Better places through community business: What are our hypotheses?

Richard Harries

Director of Research and Development

Our vision at Power to Change is of “better places through community business”. We believe that when local people come together to tackle local problems, and choose to do so through a commercial model built around trading, the results are both more powerful and more sustainable than traditional approaches taken by the public, private or third sector. Not only can community businesses breathe life back into isolated and deprived neighbourhoods, they can give local people a new sense of power and purpose.

However, we also recognise that there is little in the way of hard evidence to support these claims. That is why, as a new organisation ourselves, we spent our first two years putting in place a research and evidence framework that we think will allow us to test these beliefs in an open and rigorous way. The collection, dissemination and analysis of high quality, standardised data is at the heart of this approach.

As a grant maker, we take great care to make sure that whenever we ask applicants for information, we analyse their responses thoroughly. We know, for example, that a typical grantee supported through our main Community Business Fund will be a community hub that has been around for 10-15 years but only trading for perhaps half that time. Moreover, we know that in many cases trading will not be its main source of income but that it does want to diversify and become less reliant on grants and donations. This tells us something important about the kinds of businesses that apply to the fund and make it through to our grants committee. With that in mind, we have been looking harder for organisations that don’t conform to this model, to balance our portfolio and support organisations at an earlier stage in their life cycle.

This is a simple example of how data analysis has helped us to improve our internal processes and make better funding decisions. However, our interest in community businesses goes beyond the few hundred we support through grant each year. We want grow the entire marketplace and we want to understand the impact these businesses are making relative to all the other things that are happening in their local area.

We are doing this in a number of ways. We are seeking out and procuring commercial datasets that give us different perspectives and insights into specific geographies. We are working collaboratively with the wider voluntary, community and social enterprise sector to agree shared data standards. And we have developed a business intelligence platform, Twine, that allows community businesses (and indeed any small local organisation) to collect financial and operational data on the issues that matter to them and to benchmark their performance against a peer group.

We believe that our ongoing investment in data collection and analysis will allow us to build a rich picture of local economies and the challenges they face. However, to really get to the heart of what’s really going on in community businesses, we need to break down the lofty claims made about community businesses into a set of basic statements about how they might transform their local areas and how Power to Change might help them to do so.

We don’t think of this as a Theory of Change in the usual sense. These hypotheses are intended as research questions, falsifiable ones, that we will assess regularly by drawing on all our data sources. We may find that some don’t hold, and where that turns out to be the case, we’ll try to adapt and improve them.

We are publishing them here and we’ll check back in on them regularly, sharing what we learn as we go along. Please drop us a line if you have thoughts about how we could develop our hypotheses, about different data sources we could use to test them or about potential collaboration opportunities.