When most people hear about social enterprises that provide training and employment to disadvantaged individuals, they think it’s a good idea. But when they ask what data we have on whether SE’s actually “work,” whether they improve the lives of the people they serve, over the long term, there’s been precious little of it. Fortunately, now there’s a new REDF study that provides some valuable insights on that impact.
The Mathematica Jobs study gathered data from 282 workers in seven REDF-supported organizations, and compared them with 37 work-eligible individuals not hired by one those SEs. The research indicated that not only did these workers gain employment and thus greater economic self-sufficiency, they also achieved greater life stability, measured for example in terms of share of SE workers living in stable housing. That percentage increased from 15 to 53 percent, a huge measure of success.
Net Benefit To Society
One way to assess impact in financial terms is to evaluate dollar benefits to society from hiring disadvantaged workers, in terms of reduced government payments, increased taxes paid, and financial benefits to the SE. Put differently, what’s the social return from investing money in these kinds of ventures?
This Jobs Study showed that for every dollar the SE spent, the net benefit to society was $2.23. Roughly half of that was in the in the form of reduced government spending, the other half financial gain to the SE — which it can then re-invest in employing additional people.
Not all the results were so positive. While workers gained economic self-sufficiency and life stability as a result of working for an SE, they actually incurred a small financial loss compared to what they would have had if they’d kept their government payments and housing subsidies. That said, their percentage of total income from government transfers decreased from 71% to 24%, a good thing for gaining greater self-sufficiency and to enable government can spend those resources on other individuals with greater needs.
Another finding was that smaller and newer SEs studied for this report did not appear to produce a positive net benefit to society, which underscores the need to take a longer term perspective on this issue.
These are excellent results, which, given the small sample size, suggest the need for additional research to expand our understanding of SE impact and inform future decision-making.