With traditional funding streams drying up, voluntary youth organisations are facing a tough time. Cuts to local authority budgets and government grant programmes look to be hitting the sector particularly hard, with a Local Government Association survey reporting that 22% of finance directors from local authorities say that services such as youth clubs and play groups are getting above-average spending reductions.

Figures from polls within the sector back this up. The National Council for Voluntary Youth Services (NCVYS) highlighted back in October 2010 that almost 70% of organisations were already seeing a drop in income over the previous 12 months, with 75% cutting projects and over 80% citing the end of targeted programmes for young people. Understandably, many of these organisations are looking for new and innovative ways to generate income, and increasing numbers are wondering whether a social enterprise approach would work for them. 

Trading with a mission

Social enterprise appeals because the sector shares the ethos and mission-driven nature of the voluntary sector, whilst generating income through trading like traditional businesses. As Social Enterprise UK's Director of Business & Enterprise, Nick Temple, says: “It requires a different approach, but operating as a social enterprise can really empower a staff team and enable employees to put their business ideas and skills to good use. It also gives an organisation the freedom to be much more innovative in service design and delivery, and means they’re less reliant on traditional funding streams.”

There are plenty of great examples of social enterprises working with young people too. Livity, for example, is a youth communications company launched in 2001 (see photo). It aims to harness companies’ marketing budgets for social good, running marketing campaigns with young people and, crucially, offering them placements and training to carry out the work. Based in Brixton, 30% of the young people Livity works with are disadvantaged, often NEETs [not in education, employment or training], from across London.

With an estimated turnover for 2010-11 of £4m, Livity’s projects also include running Live Magazine, originally a local authority run communications tool to get messages out to young people. Since Livity took the magazine over, it's grown widely in popularity, with the young people involved in its production, editing and selling of advertising space.

Taking risks

Changing your business model isn't easy though. One of the biggest challenges voluntary sector organisations face when transitioning to social enterprise is adopting an entrepreneurial culture and mindset. Charity trustees have a legal obligation to minimise risk to the organisation, but if you want to move to an enterprising approach, you have to be able to take financial risks.

Similarly, it’s challenging to think of ways to become sustainable through trading rather than relying on grants and donations, particularly in a market where your service users have low disposable incomes, or where available public service contracts have slim or no profit margins. To overcome this, many social enterprises in public services use cross-subsidisation models – running a commercial media agency to fund training and employment schemes for young people, for example.

Added to all of this is the rapid pace of change in the funding environment, which leaves little time for organisations to adapt.

To help provide support during this period of transition, Social Enterprise UK has recently produced a series of practical resources for professionals working with children, young people and families as part of a programme funded by the Department for Education. Drawing on best practice and sharing stories from our members, these include a guide to social enterprise, free practical events and one-to-one surgeries, all tailored to the areas voluntary organisations told us they needed support in. If you think your organisation could benefit from any of these resources, come and take a look at the network we've set up on our website to host them and let us know what you think.

Further information on the resources offered by Social Enterprise UK can be found here.

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