With market forces and state funding failing to ensure the wellbeing of our cities, universities can be the architects in the development of a new social economy, argues Mike Emmerich.

Austerity. Rising inequality. Poverty. Unemployment. An ageing population.

These are all challenges that exercise the great minds of the world. There is recognition that a new approach is needed, and signs are that the social economy has a role to play. Not even the staunchest defenders of market economics would argue that markets alone will maximise the wellbeing of cities like Manchester, while state funding didn’t fill the gaps even during the good times.

That leaves the community with a role to play, and social enterprises as part of that.

The interest in social enterprise is growing. We are not talking about charities or not-for-profits, but about money-making businesses that also have a social aim. The UK government has increased measures to promote social entrepreneurship, and social innovation, backed by legislative attempts to build a new social economy.

But if social enterprises are to rise to the challenge, we don’t need just legislative backing. We need the ambition and the opportunity to develop this social economy. And now is the best time to do this.

The global financial crisis has left people feeling powerless and completely disengaged, shouldering the personal cost of the downturn. Manchester is not immune to the effects of the financial crisis or austerity. Yet there seems to be a greater will and openness for a wider dialogue on the Greater Manchester approach to austerity and these wider challenges. Our answer, from the Greater Manchester Strategy, is clear: we need to improve growth, and reform the way our public services are delivered for all to benefit.

The appetite for experimentation with new approaches is greater now than at any other time. There is a need for a new way of working, and how social enterprises can work in this space is a question that New Economy has frequently explored.

Cities across the UK are developing and considering the role of social enterprise in varying shades, from a passive stakeholder to an active contributor in their local economic development. Stimulating the wider social economy in the pursuit of finding solutions to social challenges however, should be a collective effort.

This effort involves key partners – businesses, Universities, local government and the community – working together to develop an ecosystem that can start to give social enterprises a comparative and competitive advantage. In turn, the partnerships and social economy that develops should aid community resilience and harness community level entrepreneurialism. But they should also look outwards and learn new ways of constructing homegrown solutions to our intractable challenges.

Higher Education Institutions can be the architects in the development of a new social economy. HEIs sit at the heart of any community – a source of education and employment for many. In isolation, HEIs can employ and educate people from a variety of backgrounds.

But working together with social enterprises can not only add social value to this work, but also extend the reach of the HEI into the local community and beyond. Working with the local community should be something expected of any HEI with a social mission.

There are three main areas HEIs can start to make a difference: through its supply chain and processes; through its student and research base; and in acting as a catalyst for the wider social economy.

HEIs act as economic powerhouses in their own right. Using their collective purchasing power for the benefit of the wider community, HEIs can influence the social economy through their choice of providers, further stimulating the consideration of how students themselves choose to use their individual purchasing power. At the same time, social enterprises can benefit HEIs: playing a role in new approaches to attracting the best students, enhancing the student offer, and showing value for money.

With their international focus on intellectual discovery and multidisciplinary knowledge, HEIs are ideally placed to capture and foster the imagination and creativity of social entrepreneurs. The vast wealth of knowledge of local and international communities, students and researchers can be harnessed to seek creative, cross-disciplinary solutions to pressing economic and social needs. The overall aim of this should be in the creation of a healthy social fabric at the heart of GM.

We shouldn’t see the role of HEIs in isolation, and we don’t.

Over the next few months, a project New Economy has been working on, led by Angeliki Stogia, on the role of the social enterprise in Manchester will report. Without giving too much away now, it’s already clear that we have got our work cut out if social enterprises are to play a big role in strengthening our economy, and making our communities more resilient. The opportunity and the benefits are there. We just need to seize them.

• Mike Emmerich is one of the speakers at a seminar considering Higher Education and the Social Economy taking place on Wednesday, 4 June 2014. The seminar has been organised by The University of Manchester and the RSA.