The Social Economy in the North of Tyne Combined Authority

Mapping and surveying the scale and scope of the social economy in the NTCA region has proved achallenging task. The research has revealed a multitude of diverse legal structures within the social economy, meaning it is often unclear from the data sets used, as to whether an organisations mission is purely social, primarily commercial and the extent to which the two combine. Complicating this observation is that despite the legal definitions provided in this report, what is implied by the term social is often vague.

The two most common definitions used to describe organisations in the sector are Third Sector Organisations [TSOs] or Socially Trading Organisations [STOs]. TSOs include charities, social enterprise, and voluntary groups which deliver essential services that improve wellbeing and contribute to economic growth. STOs are defined as organisations that have a clear social mission AND are trading commercially. Crucially, organisations that operate in this sectorshould prioritise the creation of social value over economic value. The balance of statutory income [e.g., government contracts], trading income [e.g., from the sales of good and services] and philanthropic income [e.g., derived from legacies and donations, investment income or endowment income] is highly variable. Capturing this breakdown more systematically from the data would be a valuable addition to guide future strategic
thinking for the sector as a whole.

Our research has found that many of the most profitable organisations in the sector do not have an explicitly social mission as their driving force and/or they do not trade commercially. Complicating this picture is the observation that many of the most profitable organisations derive their income from multiple sources such as the public sector funding, trading income or from philanthropy. To mitigate the tension between mission and legal form we have adopted a more universal term, ‘socially focused organisation’ [SFOs], which encompasses any organisations who delivers social value.

The remit and purpose of this report is to fulfil the following objectives:

1) Define the social economy and its sub-categories, which will include inter alia CIOs, CICs, Cooperatives & Mutual Benefit Societies, Housing Associations and limited companies with explicitlysocial missions.

2) Collate data from secondary data sources to give an indicative sense of the composition and scaleof the NTCA social economy.

3) Inform the design of the funding priorities and make recommendations regarding the mostappropriate blend of financial instruments.