In early October 2022, teams from the 6 Catalyst organisations: Real Ideas Organisation – Plymouth, B-Inspired – Leicester, Wharton Trust – Hartlepool, Centre 4 – Grimsby, Made in Manningham – Bradford, Wigan and Leigh Community Charity – Wigan (see appendix) who have managed the development of community businesses through the Power to Change Empowering Places programme for the past 5 years, met for the final face-to-face learning event of the programme to share what they had achieved and learned. In December 2022, at a Share and Learn event, we invited external guests from Big Local, Esmee Fairbairn and the National Lottery Community Fund, to listen to our reflections and this note incorporates the key reflections from both gatherings.

The questions we explored in the two sessions were the key achievements and impacts delivered for their communities through growing community businesses, what they had learned and the challenges they had overcome, what would be their ambition for the future of community businesses in their communities and what they need to achieve that ambition.

Across the two sessions four broad themes emerged:

1. Community engagement/organising is a necessary pre-condition for community businesses: Community businesses are created by local people, for local people. Developing a thriving sector starts with local residents who are energised and supported to become entrepreneurs and establishing a trusted relationship with marginalised communities.
2. Community businesses are a key part of community wealth creation: Community businesses are a key part of building community wealth but their contributions are often overlooked. We need to understand the nature of the value they uniquely create and support entrepreneurs to create sustainable businesses.
3. A thriving community business sector leads to greater community governance and democracy: A stronger ecosystem of community businesses is a key ingredient to enabling communities to have a greater influence and impact over decision-making and governance for their place, leading to more genuine forms of community democracy.
4. Community businesses cannot thrive without early stage and patient investment, plus hands-on support throughout their journey: Key to building a thriving community business sector is investment in a core local infrastructure that includes coaching people through their business journey, providing affordable resources like space and access to a peer network, plus enabling access to sources of flexible funding for businesses to develop at a pace that encourage diversity.

Community engagement

Deepening the relationship with the community

All the Catalysts have built deep and trusted connections with their communities and this is a critical part of the legacy of the work. The Catalysts have employed different approaches to building engagement and creating the reach to build participation. Many of the Catalysts such as Wharton Trust in Hartlepool, had been involved in community building and organising for years, enabling them to understand the community and build the connections needed to create the right environment for business growth. Others have approached through Enterprise Coaching with a specific focus on preparing people to develop successful community businesses. In Grimbsy, for example, by refocusing local work on grassroots community activities, the Catalyst team were able to build a new depth of insight and the relationships that have recently re-energised the programme. In Bradford, the deep connections created with the Muslim community have led to the development of businesses by members of the community who would not otherwise thrive in mainstream employment. It draws on a cultural heritage of enterprise, helping people to develop businesses that reflect the needs and preferences of the parts of the community of which they are members.

The Sunnah Sports Academy Trust is an example of a local business led by a Muslim woman that provides access to sport in an environment that feels safe and inclusive for the community, and Muslim women in particular, providing access to sports relevant to that community like archery which has been part of the Muslim culture for centuries.

In some places, the impetus to start community businesses has come from community developers who have identified an opportunity or a need in a local community and built a local team to take the business forward. In communities where entrepreneurship needs to be cultivated and developed, the role of the community developer in initiating an idea that has value and the potential for positive impact in a community is critical.

For example, in Leicester, the Empowering Places programme enables B-Inspired, the local Catalyst, to hire paid community developers who set up a community cafe and community shop in the Grove - the community hub. They established the basic structure and infrastructure of both ventures making it easier for local people to take ownership progressively over time.

The lesson across the Empowering Places programme is that deep community engagement is an essential starting point in creating a thriving community business sector which can play a unique role in engaging parts of the community who are otherwise under-served by the mainstream economy.

Engaging young people

For many of the Catalysts engaging younger people is a key priority. In Wigan, the development of the “Made in Wigan” brand is aimed at engaging younger people to be inspired to become entrepreneurs. Similarly in Grimsby, engagement of young people is a key local priority and having a community space that can be used by emergent entrepreneurs at an affordable cost, with access to peer businesses and expert support via the Catalyst is key to encouraging and enabling younger people. In Leicester, the newest community business starting in the local hub - The Grove – is a digital radio station run by young people.

In Grimsby, the Venturist programme worked with primary school children through a structured education programme where they learned the essentials of what defines a community, what are the needs in their community and their experience of those needs. Children were invited to design solutions and were funded to prototype their ideas. The ambition would be to engage with older children closer to the stage where they transition into work and help them develop their ideas for the enterprise and learn about setting up and managing a business.

A key ambition is to work more closely with schools so that the option to create community businesses is available to young people as a matter of course.

Role models for community

All the Catalysts talked about the importance of community entrepreneurs as leaders and role models, inspiring others to follow them. In Bradford, the team talked about how entrepreneurs were challenging the stigmas and tensions across a diverse and multi-generational community, creating different possibilities for people and inspiring parts of the community who may feel otherwise excluded from mainstream employment opportunities.

Community businesses as a key part of building community wealth

The journey to creating community businesses

Whilst all the places within the Empowering Places programme have established community businesses that are thriving and sustainable, the work to catalyse those businesses through initial engagement with the community – creating, testing and iterating the infrastructure of support, supporting businesses from inception of the idea through to a sustainable business model and demonstrating the value of community businesses as a cohort – takes a significant period of time. The 5 years of funding in Empowering Places was more patient and flexible than many other funding sources, but still too short for Catalysts to establish a resilient and sustainable sector in all six places.

Influencing local and national leaders and attracting funding

All the Catalysts have had a significant influence on decision-makers whether democratically elected local leaders and public sector officials, third-sector funders, or national campaigns and influencing groups. This role in improving the environment for community businesses has been a critical part of the value of the Empowering Places programme.

For example, in Wigan, the Wigan and Leigh Community Charity evolved from a smaller and more local organisation covering Abram Ward and now works closely with the Council on a borough-wide strategy for community wealth building and well-being, and has been invited to work on the Town Centre strategy. This reflects the growing importance of community businesses as part of the broader economic strategy of a place.

In Hartlepool, the Catalyst team feel that the EP programme provided access to both a platform and networks, to influence national funders and policy makers, and has led to their playing an active role within these networks and campaigns, for example in the APPG on Left Behind Communities and the We are Right Here Campaign. This has enabled Wharton Trust to evolve from a hyperlocal and somewhat isolated community catalyst organisation to one that both serves a local community and has a voice in the national policy landscape.

Creating a purpose-led ecosystem

Community businesses are innately purpose-led and hold deep experience of balancing the competing tensions of purpose, community interest and financial viability. They create a bridgehead between the business and voluntary sector, influencing private sector businesses to think more about how they can contribute to the wealth of communities and showing the charity sector that often a more sustainable path is found through a blend of income and grant funding rather than over-reliance on charitable funding.

Because community businesses are there to serve their communities, they have an important value in showing the potential of enterprise in their communities.

For example, in Wigan, Missplaces, a business that provides a place for local women to gather and develop their skills and confidence and which is led by a person with a disability, shows the potential for community businesses to drive inclusion.

RIO, the Catalyst in Plymouth, has supported 23 community businesses throughout the EP programme, the majority of which are led by women or those from minority ethnic backgrounds. These community businesses have begun to create an ecosystem of thriving businesses which are ‘using an entrepreneurial approach to social and community innovation,’ and their leaders are significant role models for others in their communities.

A key investment through the Empowering Places programme has been mapping the local community business ecosystems to identify the range of businesses and making that data available to those that commission public services, so decision-makers are aware of what is available locally and incorporate businesses into the local service ecosystem.

The Catalyst teams have played a crucial role convening a broader group of social and purpose-led organisations, so they amplify their voice and influence. For example, in Leicester, the Catalyst has become part of a Social Enterprise network and managed to secure funding from the Shared Prosperity fund to support the social enterprise sector in the City. They organised themselves collectively as a campaign that influenced the decision-making process, helped by the fact that the Local Authority were trying to make decisions more democratically. The funding will provide core resources to catalyse the development of the sector.

Emergent approach to value and purpose

Several Catalysts talked about the freedom they had found in not having pre-defined targets in the Empowering Places programme and how their understanding of the value of the programme had emerged in unexpected ways. For example, Plymouth talked about achieving much more around asset transfers (15 of which occurred throughout the duration of the EP programme) and employment than initially anticipated and achieved more overall from being able to follow the opportunities that emerged. This momentum has garnered the support of the local authority who see the benefits of developing the community business sector both in terms of economic regeneration and urban renewal.

Bradford talked about the mismatch between how public authorities sought targets and outcomes as a condition of funding using contracting models more suited to service contracting than entrepreneurship. The journey of an entrepreneur is much less certain and styles of funding and evaluation of programmes need to reflect this.

More generally, Catalysts talked about their role in capturing and communicating the value of the work, joining up with a broader group of social enterprises to evidence and make the case for investment and local prioritisation of community-led business.

Community governance and democracy

Developing the social infrastructure

There is a growing argument, made recently by MP Danny Kruger and by Think Tank Onward that social capital and the empowerment of local people has declined to a point where communities no longer believe they can be agents of local change. If there is continuing investment into levelling up, it is critical that a proportion of that investment is made into so-called “soft” social infrastructure creating the means through which people in communities connect and act together to improve places. In many of the most deprived communities there are few voluntary sector organisations providing the leadership and convening power that allows those wanting to contribute to their community to take part. Community businesses and the Catalyst teams that support them have a critical role in building local social infrastructure and the belief that local people can deliver change.

Recognising the importance of partnership, Power to Change provided additional funding for local collaborations to evolve and in Wigan this funded the development of participatory budgeting which has strengthened the role of the community in making local decisions.

Amplifying the voice of community businesses

Local entrepreneurs strengthen the connections with and between people in the community and are a critical conduit to engaging with local people and enabling the voice of communities to be heard. As leaders in the places they work in, community businesses play a key role in shaping the aspirations for places and understanding what defines the identity and pride in place. Community businesses can be the catalysts for defining an ambition for the future of place and engaging with different funders to achieve this. The Dyke House prospectus (in development) in Hartlepool is an example of community businesses stepping into this broader leadership space.

It is important to build the commitment of local people to support local businesses through publicity. The Made in Wigan and Made in Manningham brands were aimed at building local commitment for the sector. The relationships that community businesses make in their community is key to building local support for the business.

Developing new forms of community democracy

As noted earlier, a key learning of the EP programme has been that strong community organising is a condition for developing a thriving community business sector; another key learning is that building a community business sector in turn, enables stronger community voice, governance and new forms of community democracy to develop. This can lead to more meaningful and sustainable shifts of power from institutions to the community itself, leading to ‘devolution’ at a more local level, a level at which members of the community can directly participate.

The Wharton Trust in Hartlepool has been thinking about increasing community power and role in democracy for some time, and are actively exploring setting up parish councils that will have more direct decision-making authority over aspects of life that affect their community and environment.

In Plymouth, with greater community ownership of land and assets, they are testing out new ways of consultation and decision-making (in person and on-line) on how to use these resources as well as how to increase and shape community-led economic development efforts. These efforts provide ways for a community to play a much more central role in evolving and creating their own place, while making space for different views to be heard from different parts of the community.

In both these examples, the local authorities are very supportive, seeing opportunities for economic regeneration, urban renewal, and ways to reduce the demand on local authority capacity.

Creating, preserving and regenerating community hubs

A key role for the Catalyst teams has been creating spaces that belong to communities and which enable community businesses to access a community market and for residents to gather in spaces that belong to them. The lack of space for communities to convene is a well-documented[1] constraint on community cohesion and collective action. Community businesses create the impetus and sources of sustainable funding to enable spaces to be available to local people, providing a key resource for communities to work together and take action together.

“These physical structures – for example, the coffee shop or library, – have historically been the areas where social capital has formed. There is a need to consider further how these assets, alongside different forms of housing, levels of home ownership and transience affect community and belonging in different places. Recent evidence has shown that the number of traditional public assets such as post offices, public houses and bars (pubs) and libraries have all declined in number in recent years, with far-reaching consequences for local places….However, while the number of pubs and libraries in the UK has consistently declined since 2008, the number of community-run or -owned pubs and shops has increased year-on-year over the same period. Since 1996, the number of community shops trading in the UK has increased ten-fold – from 34 to 346. Not only does this contribute to the richness of the Social Fabric in a neighbourhood, community shops seem to fare much better than other small businesses, with a long-term survival rate of 94%.” Repairing our Social Fabric. Onward. 2020.

The Empowering Places programme has provided the funding to create the sort of spaces that breathe life back into the social fabric of communities. For example, The Annexe in Dyke House, Hartlepool; The Grove in Braunstone, Leicester, the Campus of spaces in Plymouth and Lister Mills in Manningham, Bradford. These examples show the transformative impact of creating community hubs on the physical and social fabric of communities. Local Authorities have played a key role in several places in transferring ownership of public assets that are given new life and purpose through community businesses.

Enable the green transition for community businesses

As ethical organisations, many community businesses want to act on climate change, but funding and technical support is needed for an investigative phase to identify the opportunities for community businesses to act. Making available investment to develop exemplars and provide proof of viability would enable community businesses to access funding at scale and put community businesses at the forefront of greening their communities.

Community businesses often play a key role in preserving and regenerating spaces that sit at the heart of their communities - bringing back to life buildings important to the identity of a community. In often re-inventing those spaces so they are relevant for the current social context, making those spaces “green” and demonstrating how spaces can be sustainable and regenerative is a key role and value.

Investing in the growth of the community businesses

To grow community businesses funding is needed to:

• Create a local platform that supports individual businesses through the life cycle of inspiration through to sustainable business and builds a mutually-supporting local network.
• Provide access to spaces that are affordable and which enable businesses to connect with their communities and local funders
• Provide long-term patient and flexible support that recognises the length of time that is needed for communities to create and develop viable businesses
• Invest in the development of partnerships and relationships so community businesses have a local voice and influence

The Ripple effect

The importance of community businesses being a mutually-supporting local network that provides practical and emotional support to local businesses was widely referenced as a key condition for entrepreneurs to thrive. The momentum was created by establishing an initial cohort of businesses and enabling their success meant that as news travelled across the community, the number of business start-ups accelerated over the duration of the EP programme. The more investment that is made into establishing a local platform for community businesses, the more likely it is that the investment will produce a sustainable and vibrant local community business sector.

It has been important to integrate the community businesses that have been developed through Empowering Places funding into the wider activities of the Catalyst organisations to enable longer term sustainability. The ability of Catalysts to provide a longer-term platform that can connect nascent and established community businesses has been a key differentiator in establishing the legacy of the programme.

Location, location

Having a space that brings businesses together and enables them to access local people is a critical starting point to support community businesses and all the Catalysts had built a hub or hubs for organisations. In all 6 places funded through Empowering Places, having a location to offer new businesses has been critical to enabling their development. In Leicester, which has one of the longest established hubs, the rental income generated through the Grove Centre now funds new initiatives enabling the sector to be substantially self-sustaining.

It takes several years for a Hub to become a central and trusted part of a community, but the pattern of funding means in practice that centres only secure short-term funding for programmes, and struggle in particular around securing core costs. Catalysts are looking for a longer-term commitment to that central infrastructure and capacity building that creates longer-term certainty for the community and stability for the businesses that the Hub supports.

Funding of community businesses

The majority of community businesses depend on multiple sources of funding at all stages of their journey. This means that they need to be able to identify sources of, and bid for, funding, usually given in small amounts and for short periods of time. A priority for the Catalysts collectively is to advocate for stable and accessible funding and where funding decisions are made with the community. A key constraint identified by Catalysts is the longevity of funding. With the added complication of the pandemic, Catalysts were of the view that many of the businesses developed through the Empowering Places programme are not yet sufficiently sustainable and resilient without on-going support.

Local Councils play a critical role in enabling businesses to access public spending. For example, Wigan Council through the Wigan Deal has started the gold, silver, bronze model to commissioning and procurement based on community wealth-building principles such as number of local jobs etc. which now means businesses in general in Wigan are being more community-minded. Wigan Council are also changing their model of grant funding to create a more sustainable and long-term funding platform for community organisations. But, in other places Catalysts talked about the prevailing paternalistic model of funding from local government inhibiting the ability of the public sector to work flexibly with communities and follow their needs and preferences. The experience of Catalysts in working with their local authority partners differs significantly and is described as “pot luck”. In many authorities, the procurement processes were inaccessible to small businesses and most, particularly those who were not set up as private business entities, are not recognised by procurement teams as potential suppliers and contractors.

Supporting people to transition into being community entrepreneurs

The journey to creating a viable community enterprise can be long and arduous and made more so because many founders work part or full time in other roles that fund their investment into the enterprise. Many businesses do not thrive because founders can’t manage the transition from “side hustle” to viable source of employment. The form of funding to community business should follow the journey of businesses from being dependent on non-repayable finance in the earliest stage to taking repayable social loans as they adopt commercial mindsets and practices. For example, Snapdragons Plymouth, an innovative early years centre, was founded by two primary school teachers who took over a dilapidated property. It took them 3-4 years to set up Snapdragons while holding down full-time teaching roles; how can social entrepreneurs be better supported to have the capacity to make these transitions sooner and how can funders and policymakers be more ‘honest and responsive’ to the real capacity needs of setting up community businesses?

The Catalysts play a critical role in building confidence in local people to make the journey to be an entrepreneur. Creativity can come from people from all walks of life and the role of the Catalyst is to encourage and enable people to realise their ideas. It is important to be able to make sufficient investment in developing people’s skills and confidence so the opportunity to be an entrepreneur is accessible to people from all walks of life.

It was suggested that mapping the different journeys of community entrepreneurs would be useful in understanding the diversity of routes and how best to support those journeys.

Conclusion and call to action

What the discussions brought to life is the unique role of community businesses in empowering people in places to become agents of their own, and their community’s, change. As a vehicle for enriching the social, economic and physical capital of places, they provide different ways to generate wealth than mainstream business or the charitable sector. They enable people who struggle to find or thrive in employment, opportunities to use their talents and passions for good. They create local pathways for young people to stay and contribute in their communities. They reach into communities and engage people with whom many others find hard to build trusted relationships and who are often marginalised from the business and charitable sector. They create the physical and social infrastructure that allows people to convene and act - strengthening their voice and influence and providing the route for those voices to be heard, and ultimately, creating stronger communities.

What we have learned through Empowering Places, is that this work needs flexible and long-term funding that reflects the very different starting points and paces at which entrepreneurs of different backgrounds and experiences create viable businesses. The role of Catalysts in giving people the inspiration, confidence and support to become entrepreneurs is essential – community businesses will simply not thrive without their support. They needed to be funded so they are a dependable part of the sector ecosystem – there for the whole journey. The type of businesses and the people who create them reflect the diversity of the communities they are part of. The community business sector will be different in each place, as will the support they need to flourish. But, one universal need is having a space for businesses to come together and support each other at a cost viable for the business at the stage of its development. Funders need to enable local catalysts to take ownership of spaces that bring local people and the businesses that create local wealth together.

Appendix: Catalyst Profiles

Made in Manningham, Bradford

Made in Manningham (incubated by Participate Projects) was set up in 2017 with the vision of making the Manningham area of Bradford a great place to work, live and visit. Made in Manningham aims to see community businesses at the forefront of harnessing local people’s potential and for people from all communities to be involved in making it a great place to live and work. This includes supporting a thriving network of new and/or expanded sustainable community businesses. Made in Manningham has developed a unique model to deliver Empowering Places, using an asset-based appreciative enquiry approach. This model is based on grassroots community engagement, enterprise coaching, targeted support and strategic engagement.

Centre4, Nunsthorpe and Bradley Park, Grimsby

Centre4, is a long-established hub that aims to support the regeneration of North East Lincolnshire through offering an incubator space for small businesses and social enterprises, as well as a range of services for local communities. It is based in the communities of Nunsthorpe and Bradley Park Estate – an area which hosts an active base of local residents who have been involved in setting up and running various local shops, community and youth centres. Centre4 aims to create change by supporting business development and encouraging local people to turn ideas into action, as well as providing job opportunities for local people and bringing back green spaces. Centre4 hosts a number of businesses, offers space to rent, access to a community library, community gym, business amenities, and an ethical recruitment agency. It also has a free-for-all advice service and an Oftsed registered nursery, as well as managing the social prescribing service for North East Lincolnshire.

The Wharton Trust, Dyke House, Hartlepool

The Wharton Trust is a well-established community organisation based in the Dyke House area of Hartlepool. Dyke House sits in the top 2% of deprived wards in the UK and is in the lowest 5% for employment rate in the country. Services run by the Trust include supporting community members access employment and training, promoting healthier lifestyles, youth activities, access to a community library and free use of computers and Wi-Fi. The Trust is involved in other prominent local place-based initiatives like Big Local and Place Based Social Action.

B-Inspired, Braunstone, Leicester

B-Inspired is a well-established, large community organisation which has chosen to incubate a small number of targeted community businesses largely within a central community hub. The aim is for the businesses to ultimately run as independent enterprises that also support each other and offer a diverse range of employment, volunteering opportunities and services not previously available to local residents. B-Inspired is a neighbourhood-based charity with a trading arm which owns several local assets. It operates within the Braunstone estate, a highly deprived area to the west of Leicester comprised largely of social housing but with very little infrastructure and no high street.

Real Ideas, Devonport and Stonehouse, Plymouth

Real Ideas (set up in 2007 and based in the former naval areas of Devonport and Stonehouse in Plymouth) supports social, community and creative enterprise and develops innovative projects across Plymouth and beyond. It has extensive experience of taking on and redeveloping assets (such as the Devonport Guildhall and Market Hall), setting up businesses and running educational programmes and is well networked both locally and nationally. It provides flexible and affordable office space for SMEs to grow and develop, and capacity building support for community businesses. Real Ideas’ collaborative approach uses its extensive local connections and local delivery partners to identify potential community business opportunities and to tailor the support it provides its community businesses to their needs.

Wigan and Leigh Community Charity (WLCC), Wigan (Abram Ward Community Co-operative)

Abram Ward Community Cooperative (AWCC), was launched in 2013 as a collaboration of social enterprises, charities and community groups, working together to create sustainable and innovative communities. By building strong connections with Wigan Council and other key stakeholders, the work of the Cooperative expanded into a broader area and the organisation was renamed. Using their strong community connections, WLCC focuses on creating and enabling an empowered environment for people to create their own businesses and support existing businesses to scale up. Acting as a Community Anchor organisation, WLCC aims to build on existing community spirit to create community business, to benefit the residents of Wigan and Leigh.

[1] https://www.appg-leftbehindneighbourhoods.org.uk/ evidence/session-2-social-capital-and-social-infrastructure-why-it-matters/