About Social Enterprise What is it all about? What is it all about? Social enterprises are businesses that are changing the world for the better. Like traditional businesses they aim to make a profit but it’s what they do with their profits that sets them apart – reinvesting or donating them to create positive social change. Social enterprises are in our communities and on our high streets – from coffee shops and cinemas, to pubs and leisure centres, banks and bus companies. By selling goods and services in the open market, social enterprises create employment and reinvest their profits back into their business or the local community. This allows them to tackle social problems, improve people’s life chances, provide training and employment opportunities for those furthest from the market, support communities and help the environment. Social enterprises exist in nearly every sector from consumer goods to healthcare, community energy to creative agencies, restaurants to facilities management. Well known examples include The Big Issue, Divine Chocolate and the Eden Project but there are over 100,000 social enterprises throughout the country contributing £60 billion to the economy and employing two million people. They’re creating jobs and opportunities for those most marginalised from the workforce, transforming the communities they work in and making the Sustainable Development Goals a reality. It’s business for good and when they profit, society profits. We define social enterprises as businesses that: 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 Are autonomous of the state Are majority controlled in the interests of the social mission Are accountable and transparent *Social enterprises are businesses, so they must generate the majority (more than 50%) of their income through trade. We recognise however, that many start-up businesses need funding to get off the ground and turn to readily available sources. With this in mind we usually expect that within two years of operating, genuine social enterprises generate more than 50% of their income through their own trading activities. Click here to find out more about some of our social enterprise members. Social Enterprises in Depth Our State of Social Enterprise Report is the most comprehensive research undertaken into the state of the sector. It shows that social enterprises in the UK are thriving, outperforming their mainstream SME counterparts in nearly every area of business: turnover growth, workforce growth, job creation, innovation, business optimism, and start-up rates. Here are some of the key findings: A dynamic movement: Close to half (49%) of all social enterprises are five years old or less. 35% are three years old or less – more than three times the proportion of SME start-ups. In terms of new business formation in the UK, social enterprise is where the action is. At the forefront of economic recovery: The proportion of social enterprises that grew their turnover over the past 12 months is 52%. A greater proportion of social enterprises are growing than mainstream SMEs (40%). Making a profit, making a difference: 50% of social enterprises reported a profit, with 26% breaking even. Almost all use the majority of those profits to further their social or environmental goals. Focused where most needed: 31% of social enterprises are working in the top 20% most deprived communities in the UK. Operating globally: The proportion of social enterprises that export or licence has grown to 14%. For over 1⁄3 of these, international trade accounts for between 11% and 50% of income. It’s all about business: 73% of social enterprises earn more than 75% of their income from trade. Stronger than ever in public services: 27% of social enterprises have the public sector as their main source of income, an increase on 2013 and 2011. 59% of social enterprises do some business with the public sector. Innovation pioneers: The number of social enterprises introducing a new product or service in the last 12 months has increased to 59%. Among SMEs it has fallen to 38%. An inclusive and diverse leadership: 40% of social enterprises are led by women; 31% have Black Asian Minority Ethnic directors; 40% have a director with a disability. Job creators: 41% of social enterprises created jobs in the past 12 months compared to 22% of SMEs. Not just any jobs: 59% of social enterprises employ at least one person who is disadvantaged in the labour market. For 16% of social enterprises, this group forms at least half of all employees. Paying fair: The average pay ratio between social enterprise CEO pay and the lowest paid is just 3.6:1 – for FTSE 100 CEOs, this ratio stands at 150:1.