Factsheet 1

An introduction to Social Enterprise

The idea behind social enterprise is quite simple.

Social enterprises are businesses, which trade for a social purpose. They therefore operate for the benefit of a community rather than for private profit.

Any profits of a social enterprise will be used to reinvest in the business or for the benefit of the community the business has been set up to help.

What kind of business ? The type of business will depend on the organisation and could involve selling services or products, or providing public services under contract. Food cooperatives, recycling projects, training services, village halls are just a few examples.

When did social enterprise begin ? Social enterprises have been in existence in the UK and elsewhere for many years. They date back as far as 1840 when the first cooperative [the Rochdale cooperative] was formed. Many have developed in order to bring in much needed income, which is useful because it can be used to fund any part of the organisations, including central and core costs. This compares with grant funding which often has to be used only for specified activities.

Government support The Government is promoting the development of Social Enterprise. It has defined Social Enterprise as

‘Businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.’

Business solutions to achieve public good The Government believes that social enterprises have a distinct and valuable role to play in helping create a strong, sustainable and socially inclusive economy. The Government set up the Social Enterprise Unit to help in the delivery of its strategy to develop social enterprises.

Social enterprises come in all shapes and sizes. Examples include development trusts, co-operatives, charities, employee owned businesses, community interest companies, development trusts, sports trusts, and social firms.

Tablehurst and Plaw Hatch Community Supported Agriculture Scheme runs a successful farm shop and flour mill, alongside a flock of milking sheep and other activities. Shares in the two farms are owned largely by the local community. The business

Furniture Now! is a charity which provides high quality low cost furniture, a recycling services and training in refurbishing furniture for people with mental health needs and other socially excluded groups.

Many voluntary and community organisations are also social enterprises, although they would not necessarily describe themselves as such. Some large organisations eg major national charities, may run a social enterprise as part of a larger operation.

At the other end of the spectrum there are also organisations whose labels suggest that they are social enterprises, although they are essentially set up for purpose of making a profit for private individuals.

Social enterprises can fill a gap by meeting the needs of particular markets or parts of the community. In doing so they fulfil an important role in contributing to the economy and also providing a business response to a social issue.

For further information about social enterprise see Fact Sheet 3

See also A what enterprise – a beginners guide to social enterprise’ by Susan Heath www.decoda.org.uk