New research highlights impact of economic shocks and property prices on social enterprises

Based on a quarterly survey of our members, the latest Insight Paper on our Social Enterprise Knowledge Centre gives us a snapshot of sector conditions and expectations. This new research focused on social enterprises’ ability to increase turnover and generate profit during ongoing economic turmoil but also explored property status, trading with local government and adoption of artificial intelligence (AI) technologies in the sector.

We found that the challenging economic conditions faced by all businesses are starting to impact the financial performance of social enterprises, with a downward shift in the proportion reporting a growth in turnover. However, half of all social enterprises surveyed reported increasing their turnover in the past year, compared to the 34% of small and medium sized enterprises (SMEs) who reported turnover growth.

Whilst social enterprises are outperforming SMEs in this respect, profitability is significantly lower among social enterprises than the wider SME community. A key issue affecting social enterprise finances is rising property costs and uncertain tenancy statuses. The research looks at how this is  affecting social enterprises’ ability to meet their missions, with more resources going to meet costs like rent –  and also their ability to benefit from government support, such as the VCSE Energy Efficiency Scheme, which was designed to help organisations reduce energy costs but is only available to those with long-term arrangements for their premises and permission to make adaptions.

This quarter’s paper shows economic instability starting to really impact our resilient sector, which has weathered several years of economic shocks. The experience of social enterprises is now more closely aligned with the wider business community: surviving but failing to thrive.

In the run up to the July election we will be campaigning hard to make sure political leaders not only understand the issues our sector faces but put in place measures to unleash our full potential, so that social enterprises can continue to tackle the most pressing societal challenges while supporting wider economic recovery.