A social enterprise is a business that trades for a social and/or environmental purpose. It will have a clear sense of its ‘social mission’: which means it will know what difference it is trying to make, who it aims to help, and how it plans to do it. It will bring in most or all of its income through selling goods or services. And it will also have clear rules about what it does with its profits, reinvesting these to further the ‘social mission’.
Are businesses that aim to generate their income by selling goods and services, rather than through grants and donations
Are set up to specifically make a difference
Reinvest the profits they make in their social mission
Read the short guide - Social Enterprise Explained - to find out more.
According to Social Enterprise UK, social enterprises should:
Have a clear social and/or environmental mission set out in their governing documents
Generate the majority of their income through trade
Reinvest the majority of their profits
Be autonomous of state
Be majority controlled in the interests of the social mission
Be accountable and transparent
More detail about these points can be found in the short paper - What makes a social enterprise a social enterprise?
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 KuapaKokoo in Ghana and Timewise, which connects professionals with flexible employment opportunities.
Social enterprises operate in a 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 healthcare world that is run by the nursing and therapy teams it employs.
We are the national body for social enterprise. Together with our members we are the voice for social enterprise. Working with our members, we:
Raise awareness of social enterprise and what it can achieve through the media and campaigning.
Influence politicians across the spectrum, generating support for social enterprise. Political engagement has been the bedrock of our work and we continue to have great success pushing social enterprise up the policy agenda.
Run the annual Social Enterprise Awards.
Run a number of programmes, including the Social Enterprise Places programme, which recognises social enterprise towns, cities and villages in the UK.
Work with private sector organisations who want to explore or consolidate their position in the growing social enterprise market. We provide a range of opportunities for them to engage with social enterprises and get involved in the social enterprise ‘space’. The Buy Social guide gives advice on how firms can bring social enterprises into their supply chains and use their purchasing power to benefit society.
The pioneers of social enterprise can be traced at least as far back as the 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 mid 1990s with the coming together of different organisations, including co-operatives, community enterprises, enterprising charities and other forms of social business, all united by the prospect of using business to create social change.
The best government data estimates that there are approximately 70,000 social enterprises in the UK contributing £18.5 billion to the UK economy (based upon 2012 Small Business Survey, 2013) and employing almost a million people.
While it is difficult to agree data on the absolute size of the social enterprise sector, Social Enterprise UK’s State of Social Enterprise Report provides up-to-date information and insight into the characteristics and strength of the sector.
The two are distinct ways of doing business. A social enterprise's primary purpose is its social and/or environmental mission – it tries to maximise the amount of social good it creates balanced against its financial goals. An ethical business however, attempts to minimise its negative impact on society or the environment.
Social enterprises use a wide variety of legal forms. To see a full list and their pros and cons, as well as more information about the things you need to consider when starting a social enterprise, read the guide: Start your social enterprise.
As with any other business, setting up a social enterprise will often require substantial advice and support. Social Enterprise UK has developed a range of publications including Start your social enterprise which will provide you with some information on the legal structure and streams of finance you may want to consider. Other guides are available to download from our online resources library.
Whether you’re looking for finance to start, grow or move into social enterprise, there are a number of different types of finance available, each with their own advantages and disadvantages. Finance for social enterprises range from grants to social investment, with many different options in between. In our advice and support section you can find a comprehensive list of organisations that provide finance and funding.
Firstly, we need to bust a myth. A registered charity can still be a business. Many charities are social enterprises through and through: they don’t rely on grants and donations, but instead earn the bulk of their income through selling goods and services.
HCT Group, London Early Years Foundation, Turning Point, Sandwell Community Caring Trust – are all social enterprises with charitable status. If your charity raises most of its income by trading it probably already is a social enterprise. In which case, welcome to the social enterprise world! Do join us or sign up for more information using the links above.
If this is not the case then turning a charity into a social enterprise is principally about changing the funding / business model of the organisation. This means moving away from being dependent on grants and donations to generating more of your income through trading – selling goods and services. Read our guide for charities interested in social enterprise.
There is no single regulator for social enterprises. Unlike charities, social enterprises take a range of legal forms so they are regulated by a range of different bodies. For example:
Community Interest Companies are regulated by Companies house and the Community Interest Company Regulator
Standard companies limited by share and guarantee are regulated by Companies House
Social enterprises with charitable status are regulated by the Charity Commission
In the end, being a social enterprise is about adopting a set of operational principles. These include:
Having a clear social and/or environmental mission (set out in your governing documents)
Generating the majority of your income through trade
Reinvesting the majority of your profits to further the social mission
This is regardless of what form the organisation takes. So if you have these in place – you are acting as a social enterprise. There is no social enterprise regulator, but if you do want to identify as a social enterprise, join Social Enterprise UK and you will receive a "We're a social enterprise" badge to use in your electronic and printed materials.
Firstly you need to be clear about why you are doing it. Most importantly you need to be clear about the difference you want to make – your social mission. If know what this is, and it is central to your business – then social enterprise is probably the right choice for you.
The next thing to think about is your business plan. You need to make sure that your business will work as a social enterprise – take into consideration how you generate your income and how being a social enterprise will influence this.
Social enterprises re-invest their profits and can’t be sold in the same way as standard businesses as they are set up for a social mission. Because of this you will need to think carefully about any existing and future investment before converting to a social enterprise.
When it comes to future investment needs, social enterprises can sometimes struggle to get investment through the same channels as private businesses, so you need to bear this in mind and look at the social investment options out there.
You will also need to think about how you recover any personal investment you may have put into the business yourself. It is fine for you to do this and make a reasonable return, you will just need to be clear and transparent about it, and seek advice.
Once you have thought these things through – if you decide social enterprise is right for you, there are few steps to follow.
Social enterprises don’t have a single regulator so most of the changes you will need to make will be to your governance. It could be that you are already operating as a social enterprise – your business has a clear social mission and you reinvest your profits, but you have not made this a formal arrangement. In which case you will need legal advice to ensure these are written it into your governing documents.
You will also need to think about accountability and how you are held to account on your social mission. This could be through appointing an independent board or adopting a membership structure of some form. Alternatively you could investigate converting your existing company into a community interest company (a legal form set up specifically for social enterprises).
13. What is social impact and how do I measure it?
Measuring your social impact will help you understand, manage and communicate the social value that your social enterprise creates in a clear and consistent way. This information can be used for a number of very beneficial purposes:
1. Helping you better understand, and target, your work
2. Attracting investors and retaining investor confidence
3. Tendering for public sector contracts or selling goods and services