Membership badge criteria

Our criteria for using our badge that says ‘We are a social enterprise’ explained:
 

Our new member badges are designed to get social enterprises to promote themselves as such. If our members want to use the ‘we are a social enterprise’ badge, we ask them to agree with a number of statements that show they meet some basic criteria that we feel are the essential characteristics of social enterprises:

  1. Our business has a clear social or environmental mission that is set out in its governing documents

  2. We are an independent business and we earn more than half of our income through trading (or we are working towards this)

  3. We are controlled or owned in the interests of our social mission

  4. We reinvest or give away at least half our profits or surpluses towards our social purpose

  5. We are transparent about how we operate and the impact that we have

Has a clear social or environmental mission that is set out in its governing documents
 

A social enterprise’s primary aim is a social or environmental one and this must be explicit in the organisation’s governing documents.

An independent business that aims to earn more than half its income from trading
 

Social enterprises are businesses so they must aim to generate the majority (more than 50%) of their income through trade (rather than from donations) and they must be independent of state.

Controlled or owned in the interests of your social mission
 

In order for the social mission of an organisation to be protected – the majority of the company should be owned in the interest of this social mission. 

How this works in practice can vary.  For community interest companies and social enterprises with overarching charitable status, this is implicit.  For companies limited by guarantee – this should be through an accountable board.  For social enterprises with co-operative structures this would be through the membership.  

For those organisations that are keen to issues shares we believe that control should remain with the social mission.  This could be through a golden share issue[1] or it could be by ensuring that the majority and controlling stake is held either in trust or by another body with a social purpose.

Reinvests or gives away at least half of its profits towards its social purpose
 

What a social enterprise does with its profits can be critical to how its social mission is delivered.  We believe the majority (more than 50%) of an organisation’s profits should be reinvested to further the social or environmental mission.   We believe this leaves sufficient scope to allow a return on investment when required while retaining clear commitment that the core purpose of the organisation is social.

Many social enterprises also choose to ensure that their assets are legally protected and permanently retained for social or environmental benefit. We believe there are many cases when this is desirable.  However, we recognise that there are some cases where it is not required. 

Is transparent about the way it operates as a business and the impact that it has
 

As social enterprises are organisations operating in the wider interests of society, we believe that transparency is critical. We believe that all social enterprises should be working towards providing transparent financial, social and environmental information is essential, allowing the sector, customers, employees and investors to make the judgement on an organisation’s social credentials.


[1] A Golden Share is a nominal share which is able to outvote all other shares in certain specified circumstances.