Support organisations

This is a living document, and we need your help to make it better. Please leave any comments or sources of further evidence at the bottom of the page. This is version 1 - published on 15th July 2010.

What's the policy?

Support co-ops, mutuals, charities and social enterprises

"We will support the creation and expansion of mutuals, co-operatives, charities and social enterprises, and support these groups to have much greater involvement in the running of public services.
We will give public sector workers a new right to form employee-owned co-operatives and bid to take over the services they deliver. This will empower millions of public sector workers to become their own boss and help them to deliver better services.
We will use funds from dormant bank accounts to establish a Big Society Bank, which will provide new finance for neighbourhood groups, charities, social enterprises and other nongovernmental bodies." (Building the Big Society, Cabinet Office)

What's the evidence?

1a. How many co-ops, mutuals, charities and social enterprises might need support?

According to the UK Civil Society Almanac, there were 171,100 general charities in the UK in 2007-08, an increase of 6,919 organisations since the previous year. The income of these general charities amounted to £35.5 billion.

Registered charities in England and Wales, 1960-2009

chart?chxr=0,1965,2009|1,10,170000&chxs=

Source: Charity Commission

There were 4,600 co-operatives in the UK in 2007/08. Co-operatives also experienced an increase in overall numbers, with an additional 185 organisations over the last year. The income of these co-operatives was £24.5 billion.

A number of organisation types can be defined as mutuals, including co-operatives. Other mutual organisations include employee-owned businesses, NHS Foundation Trusts and housing associations (see table for further information). According to the Mutuals Yearbook 2009, the mutual sector continued to grow in 2009 with overall revenues exceeding £98 billion (up from £84 billion in 2008). Membership of mutuals has also continued to expand.

The Mutual sector, 2009

Sector	Number	Members	Employees	Assets (£m)	Revenue (£m)
Building Societies	52	22,000,000	42,300	341,000	4,000
Friendly Societies	200	6,000,000	5,000	17,000	1,646
Mutual Insurers	14	3,288,366	12,932	60,999	2,715
Other Financial Mutuals	2	2,001,200	13,397	70,329	4,535
The Co-operative Sector	4,630	10,650,338	167,519	7,873	24,488
Co-operative Trust Schools	28
Credit Unions	487	747,230	950	592	63
Employee Owned Businesses	200		110,000		25,000
Football Supporter Trusts	169	100,000	100	6	6
GP Co-ops and Mutuals	40		8,000		150
Housing Associations	2,000	6,000,000	151,330	57,000	11,580
Leisure Trusts	120		26,000		625
Clubs & Societies	11,600	7,000,000	20,000	220	463
NHS Foundation Trusts	115	1,500,000	398,196	17,790	22,770
Total	19,657	59,287,134	955,724	572,809	98,041

Source: Mutuo - the Mutuals Yearbook 2009

The Social Enterprise Coalition reports that social enterprises contribute £24 billion to the economy.

1b. What support is already being provided to these organisations?

Voluntary and community organisations, coops and mutuals and social enterprises receive support from a number of ‘horizontal’ (such as NAVCA or DSC) and ‘vertical’ (such as Children England) infrastructure bodies at national, local and regional levels.

Funding for this support comes from a range of sources, including the sector itself and government. The users or beneficiaries of this support are frequently not the purchasers or funders. This in turn highlights that support is financed through direct purchase, membership subscriptions and grants from a range of different funders. The Big Lottery Fund (via its BASIS stream) and Capacitybuilders’ ChangeUp programme have been significant funders of support.

The evaluation of the first phase of ChangeUp (pdf) by the Third Sector Research Centre provides an indication of the level of support provided. Using GuideStar UK data, TSRC estimated that expenditure by approximately 1,200 National Infrastructure Organisations totalled £2.5 billion in 2008, equivalent to 8% of GuideStar’s estimate for total third sector expenditure. In addition, 2,000 Local Infrastructure Organisations spent £700 million in 2008, or 2% of total spend by the third sector. We believe these estimates are based on a broad definition of infrastructure organisations.

1c. How do these organisations contribute to the delivery of public services?

The Mutuals Yearbook 2009 shows that mutuals, co-operatives, charities and social enterprises already undertake a wide range of public service delivery. Cooperatives work across the economy, including in the provision of affordable housing, children’s nurseries and healthcare. Housing associations provide 2 million homes for 5 million people and have a turnover of £11.6 billion. The 122 NHS Foundation trusts (as at September 2009) cover acute and mental health services. The 115 that were registered by March 2009 had a turnover of £22.8 billion.

The UK Civil Society Almanac estimates that general charities received £12.8 billion from government in 2007-08, of this, £9.1 billion was in the form of a contract. Contract income from government to general charities has increased by £5.1 billion in seven years. Just over one-fifth of general charities (38,000 organisations) have a direct financial relationship with government. An organisation’s size appears to impact on both the amount of statutory income that it receives and also how important that statutory income is to their overall income. 79% of the general charities statutory income is received by 3,742 large and major organisations. Alternatively, small and micro organisations receive only 3.3% of the statutory funding that is received by the sector.

Social enterprises work across a wide range of public service areas including delivering primary and community care services and employment services. A survey by the SEC found that organisations in the £250,001–£1 million turnover band were more likely to receive the majority of their income from the state (48%).

2. How common are employee-owned businesses?

There are approximately 200 employee-owned businesses with a combined annual turnover of £25 billion. There is no official data about the size of the co-owned business sector – companies in which employees own anything from a significant to controlling stake in the company – but the sector appears to be growing at a significant rate [add data]. Employee-owned businesses take many forms (e.g. cooperatives, mutuals, companies with Employee Share Ownership Plans (ESOPs)), so should not be thought of as a single business model.

What are the potential challenges and opportunities?

Opportunities

Greater involvement of voluntary and community sector in the delivery of public services could lead to increased funding for some organisations, particularly the larger charities with a local presence.
The opening up of markets may lead to a growing interest in the voluntary and community sector as innovators and transformers of public services.

Challenges

For many organisations it may not be feasible or appropriate for them to be involved in the delivery of public services and doing so could lead to mission drift.
More involvement in the delivery of public services could lead to voluntary and community organisations losing their identity and becoming more like public sector organisations.