New report reveals innovation driving community business trading success
A new report by independent trust Power to Change, the School for Social Entrepreneurs (SSE) and Renaisi reveals that the innovative Community Business Trade Up scheme has incentivised a boost in annual trading income for community organisations by an average of £9,190.
Trading Back: Match Trading for Community Businesses as a powerful incentive for regeneration post-COVID, revealed that Trade Up participant businesses achieved this significant increase in income from trading despite the fact that over half (54 per cent) of them are based in the most deprived areas in the country. When participants started the Trade Up programme, median average income was just over £70,000.
The report demonstrates the impact of the Community Business Trade Up programme, a five year, £6.5million support programme aimed at strengthening community businesses.
Its aim is to help participants increase their income from trading, build an entrepreneurial mindset, reduce grant dependency and be financially sustainable.
This programme has provided 279 participants a transformative nine-month learning programme, up to £10,000 Match Trading grant and the support of a network of other community business leaders. Match Trading grants pound for pound match an increase in income from trading capped at £10,000.
Key findings from the report:
- Incentivised grants work. The average increase in annual income from trading can be attributed to receiving the Match Trading grant is £9,190. Trade Up participant businesses achieved this increase in trading income despite the fact that over half (54 per cent) of them are based in the most deprived areas in the country.
- Incentivised grants reduce grant dependency. The use of Match Trading grants is shown to drive an increase in income from trading as a proportion of total revenue. A 9.5 percentage point shift in this ‘trading ratio’ is credited to the grant mechanism.
- Entrepreneurial mindsets. The learning programme gives participants the business skills, confidence and peer support to develop a truly entrepreneurial culture. All this contributes to an organisation’s chances of long-term sustainability via more diverse income streams, greater social impact and the ability to adapt to future crises.
Match Trading is one of 20 proposals in Danny Kruger MP’s report to government, Levelling up our communities: proposals for a new social covenant.
The report also highlights Trade Back grants as a tool for supporting community businesses to recover from COVID-19. As community focused, and traditional for-profit businesses across the country grapple with the challenges of COVID-19, it’s to be expected that they will need grant support to some extent. However, supporting and incentivising the trading activities of social sector organisations will be key to their recovery, and their future resilience.
Trade Back grants match pound-for-pound an increase in income from trading above Covid period levels. Combined with a learning programme, Trade Back grants aim to help social enterprises and community businesses re-acquire their customers, adapt their business models, and build back better.
The report launched today at an online roundtable chaired by the Rt. Hon Nick Hurd. The panel included: Abena Oppong-Asare MP, Shadow Exchequer Secretary; Vidyha Alakeson, Chief Executive at Power to Change; and Alastair Wilson, Chief Executive at School for Social Entrepreneurs. You can watch it back here.
The panel discussed how Community Business Trade Up has worked in practice to reduce grant dependency and build long-term sustainability, as well as the future implications of the report’s findings. It also discussed whether government should establish a ‘MatchTrade’ scheme where public money is used to match the revenue social enterprises make through trading as recommended in Danny Kruger’s report.
Vidhya Alakeson, CEO of Power to Change said: “The Covid-19 pandemic has shown just how agile community businesses can be, many adapting quickly to meet the needs of their local community. But the social and economic outlook remains challenging and in order to survive in a constantly shifting ‘new normal’, community businesses will need to build resilience. The Community Business Trade Up programme gives them the tools and support they need to adapt and continue to be the backbone of our pandemic recovery.”
Alastair Wilson, CEO of School for Social Entrepreneurs, said: “Community businesses strengthen local economies and enrich the fabric of society. But running them can be challenging, especially during the pandemic. This report shows clearly that Match Trading grants work as an incentive to reduce grant dependency. Coupled with an entrepreneurial learning programme, this approach will be key to building back communities from the bottom up.”
Community businesses from across England can find out more and apply now until 2 December 2020 here.
Created by the SSE, Match Trading supports community businesses to develop more sustainable business models and create greater impact in the longer term. It provides an incentive for organisations to increase trading, by matching sales growth pound for pound.
Match Trading participants receive a grant that is matched to the increase in their income from trading from the previous year, capped at £10,000. For example, if a Match Trading grant recipient grows their income from trading by £6,000, then they receive a Match Trading grant of £6,000. If however they increase by only £4,000, their grant will also be £4,000. If they increase their trading income by £13k, they would still just receive the maximum Match Trading grant of £10,000.
There are more than 9,000 community businesses across England set up as cafés, swimming pools, pubs, breweries, shops, bakeries, community hubs, launderettes and even woodlands. They serve the most vulnerable people in society and 67%1 are located in the most deprived areas.
Community businesses provide vital services, jobs, facilities, volunteering, reduce isolation, build social capital and improve wellbeing. Accountable to their local communities, community businesses have proven crucial throughout the Covid-19 crisis. They have coordinated local responses to the pandemic – providing support as people lost their jobs, were furloughed or told to shield.
One Voice Blackburn is tackling gender and health inequality and supporting leadership skills in young people in the multi-ethnic communities of one of the poorest wards in the UK.
Shortly after Covid-19 hit, Zaffer Khan, CEO of One Voice Blackburn, joined the Community Business Trade Up Programme with plans to expand trading income.
“The BAME community has been disproportionately affected by the pandemic, and Blackburn has experienced more stringent longer-term restrictions than other areas of the UK.”
“The peer group learning style is excellent and having professionals and other practitioners available online for support has been brilliant, especially given the challenging economic climate. It’s not about being given the answers, it’s about having the space and time to reflect and bounce ideas off others going through similar situation”
“Because of COVID-19, SSE adapted the Match Trading grant so that we weren’t penalised for an economic situation out of our control. The grant’s been a lifesaver for us as it’s subsidised some of our income losses.”
“SSE staff who run the programme are exceptional. Their expertise, enthusiasm and passion really shines through. This isn’t just a job for them. They want to make a real difference to the people in communities.”
Download the full report here.
*What is trading ratio?
The trading ratio is the percentage of total income generated through trading. The average trading ratio across all 207 businesses that took part was 58%, meaning that business gains 58% of its income from trading. Businesses in the control cohort saw their trading ratio fall by 5.7 percentage points, while those in the Match Trading cohorts increased by 3.8 percentage points. In other words, the average increase in trading ratio that can be attributed to receipt of the Match Trading grant is 9.5 percentage points.
About Power to Change
Power to Change is the independent trust that supports community businesses in England.
Community businesses are locally rooted, community-led, trade for community benefit and make life better for local people. The sector owns assets worth £890m and comprises 9,000 community businesses across England who employ 33,600 people. (Source: Community Business Market 2019).
From pubs to libraries; shops to bakeries; swimming pools to solar farms; community businesses are creating great products and services, providing employment and training and transforming lives. Power to Change received its endowment from the National Lottery Community Fund in 2015.
About The National Lottery Community Fund
We are the largest community funder in the UK – we’re proud to award money raised by National Lottery players to communities across England, Scotland, Wales and Northern Ireland. Since June 2004, we have made over 200,000 grants and awarded over £9 billion to projects that have benefited millions of people.
We are passionate about funding great ideas that matter to communities and make a difference to people’s lives. At the heart of everything we do is the belief that when people are in the lead, communities thrive. Thanks to the support of National Lottery players, our funding is open to everyone. We’re privileged to be able to work with the smallest of local groups right up to UK-wide charities, enabling people and communities to bring their ambitions to life.
About community businesses
A community business is run by and for a local community. Its profits are reinvested for the benefit of that community.
About the Community Business Trade Up Programme
The Community Business Trade Up Programme is a learning programme accompanied by a Trade Back grant of up to £10,000 for community businesses that are planning to grow. The programme is run by the School for Social Entrepreneurs (SSE) in partnership with Power to Change. The programme includes 12 learning days, spread over nine months. The programme will support 50 community business leaders in total in this phase. Learning takes place online and in-person at delivered by five SSE regional teams (North West, North East, Midlands, London and South West), subject to government social distancing guidelines.
Nearly 300 community businesses have taken part in the programme so far and previous participants have typically increased their income from trading by 64%.
Applications are open until 2nd December 2020. More info: https://www.the-sse.org/courses/community-business/
About the School for Social Entrepreneurs
We can’t fix issues like poverty, climate change and ill-health alone. That’s why the School for Social Entrepreneurs exists. SSE helps 1,000 people a year develop the skills, strengths and networks they need to tackle society’s biggest problems. It runs courses that equip people to start, scale and strengthen organisations that make a positive difference. But it is not a traditional school. Learning with SSE is inspiring, action-based and accessible. SSE supports people in others ways too, such as funding and mentoring. Lord Michael Young founded SSE in 1997, and it’s grown to a network of schools across the UK, Canada and India. Together, SSE is changing lives and transforming communities. www.the-sse.org