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A social enterprise is a broad-definition, umbrella term for businesses that trade for social purposes and not a legal framework or a name that has any link to the structure of an organisation. The first social enterprises in the UK were co-operatives and date back to the 1840’s but today they take a variety of forms including, a company limited by guarantee or shares, an Industrial and Provident Society or a registered charity or a CIC. A Community Interest Company is the legal framework that gives a brand identity to convey an organisation is a social enterprise. It is estimated that there are around 62,000 social enterprises in the UK contributing at least £24B to the economy.
Social enterprises include housing associations, community development trusts, workers owned co-operatives, leisure centres and charities that have a separate trading arm such as a shop. John Lewis, Jamie Olivers’ Fifteen, the Big Issue, Café Direct are all well known examples.
A social enterprise needs to make a profit in order to compete in the market and ensure its continued survival as well as reinvest to carry out their social aims. Initially groups might well have some reliance upon grants and donations, however they would be looking at increasing their trading activities and having less reliance upon these funding streams as they develop as a business.
A social enterprise is a business that
- Aims to make its money from selling goods and services
- Is set up to achieve social objectives and for community benefit
- Reinvests its profits back into the business
- Is not driven by the need to maximise profits for owners or shareholders
- does not rely on grants and donations in the long term to be sustainable
The three pillars that define an organisation as a form of social enterprise are:
SOCIAL PURPOSE / TRADING ACTIVITY / SHARED OWNERSHIPThere isn’t a single regulator for social enterprises as they take a variety of legal forms, however there is a regulator for Community Interest Companies (the CIC Regulator) that jointly regulates with Companies House. As with a limited company there are deadlines to meet with submission of annual reports and accounts. The Social Enterprise mark identifies businesses that are driven by social objectives.
Social Enterprise UK is the national body for social enterprise. It provides information and tools, shares knowledge, builds networks, raises awareness and undertakes research
Useful websites
Other fact sheets:
An Introduction to Legal Structures & Charitable Status
An Introduction to Writing your Constitution
An Introduction to Charitable Incorporated Organisations
An Introduction to Community Interest Companies
An Introduction to Risk Assessment
An Introduction to Fire Safety
An Introduction to First Aid