Social entrepreneurs and community businesses offer some of the most innovative solutions to tackling the big social justice and community challenges of our time. A third of social enterprises in the UK work in the most deprived communities, and 44 per cent employ people who are often disadvantaged in the labour market, such as ex-offenders, people with disabilities, military veterans and homeless people, according to Social Enterprise UK’s latest research. Operating in such an environment means that, commercially, these businesses are more likely to struggle to compete with an organisation offering similar services or goods, but importantly without the same social impact.
According to SEUK’s State of Social Enterprise 2017 report, 51 per cent of social enterprises made a profit in the past year. The same report tells us, however, that less than half of UK social enterprises increased their turnover in that year – but we also know there’s an appetite for growth.
Inevitably a significant proportion of these social enterprises and community businesses became reliant on grant funding. And it’s right that they should receive support for the work that they do. The challenge is when organisations stall, becoming reliant on grant funding rather than building the businesses they want.
The School for Social Entrepreneurs is supporting people to learn how to diversify and rebalance their income streams, helping organisations to move away from grant-dependency to generating more income from trading goods and services. SSE has developed a new model of grant funding, called Match Trading.
Match Trading pound-for-pound matches an increase in income from trading. Social enterprises and community businesses are offered a Match Trading grant: for every extra pound they earn through trading compared with their previous year’s accounts, they receive a pound in matching, up to the amount of the Match Trading grant on offer. On SSE programmes, they also attend learning sessions with other entrepreneurs. By rewarding sales growth, Match Trading incentivises social organisations to develop their trading bases, so they can build stronger futures.
SSE has been running programmes with pioneer partners the Lloyds Banking Group and the Big Lottery Fund, and programme partner Power to Change, to explore the impact of this new type of funding. The initial results have been really positive. The numbers who have completed programmes are still small – 40 organisations were given access to a learning programme and Match Trading grants of £7,000 to £10,000 – but typically they have increased their income from trading by about 90 per cent compared with their previous financial year, calculated by median.
Fiona Frank is a recent Match Trading grant recipient. She’s the director of Halton Mill, run by Green Elephant Cooperative, which offers private and shared low-carbon workshops, studio and office space, as well as classes, performances and events. She shared her experience: "The Match Trading grant, alongside the learning sessions, really helped us to take risks and try new things. We trialled a new learning programme, put on more events ourselves and produced a brochure for the first time, which has really increased our profile.
"Not everything worked, but it gave us a much better idea of what does work for the business, and how we can continue to build a working community and provide stimulating classes and events for the locality. Our income from trading grew by £26,000 during the year of the programme, an increase of 37 per cent. We are not now reliant on grants to cover our running costs. We also learnt a lot from other social entrepreneurs involved."
I am chairing a taskforce of people from some of the UK’s leading trusts, foundations, social-sector bodies and the government to consider and test how SSE and the sector can together develop the Match Trading model. Over five years, Match Trading grants will be used by at least 600 social enterprises, charities and community businesses.
The government’s renewed commitment to grant giving in the recently published Civil Society Strategy is a welcome recognition of the vital role that grants can play in civil society. It is also an opportunity for us to explore new ways of administering grant-funding, such as Match Trading. This will allow us to offer those people who have such passion and determination to making a change in their communities a real opportunity to achieve as leaders and as entrepreneurs.
Carol Mack is chief executive of the Association of Charitable Foundations, and chair of the Match Trading taskforce