Have you ever bought the Big Issue? Read it over a bar of Divine chocolate with a cup of Cafédirect coffee? Visited the Eden Project? Shopped at the Co-op?
Well, then you may know more than you realise about social enterprises. Social enterprises are businesses that are changing the world for the better. 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.
How do social enterprises work?
By selling goods and services in the open market, social enterprises reinvest the money they make back into their business or the local community. This allows them to tackle social problems, improve people’s life chances, support communities and help the environment. So when a social enterprise profits society profits.
The Big Issue, the Eden Project and Jamie Oliver's restaurant Fifteen are examples of social enterprises. So areaward-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, here's some you may have heard of…
Cafédirect is the UK's largest Fairtrade hot drinks company.
Elvis & Kresse 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.
CSH Surrey is a pioneering social enterprise in the healthcare world that is run by the nursing and therapy teams it employs.
The pioneers of social enterprise can be traced 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.
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.
If you are in need of free business support and advice, please contact Inspire2Enterprise.
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’s probably a social enterprise already. In which case, welcome to the social enterprise world! Do join us or sign up for more information using the links above.
If your charity doesn’t raise most of its income by trading, then turning a charity into a social enterprise is principally about changing the funding / business model of the organisation.
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 be recognised as a social enterprise, join Social Enterprise UK and you will receive a certified social enterprise member badge to use in your electronic and printed materials.
In September 2018, Social Enterprise UK published its 'Hidden Revolution' Report looking at the size and scale of the social enterprise sector in the UK. The report, supported by Nationwide and Co-op Group showed there to be over 100,000 social enterprises contributing £60bn to the UK economy and employing 2 million people. This is considerable higher than previous estimates.
The Hidden Revolution focused in on the economic impact of the sector and complimented our flagship State of Social Enterprise Report, the latest of which was published in September 2017. Titled 'The Future of Business' it showed a commercially resilient sector outperforming mainstream SMEs when it comes to turnover growth, innovation, business optimism, start-up rates, diversity in leadership and more. The key stats are presented below and you can download the full report here.