Social Enterprises are fast becomming the option of choice for Charities and Community Groups wishing to generate income as a seperate entity. I have many years experience of advising and training Charities and Community Groups including helping them to establish a Social Enterprise
About Social Enterprise
Have you recently seen?
- A business that has social or environmental objectives.
- That reinvest their surpluses into the business or community.
And are organisations interested in overcoming:
- Social Injustice
- Contributing to society.
Social Enterprise is the fastest growing business model in Europe, it:
- Tackles social and environmental problems
- Raises the bar for corporate responsibility
- Improves public services and shape public service delivery
- Offers a high level of engagement with users
- Pioneers new approaches to existing problems
- Encourages under-represented groups (e.g. women, youth and offenders)
Many organisations and charities decide to form a Social Enterprise. Sometimes charities take this option to enable them to trade and bid for contracts that generate income and surpluses, (profit in a conventional business), as this is restricted under their normal Charities Commission Regulations.
As with all businesses, they compete to deliver goods and services. The difference is that social purpose is at the very heart of what they do, and the profits they make are reinvested towards achieving that purpose. Well known examples of social enterprises include The Big Issue, Jamie Oliver’s restaurant Fifteen, and the fair-trade chocolate company Divine Chocolate.
The government defines social enterprises 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.”
Social enterprises are businesses driven by a social or environmental purpose. There are 62,000 of them in the UK, contributing over £24bn to the economy, employing approximately 800,000 people (2005-2007 data from the Annual Survey of Small Business UK).
Social enterprises operate in almost every industry in the UK, from health and social care to renewable energy, from retail to recycling, from employment to sport, from housing to education. Whatever they do, they do it differently from typical business, because they are driven by a social and/or environmental mission, and they are focused on the community they serve. In a recent survey into social enterprise, 45% of respondents said that ‘putting something back into the community’ was their reason for setting up a social enterprise.
I have extensive expertise in forming and developing Social Enterprises including establishing Community Interest Companies and am commited to supporting businesses of all types and assisting disadvantaged or excluded individuals to explore self employment.
Social enterprises use a wide variety of legal forms including:
- Community interest company (CIC) Community Interest Companies (CICS) are limited companies, with special additional features, created for the use of people who want to conduct a business or other activity for community benefit, and not purely for private advantage. This is achieved by a “community interest test” and “asset lock”, which ensure that the CIC is established for community purposes and the assets and profits are dedicated to these purposes. Registration of a company as a CIC has to be approved by the Regulator who also has a continuing monitoring and enforcement role
- Industrial and provident society (IPS) This is the usual form for co-operatives and community benefit societies, and is democratically controlled by their members in order to ensure their involvement in the decisions of the business.
- Companies limited by guarantee or shares are the most common legal structure for businesses and often considered to be the most flexible, particularly companies limited by shares. While they can ensure they have a social mission written into their Memorandum and Articles of Association, this is not regulated.
- Group structures and charitable status Tax is an important consideration for some organisations where the retention of surpluses is essential, particularly if they can’t take on equity. In these cases the tax breaks associated with charitable status can be an important factor.
Contact us today to find out more about how I can help groups or organisations to form or develop Social Enterprises!