Rethinking Innovation Funding for Social Enterprises

Social enterprises are important drivers of innovation, generating social, economic, technological, and organisational value while helping to address complex local and global challenges. Yet their ability to innovate is often constrained by limited resources, especially for smaller and lower-capacity organisations, and by funding models that do not always reflect the realities of their needs. Although many UK social enterprises undertake varied types of innovation including but not limited to new products, services, processes, and organisational models they continue to operate in precarious funding conditions, suggesting a need to rethink how innovation support is designed and delivered.

Drawing from co-design approaches and by developing a bespoke serious board game, this report presents how innovation funding can be better aligned with the needs of social enterprises. The game-based method brought practitioners from social enterprises and their funding organisations together into structured dialogue, helping surface differences in experiences, assumptions, and decision-making constraints. The findings highlight the significance of funding design as much as that of funding availability. Social enterprises need approaches that are more relational, locally embedded, and responsive to cash flow needs, rather than overly rigid and purely project based. The report identifies that for social enterprise innovation to thrive innovation support should recognise the full range of social enterprise innovation: organisational, process, and relational forms, not just products or services.

The report offers six practical recommendations across organisational, ecosystem and policy levels. For funders and ecosystem actors, this means strengthening relationships with social enterprises, aligning payment schedules more closely with cash flow, improving recognition of social enterprise innovations, and using more collaborative methods such as serious games to support shared learning. The report also recommends that for a strong R& I system, social enterprises should be recognised as core partners in innovation strategy and greater weight  should be given to social outcomes in national innovation frameworks. Overall, the report concludes that supporting social enterprise innovation requires more than increasing access to finance. It requires funding models and innovation policies that are better aligned with how social enterprises innovate in practice and create not just economic value but value for the society and environment as well.

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