1.    What are social enterprises?
2.    What are some examples of social enterprises?
3.    What is the history of social enterprise?
4.    What data is there on the size and popularity of the social enterprise movement?
5.    In which economic sectors do social enterprises work?
6.    What is the difference between a social enterprise and ethical business?
7.    Why is it important for social enterprises to make a profit?
8.    What legal forms can a social enterprise take?
9.    Is my business a social enterprise?  
10.  Where can I get advice on starting up a social enterprise?

Social enterprises are businesses set up to tackle a social or environmental need. Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinctive because their social and/or environmental purpose is absolutely central to what they do - their profits are reinvested to sustain and further their mission for positive change. 

 

The Big Issue, the Eden Project and Jamie Oliver's restaurant Fifteen are examples of social enterprises.

So are award-winners Divine Chocolate,a fair trade chocolate company co-owned by the cocoa farmers cooperative Kuapa Kokoo in Ghana and Women like Us, which connects women with flexible employment.  

Social enterprises cover a huge range of industries - Cafedirect is the UK's largest Fairtrade hot drinks company; The Elvis & Kresse Organisation (EaKo) takes industrial waste materials, turns them into stylish luggage and hand bags and donates 50% of the profits to the Fire Fighters Charity; Hill Holt Wood educates at-risk youth in an ancient woodland; Central Surrey Health is a pioneering social enterprise in the health care world that is run by the nursing and therapy teams its employs; Green-works takes office furniture that would have been sent to the landfill and offers it at a large discount to charities and other organisations.

 

The pioneers of social enterprise can be traced at least as far back to 1840s in Rochdale, where a workers' co-operative was set up to provide high quality affordable food in response to factory conditions that were considered to be exploitative.

In the UK, a resurgence of social enterprise started in the late 1990s with the coming together of different traditions, including co-operatives, community enterprises, enterprising voluntary organisations and other forms of social business.

 

Government data released in 2006 (the Annual Survey of Small Businesses UK) estimates that there are 55,000 social enterprises in the UK with a combined turnover of £27 billion. Social enterprises account for 5% of all businesses with employees and contribute £8.4 billion per year to the UK economy.

A YouGov poll released in 2007 found that over 60% of the British public would prefer their local services to be run by a social enterprise - instead of the government, private profit businesses or traditional charity. 

That same survey polled 2,000 people and asked them what kind of company they would like to work for. A clear majority, 30%, picked social enterprise, with only 16% of respondents saying they would like to work for a traditional business, 13% choosing a government institution and 13% a traditional charity.

Recent research into social entrepreneurship in the UK released by Delta Economics in July 2008 found that:

·         Almost 1.3 million people or 3.4% of the working age population, consider themselves to be social entrepreneurs, representing a significant part of the UK's labour force.

·         35% of all entrepreneurs who have been involved in start-up activity for less than three months in the UK are social entrepreneurs.

·         5.5% of all established business owners in the UK are social owner-managers

·         Almost 12% of early stage entrepreneurs are starting a social venture

 

Social enterprises are active in a wide range of industries.

According to a DTI survey in 2005, health and social care services is the largest category of trading activity for social enterprises as it was the principal trading income source for 33% of respondents, followed by education at 15%. Social enterprises are also extremely active in the energy, transport and recycling markets. However a social enterprise can be successful in any market - from an employee-owned bicycle shop to an IT consultancy firm hiring people with Asperger's syndrome.

 

The two are distinct business models. A social enterprise's main purpose of existing is to fulfil its social and/or environmental goals.  This is achieved by reinvesting the majority of the profits back into the business.

An ethical business tries to achieve its financial goals while minimising any negative impact on society or the environment.

 

Social enterprises are businesses. They need to make a profit to compete in the market, to ensure their continued survival and to invest in their social or environmental aims.

For many social enterprises, being sustainable - in every sense of the word - enables them to become more independent and to reduce any dependency on public grants. It also ensures they can continue to help provide a solution for a social or environmental problem.

 

Social enterprises use a wide variety of legal forms including: 

·         Community interest company (CIC) A CIC is a legal form created specifically for social enterprises. It has a social objective that is "regulated" ensuring that the organisation cannot deviate from its social mission and that its assets are protected. For more information on CICs, contact the CIC regulator - www.cicregulator.gov.uk

·         Industrial and provident society (IPS) This is the usual form for co-operatives and community benefit societies, and is democratically controlled by their members in order to ensure their involvement in the decisions of the business.

·         Companies limited by guarantee or shares are the most common legal structure for businesses and often considered to be the most flexible particularly companies limited by shares. While they can ensure they have a social mission written into their Memorandum and Articles of Association, this is not regulated.

·         Group structures and charitable status Tax is an important consideration for some organisations where the retention of surpluses is essential, particularly if they can't take on equity.  In these cases the tax breaks associated with charitable status can be an important factor.

 

If you are generate the bulk of your income from trading and use the majority of your profits to further social or environmental goals then your business or charity might be classed as a social enterprise.

 

© Social Enterprise Coalition    

 

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