What is Social Enterprise?
A social enterprise is a business that exists primarily to fulfil a ‘social purpose’ rather than to make money for shareholders. It is not a charity, although it might be the trading arm of a charity. It is not a business that chooses to give some money to ‘good causes’.
A charity exists to tackle an issue, but relies entirely on donations. It may have a trading arm, which sells goods and services to raise money for the charity and this is often a social enterprise.
A commercial business exists primarily to make money for its owners, shareholders and investors. It may choose to demonstrate Corporate Social Responsibility (CSR) by donating money to good causes, supporting a charity or encouraging its staff to volunteer, but that does not make it a social enterprise.
There are many definitions of social enterprise – it is more of a concept than a legal entity. As a guide, a social enterprise would need to be deriving over 50% of its income from trading activities and investing 100% of its profit in tackling the social issue it was set up to address to be recognised by the social enterprise community as legitimate
Recognising a Social Enterprise
Most social enterprises will be keen to promote the fact that they are trading for ‘people and the planet’ and not just ‘profit’. Their own websites should tell you and they may have Social Impact Reports.
You will also find social enterprises listed in number of membership and buyers’ directories, for example:
- Birmingham & Solihull Social Economy Consortium – www.bssec.org.uk
- Buy Social – www.buysocialdirectory.org.uk
- Shop for Change – www.shopforchange.info
Many will have the Social Enterprise Mark which means that they have been independently assessed and can prove that they are using their profits for social or environmental good. This Mark is available to social enterprises worldwide. Look out for this symbol:
There are a number of legal structures which social enterprises can adopt. An increasingly common form is the Community Interest Company (CIC), which is designed to ensure that assets and profits are used for a social purpose only.
Characteristics of Social Entrepreneurs
Social entrepreneurs are passionate people, driven to make a difference in the world and choosing to do it through business:
- They are predominantly young and their workforces are young
- Many are women
- And many are from black and ethnic minority communities
A Worldwide Movement
There are social entrepreneurs across the world who are looking at social problems and environmental issues and attempting to make the world a fairer, more inclusive, place by using business as a force for good.
Here are some examples: