UNDERSTANDING COMMUNITY BUSINESS
This year, we received an unprecedented 1,015 valid and completed responses to our Community Business Market Survey, our eighth annual study of the sector. The findings from this survey and 15 community business interviews, together with the additional data we use to estimate the size of the market, provide the most comprehensive picture yet of how community businesses contribute to a fairer economy and the wellbeing of communities.
With their ability to adapt and respond swiftly to their communities’ changing needs, community businesses are playing an integral role in levelling up the country towards a fairer economy
Tim Davies-Pugh, CEO of Power to Change
Our market analysis estimates that there are 11,000 community business operating in England, with a total income of just under £1 billion. Community businesses are owned by, rooted in, and accountable to their communities, operating with sustainable business models that generate both financial return and benefits for communities.
In their size, structure, services, and staffing, community businesses are as diverse as the communities they were established by and support. They are run and led by local people with knowledge or experience of the kind of economic and social challenges faced by many in the communities they support.
Characteristics of people that use or benefit from community businesses’ support or services.
The survey findings show that they disproportionately operate in areas facing multiple disadvantage – 48% operate in the 30% most disadvantaged areas in England (IMD 1–3).
Putting power into community hands, community businesses aim to make a difference to a wide variety of things that matter to their place and the people that live there. Most (76%) community businesses offer more than one service to their local community, meeting a wide range of needs.
Community businesses use a variety of legal structures and governance approaches to ensure they are accountable to the people they serve. Half those surveyed are either community interest companies (25%) or charities limited by guarantee (24%).
The proportion of community businesses reporting that they primarily provide public-facing support appears to be larger than ever; 31% of surveyed community businesses, a 10-percentage point increase from 2021. At 25%, community hubs remain the most common type of community business surveyed.
Main activities reported by community businesses.
1.1 ABOUT THE research
The annual Community Business Market Report combines findings from a wide-ranging survey, interviews with community business representatives, and data from a wide variety of external sources to build a comprehensive picture of the current scale, structure, practices, and experiences of the community business market.
1.2 What we learned about community businesses
Community businesses exist to help make places better. Run by local people and trading for the benefit of a community to which they are accountable, they put power in the community’s hands and are best placed to deliver solutions that work for their areas.
A FAIRER ECONOMY
Community businesses contribute to fairer local economies through operating, trading, and partnering locally. Compared with the private sector, a higher proportion of what they spend stays in their local community, and their trading income is invested in developing and delivering more services and facilities for local people.
Often operating in areas of high disadvantage, social exclusion, and economic inactivity, they support financial inclusion and employability where it is most needed.
They provide sustainable work for local people and build skills through volunteering opportunities, making a much-needed contribution to the prosperity and prospects of their local areas and the people living there.
The average total income reported by survey respondents this year is £264,000. The hybrid model of community business typically includes earnings from trading and grants. At the time of the survey, 83% of respondents generated some income from trading and 84% said they receive grant funding. Grant income can help maintain services while trading helps with growth and sustainability.
Reported average annual income.
Income generated by trading.
In order to better serve the wider community, we’ve really had to develop as a business to generate income. We’ve built revenue that can then further support community events and activities.
…All those activities go towards the wellbeing of the people in the community and our business model is fundamentally about providing a venue that benefits the entire community’s wellbeing
Fieldgate Arts Centre
Community businesses provide high quality work and employ an average of 9 staff and 29 volunteers – nearly all live locally (86% and 92% respectively).
Average paid staff: 9 | 86% paid staff live in local area.
Average number of volunteers: 29 | 92% volunteers live in local area .
This year, 45% of community businesses reported they had employed someone who had no previous paid employment in the last 12 months. This is equivalent to 1,514 people.
Leading community-driven regeneration, community businesses improve the physical fabric of places and the services available to local communities that live there through fixed assets like land and buildings. This year, 43% said they operate on or near a local high street, and 56% said that they own and/or manage a physical asset in their local area.
Community businesses located on or a near a high street.
Our market analysis estimates the total value of fixed assets owned by the sector at £744 million. The average value of buildings owned by survey respondents was £1,173,400, higher than the average of those they managed (£1,024,000). However, the average figures can be skewed by a small number of very high-value assets; the median figures are £375,000 for those owned and £470,000 for those managed.
Community businesses owning and/or managing fixed assets in their local area.
2.1 Economic contribution
With a primary purpose of generating economic and social benefit in the local community, community businesses earn income from a mix of trading and grants to develop and provide services to meet local needs. Community businesses reported an average total annual income (made up of grants and trading) of £264,000 for the financial year preceding the survey (2021/22).
2.2 PROVIDING EMPLOYMENT AND OPPORTUNITY FOR LOCAL PEOPLE
Community businesses provide good work for local people, often in areas facing disadvantage. They create high-quality jobs and volunteering opportunities, and provide advice and support to build the confidence and skills of those furthest from the job market. By strengthening the local economy, their work helps address regional inequalities, and build local community pride and purpose.
2.3 SUPPORTING REGENERATION
Community businesses improve the physical fabric of places and the services available to the communities that live there. As locally-rooted organisations, their physical presence on high streets and in buildings brings local people together. They are at the forefront of community-led regeneration through providing infrastructure and facilities.
MAKING THINGS BETTER FOR
PEOPLE AND PLACES
Owned by and at the heart of communities, community businesses are ideally placed to identify and respond to the distinctive needs of local people and their neighbourhoods. Adaptable and resilient, they have continued to adjust their services to reflect changes in demand in the face of persistent and emerging economic, social, and environmental challenges. Their impacts are wide-ranging and make a sustainable contribution to the long-term wellbeing of communities and the places where they live.
95% of respondents said that their business’s primary purpose is generating economic and social and/or environmental benefit in the local community. By operating in ways that generate sustainable benefits for people and places, community businesses contribute to local prosperity and wellbeing.
Reported primary purpose.
Reported positive impact on improving the environment and taking climate action.
As community businesses understand and have strong connections with local people – 90% said their business is defined by its link to the local area – they are particularly well-placed to develop and adapt products and services that address some of the persistent economic, social and health disparities and disadvantages areas face. Community businesses deliver wide-ranging benefits for the people they serve; 98% said they have a positive impact on health and wellbeing, and 97% on reducing social isolation.
What we’ve always tried to do is be a safe and a welcoming space for people, so people can come, and they can enjoy the café, or do a course, or just enjoy the space. It has strengthened the community quite a lot.
Putting power in community hands, community businesses are at the forefront of building community resilience, pride, and empowerment. 98% said that they have a positive impact on community cohesion, and 97% identified growing local empowerment and pride as a key area of impact.
With social purpose at the heart of their operating model, community businesses are also ideally placed to address global challenges at a local level. A significant majority feel that the way they trade or operate makes a contribution to improving the environment or tackling climate change (72%), and 74% said that they had a positive impact on tackling injustice and inequality.
3.1 CONTRIBUTING TO COMMUNITY WELLBEING
Community businesses identify and respond to a local area’s appetite for more community-led services, and provide a wide variety of accessible support to build community prosperity and wellbeing. Whatever their primary activity, nearly all (over 97%) report a positive impact on the inclusion, health, and wellbeing of local people; and the pride, cohesion, and empowerment of the wider community.
3.2 IMPROVING NEIGHBOURHOODS AND PROTECTING THE ENVIRONMENT
This year, 72% of community businesses reported that they made some impact on improving the environment and taking climate action. Many are taking effective action to address environmental concerns by improving local buildings, facilities and green infrastructure, as well as promoting commitment to community climate action, while striving to operate more sustainably themselves.
FIT FOR THE FUTURE
The post-pandemic economic landscape is being shaped by a renewed appreciation of community-led responses to external challenges. With their sustainable business models and high local profile and impact, community businesses are well-placed to thrive. Our research shows that those who have been adjusting their operating and business models to maintain or adapt their services in response to new challenges have been proving the most resilient and optimistic.
However, feelings of confidence about the future are understandably mixed – at the time of the survey 50% of respondents were feeling more confident about their financial prospects over the coming year, whereas over a third (37%) felt less confident.
With the right type of support, the sector has proven itself resilient to external shocks. Community businesses continue to adapt and be responsive, ensuring their continued sustainability. However, in the light of ongoing and emerging economic and social challenges, the sector needs renewed support to fully realise its considerable potential.
More recent geopolitical developments abroad have joined domestic economic instability and uncertainty to exacerbate economic, social and health disparities, and disadvantage. Community businesses are not only facing the same operational challenges as the private sector, but are also seeing growing demand for support.
The cost-of-living crisis has only just really begun to be felt. I think this is going to be a very difficult winter. I think projects like ours are going to be needed more than ever.
Even at the time of our research in July 2022, 77% of community businesses reported increased demand for support related to the costs of food, and 79% for support related to increases in the costs of energy. Anecdotal insight from community businesses through our operations indicates that these concerns have only risen since then.
In this year’s survey, 37% of community businesses said they are less confident in their financial prospects for the next year. Of these community businesses, 69% cited an increase in the cost of living as a contributory factor, and even 31% of those who felt confident about their prospects were still worried about the impact of the cost-of-living crisis on their business.
Fragile finances across the market mean there’s a perennially high priority on seeking financial support, and there’s a similar appetite for help with strategic development, business planning and evaluation, to build sustainability. Nearly two-thirds (64%) of community businesses aspire to grow income from existing sources, and 82% said they will seek new sources of grant funding.
Reported improved digital systems or processes.
Plans to seek grant funding and boost trading revenue.
Many community businesses have been exploring, embracing, and developing their own digital technology (57%), which helps to provide innovative additional or alternative community-focused services. These flexible, novel, and entrepreneurial approaches are ensuring that the services they provide can sustainably meet the growing and changing expectations of their community, and their own future business aspirations.
4.1 FLEXIBLE AND RESPONSIVE
Community businesses are responding flexibly and nimbly to growing and shifting demands by developing and adapting the nature and range of services they provide. Many continue to transform their services with technology and are offering an ever-growing variety of accessible public-facing services.
4.2 LEVELS OF CONFIDENCE
Community businesses remain confident that with the right support they can continue to make a sustainable contribution to the social economy and help communities thrive. The cautious optimism of recent years seems well-founded and community businesses anticipate growth in both income and the sector, as well as in the need for their services.
4.3 EMERGING CHALLENGES
Despite typically resilient business models that mix trading with grants, income from both sources has fallen and sector finances are fragile. In the current economic climate, community businesses face the same operational pressures as private sector businesses, but also have a responsibility to support their local community through hardship. As a result, the current crisis is affecting the confidence of even the most optimistic, and many are anxious about its adverse effects on their business.
4.4 ONGOING SUPPORT TO REALISE POTENTIAL
The community business sector consistently demonstrates that with the right kind of coordinated help, it can help deliver the collective ambitions for community health and prosperity it shares with government and public services across the country, providing much-needed help to tackle pressing national and global challenges.
This is our eighth annual report on the community business market, drawing on the findings from an unprecedented number of responses to our survey and in-depth interviews with community businesses. Together with our analysis of data from a wide range of sector and other external sources, it provides the most comprehensive picture yet of the nature and scale of the community business market.
The research was carried out by CFE Research with input from Power to Change, and this webpage report has been written jointly by CFE Research and Power to Change.
Power to Change is the independent trust that strengthens communities through community business. We started life in 2015 and use our experience and evidence to bring partners together to fund, grow and back community businesses in England to make places thrive. We are curious and rigorous; we do, test, and learn. And we are here to support community business, whatever the challenge.
CFE Research is an independent not-for-profit social research company providing research and evaluation services to government departments, public sector agencies, education providers, and local and national charities. It specialises in education, employment and skills, helping its customers understand what works, in what context and why.
5.1 METHODOLOGY AND SUPPORTING RESOURCES
If you would like to reference this report, please use the following citation: ‘Community Business Market Report 2022, CFE Research and Power to Change (2022) www.powertochange.org.uk/market-reports/market-report-2022/‘
The final section outlines our methodology in more detail, and includes supporting resources to view and download.