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The voice of Scotland’s vibrant voluntary sector

Published by Scottish Council for Voluntary Organisations

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Social enterprises face financial threat

This news post is 11 months old

New research has laid bare the challenges organisations face as they struggle with the fallout of Covid-19 #NeverMoreNeeded

The vast majority of social enterprises face financial threat over the next year, research has revealed.

Data released by Social Enterprise Scotland has shown 90% of social enterprises face a level of financial threat in the next 12 months.

The study builds on research undertaken by the Scottish Charity Regulator (OSCR) at the end of May, where 774 social enterprises responded to questions over how they have been affected by Covid-19.

It shows almost a third of social enterprises (232) quizzed said they face critical financial threat over the period. A further 468 said they face some financial threat.

The survey reports that in the next six months, 34% of organisations see a “critical” or “large” threat to their financial viability; 46% see a modest or small threat and 12% no threat or unsure. Around one in twelve (8%) of the organisations highlighted that financial viability was critical before three months.

Lockdown had a big impact on income, as more than half (62%) of the sector receives 50% or more of its income through trading, though this includes local authority contracting.

The survey notes that a significantly higher proportion of sports and recreation organisations (56%) and those working in culture and the arts (48%) reported to have stopped operations than overall (36%). Of those saying they were facing a critical threat in the next 12 months, 82 (35% of responders) were from arts organisations; 61 (25%) from sports and 118 (58%) from leisure and culture.

Unsurprisingly, 97% of social enterprises reported a negative impact on their organisation as a result of Covid-19, with 52% noting a disruption to their services. Furthermore, 83% noted that planned work or events were postponed or cancelled. Most have seen a marked increase in demand for their services, with only 13% reporting no increase in demand.

The study also details what funds and support organisations have accessed, and how supported they have felt.

It concludes that certain organisations will need support to help Scotland recover from the pandemic.

It said: “There are many areas such as health, food and other direct services that have been a priority over the last few months, but over the next period, it is important to ensure that other organisations, including those operating across the arts, culture, sports and recreation are supported to ensure the overall wellbeing of the Scottish public.

“As we look at specific sectors in line with recovery efforts, we must also consider how future periods may affect their work and services. Expected rises in unemployment and subsequent income levels will no doubt have an effect on our communities and there will be a need for greater interventions from these organisations.

“Mental health, changes to the office environment and ongoing changes in our use of digital technology will impact the way social enterprises respond to support government, their communities, and their beneficiaries moving forwards.”

Social Enterprise Scotland said it will use the findings of the report to support the sector. A spokesperson said: “These findings have created new priorities for Social Enterprise Scotland and we are considering the partnerships and data insights that we need to inform and support the sustainability and long-term resilience of our sector. In particular, we are working with the Scottish Government, OSCR, Evaluation Support Scotland, and SCVO to ensure we can inform recovery efforts and resources to the organisations who need it.”

The full report can be viewed online.



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