Social Enterprise FAQs
What are social enterprises?
A social enterprise is an organisation with social aims which re-invests any surplus it has back into the organisation to pursue these aims. It is a business model where a social, community or environmental purpose is the most important factor.
While commercial businesses may have social objectives, a social enterprise is distinctive because its social or environmental objective is central to what it does.
Social enterprises are often described as having a ‘triple bottom line’ meaning they are focused on financial, social and environmental objectives.
What are some examples of social enterprise?
Social enterprises can be found in a wide range of industries. The Big Issue, Jamie Oliver’s restaurant Fifteen and Divine Chocolate are some examples of successful social enterprises.
What is the history of social enterprise?
The 1990s saw the social enterprise sector begin to develop with the resurgence in co-operatives, community enterprises, enterprising voluntary organisations and other forms of social business.
The UK has had a social enterprise strategy since the Department of Trade and Industry (DTI) published Social Enterprise: a Strategy for Success in 2002. The report defines a social enterprise as: ‘a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for share holders and owners’.
How popular is the social enterprise movement now?
Social entrepreneurship has moved into the mainstream, generating more than £27 billion each year to the GDP. Social enterprises contribute £8.4 billion per year to the UK economy and account for 5% of all businesses with employees. Social enterprises are often developed to cater for needs that the state does not fully meet and to overcome social injustice or exclusion in society through innovation.
A poll released in 2007 by YouGov revealed that 60% of the British public would prefer their local services to be run by a social enterprise rather than the government, private profit business or traditional charity.
A Local Strategic Partnership (LSP) report called Valuing the Voluntary Sector, states that there are an estimated 1,000 voluntary and community organisations in the borough of which Voluntary Action Lewisham is the main coordination and support organisation. The sector is an important local employer providing on in 50 workplaces, with an estimated value of volunteering worth £18.2 million per year. The report further states that a number of voluntary and community organisations have the potential to develop an enterprise approach to their work, particularly those involved in childcare, environmental, cultural media, health and social care sectors.
What is the difference between a social enterprise and ethical business?
The main purpose of a social enterprise is to fulfil it’s social or environmental aims. This is done by reinvesting the majority of any surplus made back onto the business.
An ethical business is focused on financial aims but works in a way to try and minimise negative affects on society or the environment.
How are social enterprises funded?
Social enterprises make money by trading. They need to make a profit to compete in the market so they are able to survive and continue to invest in their social or environmental aims.
Operating as a social enterprise provides greater freedom and flexibility as it reduces dependency on public grants. There are no hard and fast rules on where funding for social enterprise comes from, but one suggestion is that 50% should be the maximum amount of funding a social enterprise should receive.
What are the legal structures for social enterprises?
Social enterprises can have a wide variety of legal structures including:
- Community interest company
- Industrial and provident society
- Companies limited by guarantee or shares
Some social enterprises are also Registered Charities
Is my business a social enterprise?
If you most of your income comes from trading and you use the majority of your profits to further social or environmental aims then your business or charity could be classed as a social enterprise.
Where can I get advice on starting up a social enterprise?
Like setting up any business starting a social enterprise requires substantial advice and support. The directory of support for organisations with a social aim on Lewisham website will direct you to local, regional and national support providers able to help.
Some of the information used on this page comes from: Lewisham Social Enterprise Strategy 2008-2011, researched and written by CDSE and from the Social Enterprise Coalition webpage
