Leisure social enterprises ‘serious competitors’ for private firms

Social enterprises operating in the leisure services sector are becoming “serious competitors” to privately run businesses, according to the Royal Bank of Scotland (RBS) SE100 Index. The index also shows that overall social enterprises are performing well.

The SE100 Index, launched in 2010, aims to give social investors a platform to track the financial, social and environmental performance of social enterprises online. In November 2013, figures from the index showed that the social enterprise sector was gathering pace.

Leisure centres dominate the largest 10 social enterprises on the SE100 Index that deliver leisure sports, arts and culture services, all of which have turnover seven figures or more. However, the size of the organisations is varied, with Greenwich Leisure taking the top spot with turnover of £123m and tenth place Out of the Blue Arts and Education Trust turning over £1m.

Cuts to local government subsidies mean that social enterprises have an opportunity to run leisure facilities that serve both the disadvantaged and affluent by operating a ‘Robin Hood’ model of cross subsidy. In order to attract affluent gym goers and compete in the market, social enterprises have had to up their game and ensure they provide quality services.

The social enterprises involved in the sector often take a business-like approach but also reinvest their surpluses into a variety of projects that are designed to benefit the local communities. The projects can range from helping older people keep active, supporting those with health problems due to inactive lifestyles and nurturing talent among younger generations.

John Comiskey, chief executive of Edinburgh Leisure, which runs around 30 venues for the local authority, commented, “With such aggressive competition in the marketplace we have had to pull ourselves away from the old council gym mentality and understand what customers are wanting.”

The government is supporting the model leisure social enterprises are using. Minister for sport Helen Grant added that the facilities are vital for offering affordable, accessible sport for all.

Overall, the index shows that the social enterprise sector is performing well. In the second quarter, average growth of the main index stood at 30.5%, with the top 100 fastest growers reaching 306.1%. The latest data also shows that SE100 Index members are generating £2.9 billion of profits to plough back into society and the economy, with the largest 100 enterprises accounting for over 98% of this.

Ian Walters, managing director of business banking at RBS, commented, “The social enterprise sector is playing an increasingly important part and their approach to business is bringing many benefits, transforming communities, creating jobs for people excluded from mainstream employment and helping to drive a healthy, vibrant economy.”

The index has also shown that social enterprises in the health and social care sector saw massive growth in 2013. The sector, which grew 121% last year, reached a turnover of £852 million – representing an attractive investment opportunity.

Photo: ctr via Freeimages

Further reading:

Healthcare social enterprises in massive 121% growth in 2013

Online platform allows social investors to compare social enterprises

Social enterprises generate £2.7 billion to plough back into society

Big Potential fund will help charities and social enterprises diversify income

New fund allows social investors to support charities and social enterprises