure of 68,000, according to Lucy Findlay, managing director of the Social Enterprise Mark Company.

The Small Business Survey 2010, published in April 2011 by the Department for Business, Innovation and Skills, said 5.7 per cent of all small and medium-sized enterprises – or 68,000 organisations – are social enterprises.

However, in a blog published today by Third Sector, Findlay writes that the survey criteria were too vague and attempts by her company to replicate the government findings had shown many flaws in the methodology.

"We have discovered that most respondents do not have the time, inclination or understanding to answer these questions with any degree of accuracy," she writes. "We have discovered a huge level of complexity of hybrid legal and group structure."

She says even many community interest companies are primarily grant-funded and do not qualify as social enterprises. Other companies qualified in some years but not others.

"So is there an answer to the numbers question?" she writes. "My suspicion is that we should probably cut the numbers in half. But I doubt we will ever really know.

"What we should be concentrating on is measuring the quality, impact and sustainability of those that we do know about and helping new social enterprises get the best possible start."

The Social Enterprise Mark Company awards a kitemark allowing a business to prove it is a social enterprise. So far it has been awarded to 462 organisations. Its criteria are agreed by umbrella body Social Enterprise UK and supported by many large social enterprises, although considered too liberal by many within the third sector.

The company requires that a business must have a social purpose, must make at least half its money from trading, must reinvest at least half its profits for social good and must, if it goes out of business, apply its residual assets for a social purpose.

- Read Lucy Findlay's blog for Third Sector

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