The UK’s Homeless Summit this month was an important opportunity for around 200 organisations and individuals working with homeless people to take a critical view of what's needed and what's working in tackling homelessness. Once again social enterprise was one of the hot topics, an obvious response, perhaps, to the demands on the homelessness sector to meet an increased demand in services with decreasing resources.
Over the past 15 years supporting disadvantaged people into employment through social enterprises has become increasingly prevalent in the UK. In March 2012 it was unveiled as one of the five key principles underpinning the Government’s Social Justice Strategy. Despite an increased focus on work as a route towards recovery or out of poverty there has been very little study of the social impact, or the financial sustainability, of the social enterprises charged with making that vision a reality.
The results of research are a mixture of the surprising and the predictable. The first surprise was just how large and effective this sector has become:
The second surprising discovery was that, despite the majority of social enterprise employing homeless people having started in the past five years, and despite working with some of the least employable people in the country, these organisations are earning the same percentage of their income through trade as the wider social enterprise sector. Furthermore only marginally more report a loss than purely commercial SMEs (30% compared with 24%).
This tells us that social enterprise can sustainably support homeless people into jobs. But more importantly how? What works and what doesn’t?
The answer is that different approaches work at different stages of a person’s journey from social exclusion to social inclusion. In most cases (with the notable exception of Aspire Oxford) models that combine volunteer opportunities with paid employment are most effective. Volunteer opportunities being vital for those not yet ready for supported employment, but real jobs being a better final step on the ladder into mainstream employment.
There was a vast range of different models and operating in different industries, and no one social enterprise could offer all the answers. However there were some important lessons we can conclude about the important elements that contribute to the financial and social success of an enterprise. I hope those doing the hard work of actually running these social enterprises find them useful, if perhaps a little too familiar.
1. Be clear about which rung your organisation provides on the ladder from social exclusion to social inclusion. No organisation can help everyone at every stage of that journey. Other organisations have their expertise and part to play.
2. Mind the gaps between organisations, this is where most ‘beneficiaries’ fall down. The transition points into and out of your organisation are particularly vulnerable. Who is providing that extra support at those key transitions?
3. Get the right balance between core staff, ‘stable beneficiaries’ and more ‘chaotic beneficiaries’. The social enterprise has to be able to deliver its commercial service, if the balance is skewed too far one way it’s not maximising its social impact, too far the other way and it risks going bust.
4. Develop multiple income streams. Social enterprises with only one income stream rely on an average of 40% grant funding, compared to only 5% for those with five income streams or more.
5. Housing associations can provide vital stability. A three year contract to deliver a commercial service to a housing association can be a more reliable source of income than most grants.
6. Commercial franchises may offer a commercially sustainable business model that could add financial and social value to your offer. There may also be sustainable social enterprises who could be persuaded to franchise.
7. Build your commercial stability before being too ambitious with your social impact. In most cases long-term social value will be created from a sustainable commercial base.
8. Support your leader. The personal pressure felt by leaders of social enterprises in this space is enormous and they need the right support, for example from a strong board, a mentor, peer support and appropriate training. And time to be strategic, not operational.
9. Your social value can be extremely effective at getting your foot in the door, particularly with public sector bodies in the wake of the Social Value Act. But social value on its own will not keep those contracts. You need to deliver quality and reliability.
10. Cooperate, collaborate, collectivise. Together social enterprises working with homeless people are saving the government £66m a year. On your own you may have a relatively small voice, but together you pack a significant punch.
If you’re interested in reading the full report, you can download if for free