SMEs and the Community

Click here JRF Report FINAL May 2013 for the full report.

Read this report on The Guardian web site.

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When people talk of businesses and charities working together they are usually referring to titans – big corporates making financial commitments to big name charities. In truth a wide range of engagement takes place between moderately-sized bodies in both camps. This is often recognised both for the public benefit it brings and the commercial sense it expresses – for both partners.

Less widely appreciated is the value of the community engagement of Britain’s small and medium-sized enterprises (SMEs) of under 250 employees, 99 per cent of which employ fewer than 50. SMEs make up 99.9 per cent of all UK businesses, they employ 60 per cent of the private sector workforce and generate half of its revenue, but they do not shout collectively about their CSR record, are not easy to communicate with collectively and often do not realise how much social as well as economic benefit to society they can generate.

I recently had the opportunity through a small, non-programme grant from the Joseph Rowntree Foundation to examine how SMEs relate to their communities in the contrasting cities of York and Bradford. An online survey asked about their habits of volunteering the time and skills of their workforce, fundraising and the donation of goods and services to good causes. We explored attitudes and discovered interesting trends.

Although payroll giving was not found at all in companies with fewer than 5 employees, in the sample as a whole it occurred at double the national average. This suggests that the companies which replied were better disposed towards community engagement than was the business population as a whole. Despite the difference in the economic fortunes of the two cities their SMEs related to the communities in common ways and to similar extents, with the exception that York businesses were much more likely to purchase fair trade goods where they could. SMEs across the board tended to think that it was right for businesses to engage with communities and that more could be done in this respect.

One interesting outcome was that even the very smallest businesses were willing to volunteer the skills of their workforce to support a local good cause whilst time volunteering itself was very limited where time was at a premium. Time volunteering, involving lower levels of skill than skills volunteering, started at a very low level in the smallest companies but grew consistently; where there were over 50 employees there was a 50 per cent chance that the company would contribute employees’ time to a good cause occasionally. At this size of company the level of skills volunteering, often of more value to a recipient charity than the giving of time alone, such as for fundraising, was actually falling. This is perhaps because in these middle-sized companies team building measures were held to be more important to the company than was external community engagement.

The archetype volunteering episode in which the company finance manager paints the youth club fence whilst the club treasurer sits inside, tearing his hair out, is alive and well: unfortunately.

What appeared to be missing, even from my well-disposed sample, was a rationale for community engagement and a strategy to support it; SMEs with fewer than 50 employees rarely acknowledge a specific CSR or community engagement role.

Although examples of excellent practice were found, SMEs’ awareness of national organisations and events which promote CSR or community engagement was very low.

Elsewhere, campaigns such as Coethica extoll the virtues of SME engagement with communities and in boroughs like Merton voluntary and business umbrella groups work together in recognition of the fact that those local charities are actually SMEs. Tameside 4 Good is a remarkable online initiative to encourage SMEs to give to the local community by supporting local good causes appropriately – without such communication channels those needs may never fully be met. As one charity reported, it can be easier to get a local business to donate a £20 raffle prize than to go through the bureaucracy of requesting a £20 voucher from a national department store chain.

The SME sector of British business is relatively unexplored by charities looking for partners to help them grow and be sustainable. There is a willingness for those businesses to engage with good causes as long as what is sought is appropriate and proportionate. There is even a business conscience there which knows that the smaller end of the corporate sector could do more.

I hope my report, ‘The Social SME’, available as a PDF free of charge from my web site, will serve to open a few doors.