Key findings

It's time to get boring about social enterprise.  We have all heard the hyperbolic language - that our heroic social entrepreneurs are key to a post-crisis sustainable future.  How do they go about doing this and how do we know where they need help from the public or the private sector? How do we make a business case for supporting them when there is currently no definition of social enterprise on which everyone can agree?

When we conducted the COGS survey in 2008, we found that nearly 50% of the growth entrepreneurs in the survey were motivated at least partially by the desire to Make a Difference.  We felt this was large enough to warrant further investigation and so we asked the question again and put in a series of subsequent questions to filter through to "pure" social enterprises according to the UK government's own definition: those companies who are motivated primarily by making a difference, who reinvest their surpluses to pursue those goals, who do not pay a dividend to shareholders and who have a sales revenue stream that comprises of more than 25% of total revenues.

This is a non-ideological approach that lets the data rather than our own pre-conceptions define what a social entrepreneur is.  We surveyed 2,121 growth oriented entrepreneurs between August and October 2010.  These entrepreneurs had founded businesses with turnovers that were greater than £200,000 per year and had been running for more than two years but less than five years.  We found:

• Value driven entrepreneurs: Nearly 50% of the entrepreneurs in the sample had “To make a difference either socially, environmentally or in terms of job creation” as one of the primary triggers for setting up their business. 
• Make a Difference (MAD) entrepreneurs:21% of businesses had making a difference as the primary trigger for setting up their businesses.  Aggregated up to the general population of growth-oriented entrepreneurs, we estimate that there are some 232,000 businesses in the UK which are motivated by social or environmental goals.  The average annual profit of this group is £418,000 representing a potential contribution to GDP and the social economy annually of £97.0bn
• Broad Hidden Social Entrepreneurs: 19.3% had making a difference as a primary trigger and reinvested their surpluses in the business to pursue those objectives. They can therefore be classified broadly as social enterprises. Of these, all have a sales revenue stream, 99.4% have sales that contribute more than 5% to total revenues and 96% have sales that contribute more than 25% to revenues.  38.7% pay some dividend to shareholders. Aggregated up to the general population of growth-oriented entrepreneurs, this equates to some 213,219 businesses.  The average annual profit of this group of social entrepreneurs is £431,000 which is not significantly different to their mainstream counterparts.  It represents a total estimated contribution to GDP and the social economy of ££91.7bn each year.
• Pure Hidden Social Entrepreneurs: 10% conformed to the government’s definition of social enterprise in that they had making a difference as a primary trigger, reinvested their surpluses, did not pay a dividend to shareholders  and had sales which were more than 25% of revenue.  Aggregated up to the general population of growth oriented entrepreneurs, this equates to some 109,371 businesses. The average turnover of this group of social entrepreneurs is £162,000 and an estimated contribution of £17.7bn to GDP and the social economy