Social enterprise start-ups are some of the most demographically diverse of any business model – but can they stay that way?
Women make up fewer than one in ten (7.3%) of directors of FTSE 250 companies and black and ethnic minorities account for only 4.1% of directors in the FTSE 100, according to a report from the Government Equalities Office.
Social enterprises, however, are performing substantially better: 86% of them had leadership teams with at least one female director, and 27% had directors from ethnic minorities, Social Enterprise UK found.
As business models, social enterprises are inarguably more representative of the population than traditional businesses. But some in the sector warn that unless action is taken to promote the model, this could quickly change.
Lucy Patterson founded Jigsaw Care Services Plus in June 2011 with her business partner Lorraine Clements. A social enterprise, it provides personal assistants for families of disabled children. Rather than employing assistants directly, it acts as a recruitment service for families who pay them directly via personal budgets.
“We find that we come across a lot more female-led social enterprises”, says Patterson. “We’d both worked in the care sector for a long time, had relatively successful careers, and wanted to do something that would put food on our table and pay our bills but also gives back at the same time. It’s not been about making money. I think a lot of the time, within a male environment, it is very much about status, whereas in a female environment it is different.”
While this may be anecdotal, there is plenty of quantitative data to show that social enterprises appeal to a broader cross-section of entrepreneurs than simply white males. UnLtd, the charity that supports social entrepreneurs, reports that, of the start-ups it supports, 53% are male to 47% female, 68% white to 18% black or black British, 9% Asian or Asian British and 5% from mixed or multiple ethnic groups.
At more than 30% black and ethnic minority, it is if anything overly representative for a country where such groups make up less than 10% of the population. Similarly at the School for Social Entrepreneurs, between 2007-2011, 21% of its students came from an ethnic minority background; in London, that rises to 32%.
Part of the reason is that social enterprises are not evenly distributed across the country. They tend to cluster in urban areas, and particularly in areas of social deprivation. “Communities who face challenge, prejudice and lack of fairness are forced to take matters into their own hands”, suggests David McGlashan, enterprise officer at the School for Social Entrepreneurs, “and social enterprise presents a model which allows communities to tackle inequality, with the primary aim being social impact, not financial return.”
Nick Temple, director of business and enterprise at Social Enterprise UK, says: “We should acknowledge that social enterprises are doing a hell of a lot better [than the wider business world] … I think what it partly reflects is where they’re based: roughly 40% of social enterprises are based in the 20% most deprived areas – it’s about three times the proportion than standard businesses in those areas. That tends to mean they are based in more diverse communities as well”.
Added to that, he says, “The flexibility, the way social enterprises operate and the ethical value they have makes them more attractive to a more diverse range of people.”
However, a recent academic paper from the Centre for Enterprise and Economic Development Research paints a less rosy picture. Research into emerging ethnic minority social enterprises in the five east London Olympic boroughs uncovered a significant level of distrust towards the social enterprise model. “There were a lot of businesses that could be deemed as social enterprises who were actually not using that label,” says co-author Professor Stephen Syrett, “it wasn’t a label that they were comfortable with. This included voluntary and community organisations that were actually trading.”
The term “social enterprises” was largely seen, he says, as being linked to a government policy to cut social and charitable ventures away from state grants and support. It’s a point that McGlashan also picks up on. “There is a concern that lack of available public funding will restrict access to “big society” opportunities: during periods of economic downturn, opportunities often become accessible only to the well connected, well educated elite … The sector as a whole would benefit from a clearer identity, similar to the identity that the Fair Trade movement has created. This would give the general public a better understanding of what social enterprise actually means.”
Temple agrees that it’s far from job done in terms of promoting the model to female and black and ethnic minority entrepreneurs. “We’ve got a job as the national body to continue to promote our leaders as role models, because we have some amazing ones: Penny Newman at CafeDirect, Sophi Tranchell at Divine Chocolate, Karen Lynch at Belu, Victor Adebowale at Turning Point or Edwin Broni-Mensah who runs Give Me Tap. I could go on at length. And without pigeon-holing and badging people, we need to make sure we continue to promote those individuals who demonstrate what’s possible … there’s a lot more that we can do still.”
There are numerous support programmes to find and nurture the next generation of diverse leadership in the sector. Katharine Danton, UnLtd’s director of research, impact & policy, offers the example of UnLtd’s community entrepreneurship programme Star People, “which looks to scout out, fund and support talented individuals and groups who are working to make their local area a better place to live”. Part of the wider Big Local initiative, it’s a 10-year multi-million pound programme that focuses on 150 areas across England. Such schemes, it could be argued, are central to social enterprises having as diverse a future as they do at present.
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