Blog: The Foundational Economy and the VCSE sector

Written by Beth Sharratt, Policy & Research Manager at GMCVO 

The Voluntary, Community and Social Enterprise (VCSE) sector often promotes our social impact, but VCSE organisations are also critical to the functioning of thriving local economies. Within an ongoing economic crisis, it’s important that the sector understands our role, and ensure that we are part of approaches to build economic resilience. 

What is the foundational economy? In simple terms, it’s the ‘every day’ economy – the things we rely on as part of our daily lives. 

The Foundational Economy academic collective categorises three different types of foundational economy: 

  • Core infrastructure that connects households to daily essentials (material): utilities, transport, post, food, retail banking

  • Public services (providential): public provision of universal services and welfare to households

  • Essential goods and services that are consumed occasionally (overlooked): retail, leisure, and hospitality

These exist in every community. Goods and services can be delivered by different types of business, or people, in different places. Let’s take childcare as an example; for working parents needing to access childcare for their pre-school aged child/ren they could access a local childminder, a private day nursery or, if they’re lucky, they might have relatives who can help. Although this work is unpaid, it is still part of the foundational economy, as it allows those parents to access employment and be ‘economically active’, and in some cases, is the difference between being able to work or not. 

The VCSE sector plays a big part in the everyday economy, here are a couple of examples:

  • Office and conference space (‘overlooked’ foundational economy) – Our very own St Thomas Centre provides office and meeting space that enables organisations to run their day to day operations, meetings, events and even exams. This is a ‘taken for granted’ service (for those other than home workers), it is a given that space will made available to them so they can carry out their duties.

  • Groceries and household goods (material foundational economy) Highway Hope, one of GMCVO’s social investees, work in Manchester and Stockport and run a community food store in Stockport town centre which offers food at discount prices for the local community. They have a specific focus on food that is culturally relevant to African communities.

The everyday economy is important as these goods and services are essential to people in their daily lives, and the supply chain (all the people involved in creating and selling) that surrounds them has a huge impact on how wealth is distributed in local communities, as well as regionally and nationally. Therefore, how this economy operates plays a huge part of how inclusive the economy is.

Let’s think about that in more detail; consider the local pub or community centre that employs local people on a real living wage, on good terms and conditions, buys its supplies locally and plays an active role in the community, providing opportunities for local residents to come together to connect and socialise. This operating model will have a positive impact on the neighbourhood it’s based within. Take this further and imagine that the establishment is also owned by the community, with any surplus going in pockets of residents, or back into the business. Back in July GMCVO held a ‘week of action’ focused on community ownership, with a range of events demonstrating the value in empowering ordinary people to take control of assets within their communities. 

We’re one of many voices calling for and working towards a shift in how the economy operates and how wealth is created - and shared - across Greater Manchester and beyond. To this end, Greater Manchester Combined Authority (GMCA) has recently launched its ‘foundational economy innovation fund’. This is a great opportunity for social enterprises operating within adult social care, early education and childcare, retail hospitality, leisure and tourism to test out new ways of working that could ultimately increase the market share of businesses creating real social value in these sectors. Following an expression of interest phase, the formal call for proposals launches in January (find out more here).  We’re holding an online information event for the VCSE sector about the fund on the 9th February, come along to find out more. 

Others, such as Power to Change have highlighted the importance of community ownership and the role of local businesses on which communities can rely through research and their 'Take Back the High Street' campaign. The Bennett Institute at the University of Cambridge has recently published a proposal for a ‘universal basic infrastructure’ – highlighting the importance of basic services. This proposal influenced the Labour Party report  from the Commission on the UK’s future, which calls for an ‘equal opportunity economy’.

Policy makers are increasingly viewing the world through a ‘foundational economy lens’. This poses an interesting question for VCSE organisations who may not have thought of their role in their local economy in this way before now. When you consider the impact your organisation has as part of your local, everyday economy, what does that look like? How would you articulate it? Answering these questions could play a key part in how you contribute to recovery as we emerge from the economic crisis. 

Want to get involved? Here’s what you can do next:

Buy from us

Conference and meeting room hire

Investments to help you grow