New report reveals community businesses generate more income compared with other third sector organisations

Community businesses are more financially independent, generate more income and are more invested in shaping social and public policy to improve their local area than other types of third sector organisations, according to new research published today.

Community Businesses in the North of England 2020: New comparative analysis from the Third Sector Trends study, is the latest instalment of the Third Sector Trends study which has been running since 2008. It is published by Durham University in collaboration with independent trust Power to Change, Garfield Weston Foundation and the Community Foundation serving Tyne & Wear and Northumberland.

The picture in 2019, when compared with 2016, was positive. It showed that community businesses increased income; reduced reliance on public sector sources of funding; created more local jobs; and drawn down reserves to reinvest in growing their business.

Highlights:

  • Just over a quarter (26%) of community businesses substantially increased income in the last two years (compared with 19% in 2016). Community businesses were less likely to report substantially falling income in 2019 (15% compared with 23% in 2016).
  • The proportion of community business which rely primarily on public sector sources has fallen from 49% to 39%.
  • Employment in many community businesses has risen over the last two years, with 29% reporting a rise in full-time staff and 43% reporting rising numbers of part-time staff.
  • Community businesses have a higher level of income than other general third sector organisations: 63% have income over £100,000 compared with 36% of general third sector organisation that earn income and only 12% of general third sector organisations that earn no income.
  • Community businesses were much more likely to have used reserves to invest in new activities such as buying property, developing a new service or employing a development worker (17%), when compared with general third sector organisations (10%).

 

Report author Professor Tony Chapman said: “The key finding of this report is that community businesses are resilient entities. It is their determination to be financially independent, at least in part, through self-generated trading activity that sets them apart from other third sector organisations when it comes to resilience.”

The research is based on the 3,158 responses to a survey conducted between June and December 2019. The data, therefore, does not reflect the impact of the Covid-19 pandemic and lockdown on community businesses and other third sector organisations.

Of the impact of the coronavirus lockdown, Professor Chapman said: “It should not be taken as read that the future for all community businesses will be bleak. The pandemic may help to produce changes in the way communities think and act in future. Local people may feel a stronger sense of commitment to community and to the organisations which champion and service it, such as community businesses.”

The report reveals the power of community businesses to make a real difference in their local area particularly when it comes to pushing for policy changes that will make a longer difference.

Ailbhe McNabola, Head of Research and Policy at Power to Change, said: “Community businesses perform a unique balancing act, marrying enterprise and entrepreneurialism with a goal of making a real difference to places where they are based. These attributes will be important as places begin to recover from the social and economic impacts of the Covid pandemic. Community businesses can play an important role in the places where they work in the months and years ahead.”