ESE does it: How to build a regional social enterprise ecosystem

The south-west of England is well-known for its debate about the order of toppings on small baked goods – scones. But this hides a multi-faceted region with a rich variety of activities, from seaside tourism and naval bases to a rich and diverse rural economy. 

The Heart of the South West local enterprise partnership (LEP) – a voluntary partnership between local authorities and businesses – covers Devon, Plymouth, Somerset and Torbay (see map). The area has a £35bn economy and a population of about 1.7m, and contains a total of 72,000 businesses. Despite a number of positive economic indicators, enterprise in the region is performing poorly, with lower-than-average “business birth rates” and fewer scale-ups. 

How to stimulate growth? When EU funding became available to invigorate the region, Gareth Hart, chair of the Plymouth Social Enterprise Network (PSEN) between 2013 and 2020, knew where it should be invested: in the local impact economy.

Plymouth has been a leader in social enterprise since 2013, when it became one of the first ‘social enterprise cities’ in the UK. As of 2019, Plymouth was home to 200 social enterprises and community businesses, employing around 9,100 people and generating an income of £580m each year.

Back in 2013, Hart co-chaired the Social Enterprise Special Interest Group which brought together a range of social enterprise actors to work with the Heart of the Southwest LEP. Research commissioned by the group showed that one of the main obstacles for social enterprises was the lack of specialised business support.

“Social enterprises weren't accessing mainstream business advice programmes,” Hart says. “A lot of the business advice out there – it's brilliant, it's what many businesses want: human resources, marketing, financial management, business planning. But a lot of those traditional business advice programmes lacked expertise in social enterprise.” Different social enterprise structures, social investment, or the very principle of social impact were not understood in mainstream business support, he adds. 

A lot of the traditional business advice programmes lacked expertise in social enterprise

After identifying this problem, “it was just relentless advocacy, nudging, trying to get partners, from the councils to the local enterprise partnership, to recognise the need for that business advice”, Hart says. He co-authored a paper outlining the evidence available, and wrote a proposal for a business support programme to the local enterprise partnership. When the European Union funding opportunity came up, he was ready to make the case for his proposal. “At the beginning, there was quite a lot of debate about how it was going to run, who was going to do it, and then Devon County Council stepped up.” 

The council worked with partners to jointly develop the final proposal and act as the accountable body. It brought the administrative resources and experience to manage the money, and de-risked the project in the eyes of public funders, while partners would focus on service delivery.

What came out of it was Enhance Social Enterprise (ESE), a £1.73m European Regional Development Fund programme offering specialised business support to aspiring, new and established social enterprises across the LEP areas. At the same time, the programme aimed to strengthen the social enterprise ecosystem by investing in social enterprise networks locally.

Business support was delivered by six specialised training partners: Dartington School for Social Entrepreneurs, Cosmic, Somerset and Devon Community Foundations, Iridescent Ideas and Real Ideas Organisation.

“What was a good factor for the programme is that Devon Council managed it, but did not deliver it,” says Hart, who is also the director and co-founder of Iridescent Ideas, one of the business support delivery partners. “They've commissioned social enterprise experts to actually deliver the business advice on the ground.”

In practice, the scheme offered 12 hours of business support to help existing social enterprises to grow, to assist startup organisations in the process of becoming a social enterprise, and to advise budding and aspiring social entrepreneurs.

In the long-term, I realised how much confidence it gave me

Chloe Uden, founder of Art and Energy, was at the pre-startup stage of her business idea when she accessed support from ESE, through the Lloyds Bank and Bank of Scotland Social Entrepreneurs Start Up Programme 2018. Originally an artist and maker, Uden worked for a solar energy company for several years. But her desire for making art became so great that she turned down a position of director at the company and decided to start her own business, bringing arts and the renewable energy world together to unleash the aesthetic potential of such things as solar panels. 

Art and Energy organises workshops (online at the moment) and has had significant works commissioned, including an installation for the UN COP26 climate meetings in Glasgow.

“At first I wasn’t sure this kind of business support was right for me – I thought maybe a grant would be better,” she says. “But in the long-term, I realised how much confidence it gave me, and that was really valuable.”

Overall the programme has had a positive impact on social enterprises. It supported 414 individuals and businesses, and a survey conducted by the Heart of the Southwest LEP found that 60% of participating organisations said ESE was a great help and 16% said it was invaluable.

While 71% of social enterprises struggled with their business plan before receiving support from ESE, 85% found the programme was somewhat or very effective on this point. Some 81% of respondents also said that the scheme helped them with marketing and PR, something which was identified as an issue by 51% of social enterprises beforehand.

Support has been valuable for startups, as 70% of participating organisations stated they were able to ‘set things up’ following the support received via ESE. Established businesses also benefited from the programme: 29% reported an increase in turnover and 23% reported new contracts won since they started receiving support.

ESE also helped with employment, with 42 jobs created and 140 jobs safeguarded across all of the beneficiary organisations.

A network of networks

A crucial aspect of ESE was the importance given to building social enterprise infrastructure, which could carry the legacy of the programme when it ended. “You have this business advice, but what happens when that ends?” Hart asks, adding that this is why building an ecosystem for support is necessary in the longer-term. “Good networking, good advice, access to markets, access to finance – it’s the social enterprise networks that do that. And the great thing about this programme is that it invested in those networks.”

ESE worked with five local social enterprise networks – PSEN, Devon Communities Together, Essence of Exeter, Local Spark: Torbay, and the Community Council of Somerset (CCS) – creating a ‘network of networks’. 

Hart notes that, across the UK, the areas where the social enterprise sector is most active are often the best connected. “Durham, Salford, Oxford, Birmingham have some amazing stuff going on. Where there’s good infrastructure, good ecosystems, social enterprises can flourish.”

Where there’s good infrastructure, good ecosystems, social enterprises can flourish

Local social enterprise networks, for example, played an important role to support social enterprises during the Covid-19 pandemic. Rosemary Heath Coleman, director at Queen Camel Community Land Trust, which promotes affordable housing in a rural area in Somerset, said the local social enterprise network was key in accessing a Covid-19 support grant from the government. “The staff at CCS have always been great supporters and encouragers, and this is especially valued now,” she says. “It’s so encouraging to know that we are not alone”. 

An independent study into the ESE programme found that social enterprises were not likely, on the whole, to be part of a standard business network such as a chamber of commerce, hence the importance of solid local social enterprise networks. “If you look at the mainstream business economy… you've got this incredible ecosystem,” says Hart, comparing it to the “patchy” picture in the social enterprise sector. “It's sort of there in places, but actually it is very fragile,” Hart says.

Ambitions

The ESE programme enabled Essence of Exeter, which launched about three years ago, to grow from a budding entity to a confident network with big ambitions.

The potential was there: according to the network, over 650 organisations operate in the not-for-profit space within the boundaries of Exeter (which has a population of about 100,000). They handle an overall annual turnover in excess of £300m, employ directly 6,000 people, and use another 6,000 volunteers – that’s nearly 15% of the population involved in the civil society sector.

“Thanks to Enhance, we’ve got a growing and expanding network – we've seen a threefold increase in our network membership over the last 12 to 18 months,” says Paul White, director at Essence of Exeter. The connection with other networks, like Plymouth, that is well-established, helped Essence to build a strong business plan. “It gave the business a focus of trying to understand what its purpose was, and reevaluate what it was delivering and how that fit within the community and the different service offerings that have been provided by other network providers in this space.”

Thanks to Enhance, we’ve got a growing and expanding network

Being connected with like-minded individuals who share the same challenges – financial sustainability being a big one – was also important.

Looking forward, White has big plans for Essence, the first one being to support innovation. “We're using our existing business development expertise to potentially sell that expertise on to social enterprises that are starting up.” He especially notes the importance of helping innovators that have begun developing a voluntary and charity-type organisation move towards a sustainable social enterprise model.

Covid-19 is also an opportunity to work in partnership with the local authority. “There's an increasing awareness of the value proposition of the social enterprise sector,” White says. As well as public bodies, White sees the corporate sector as potentially strong partners. “We're looking at how we can help with corporate social responsibility policies, and how we could actually help bring that not-for-profit into the corporate sector.” Commercial businesses could work with social enterprises to reach sustainability targets, including sharing staff time with nonprofits, White adds.

The network of networks created a “sense of movement building,” Hart from PSEN says. “There's something really powerful, a bit intangible, about your solidarity in the movement. We're stronger together.”

Legacy

Asked what’s next in the region’s social enterprise journey, Hart says there remains a strong requirement for social enterprise business support and advice. “Some research we’ve recently done in Plymouth identifies that the need for ongoing specialised business support is absolutely critical. If we want to grow a greener, fairer, more socially inclusive economy, we need social enterprises to flourish. And if you want social enterprises to thrive and build this more inclusive economy, they need advice. 

“The risk and danger of this programme is that it ends,” he says, adding a dose of realism to the conversation. “There's nothing really yet, properly, solidly that could continue it. That's my worry… We've got to keep making the argument that social enterprises need that support.” 

Hart adds that much work is still needed with policymakers and wider society to enable a time-limited programme such as ESE to have a lasting effect.

“Social enterprise is still a bit fringe. We still have to argue that case with the government, and we still get frustrated about this sort of stuff.”

So – what can be learned from the ESE project in order to further this engagement with government, and to boost the impact of similar schemes elsewhere? 

Looking at the bigger picture, the south-west experiment is clearly an important learning opportunity for government funders, policymakers and social entrepreneurs alike in how they can effectively engage with each other to provide a more effective support system for social entrepreneurs to survive and thrive. Importantly, it could be the starting point of a wider conversation on how public money could be best used not just for ecosystem support – but to shape a future for local regions where economic prosperity and social impact can grow hand in hand.

• In part two of this series, we will reflect on some of the key findings from the ESE programme and how the experience could be used to shape support programmes and networks elsewhere.
   

The Heart of the South West Enhance Social Enterprise Programme is receiving up to £986,503 of funding from the England European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020. The Ministry of Housing, Communities and Local Government is the Managing Authority for ERDF. Established by the European Union, ERDF funds help local areas stimulate their economic development by investing in projects which will support innovation, businesses, create jobs and local community regenerations. For more information visit https://www.gov.uk/guidance/england-2014-to-2020-european-structural-and... 

This story was produced with some financial support from Devon County Council. Get in touch with our editorial team if you’d like to discuss working with us to tell social enterprise/investment stories from your local area.