17 November 2022

Social enterprise as a driver of rural sustainable prosperity?

NICRE-commissioned research

With the mounting cost of living crisis and environmental challenges affecting rural areas, there is a need to look beyond ‘business as usual’, writes Dr Ian Vickers, of the Centre for Enterprise and Economic Research (CEEDR) at Middlesex University.

Social enterprises provide an alternative that meets the needs of rural communities while addressing sustainability concerns. But are such enterprises destined to remain as small niche contributors or can they be encouraged to multiply, grow and flourish more widely?

Social enterprises and community businesses – mixed purpose organisations that trade in order to support a primary social or environmental mission – have considerable potential as pathways to enabling prosperous, inclusive and sustainable rural economies and tackling the challenges faced by rural communities. This is one of the conclusions of our report Rural Social Enterprise: contributions, challenges and support needs which combines a comparative statistical analysis of the two national data sets on small business and social enterprise (SE) with the close understanding of key experts involved in supporting social enterprises and rural economies. 

Our research - see Exploring the contribution of social enterprises to rural economies, carried out in partnership with Social Enterprise UK, was one of seven projects exploring rural enterprise funded by the National Innovation Centre for Rural Enterprise (NICRE) from the first round of funding from its Research and Innovation Fund. The second round is now open with proposals invited until 15 December 2022 – see Applications sought for funding to research rural enterprise.

Pictured are volunteers at Cletwr, a community business and social enterprise in rural Wales which has been supported by the Plunkett Foundation, which participated in the research. Photo courtesy of Plunkett Foundation.

Key findings

Other key findings on the contributions of rural SEs and their performance as community businesses include:

  • Rural SEs, although variously defined and measured, comprise up to a third of the total UK social enterprise population and about one tenth of all SMEs found in rural areas.
  • They mainly serve local markets and often address rural community needs where there are shortfalls in both public and private sector service provision.
  • They tend to be very small, highly reliant on volunteers, and often women-led.
  • Many perform well as micro/small enterprises, but key barriers relate to the operational costs of running a business and affordability of premise, and challenges of income generation particularly in smaller and more geographically remote communities.

A common theme from the interviews and focus group discussion was around the policy framework and supportive ecosystem for rural SE being patchy and fragmented across the UK, despite many individual components being in place and evidence of more ‘joined up’ support, pooling of resources and collaboration in some regions and localities. SEs are also less prevalent in deprived rural areas where they are most potentially needed. Support providers in England and Wales were particularly concerned at the insufficiency of the policy and support system and the negative impact of public sector austerity on the capacities of local authorities and on community health and other areas of social provision over more than a decade.

There is also uncertainty around central government policy to address regional disparities across the UK and the potential role of rural SE within its ’levelling up’ agenda. It is recognised, however, that Scotland has a stronger strategic framework for enabling SE which has also been much more attuned to, and to a large extent driven by, the needs of its more remote rural communities.

Areas of resilience and dynamism

While taking account of the different types of rural social enterprise and their varied growth ambitions, the study identifies three key areas of resilience and dynamism which need to inform future support provision to raise aspirations and social/entrepreneurial capabilities across the rural SE sector:

  • Income diversification and innovation - for resilience and sustainable growth when working with dispersed populations in rural areas.
  • Pooling resources and knowledge of ‘what works’ - to overcome rural isolation and ‘smallness’ through peer-to-peer support, networks, partnerships and sustainable growth hubs.
  • Engaging beneficiaries and community members - through inclusive decision-making for sustainable regeneration and democratic

Running a social enterprise is challenging in any context but in rural areas there are additional constraints. Rural SEs in many parts of the UK are showing what is possible with their vital contributions to the wellbeing of many rural communities. Growing this sector by strengthening the wider ecosystem of support for SE will be vital for the future realisation of rural sustainable prosperity.