Social enterprise FAQ
- What is social enterprise?
- Where can I get advice on starting a social enterprise?
- Are social enterprises real businesses?
- Are social enterprises not-for-profit?
- Are charities social enterprises?
- What’s the difference between social enterprise and ethical business?
- What is the best legal structure for a social enterprise
- What is a CIC?
- What is the Social Enterprise Mark?
- When did social enterprise start?
- What is a social entrepreneur?
- What are social accounting and social return on investment?
- What is the triple bottom line?
- What is the Social Enterprise Coalition?
1.What is social enterprise?
This is the most frequently asked question about social enterprise and also one of the hardest to answer.
The quick answer is that social enterprises are businesses set up to tackle social or environmental issues.
But defining what that means in detail is more difficult. Many people use the definition published by the Department for Trade and Industry in its 2001 social enterprise strategy:
"Social enterprises are 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."
Many supporters of social enterprise would like to see a more precise, widely agreed, definition and are working to develop a national Social Enterprise Mark.
2.Where can I get advice on starting a social enterprise?
This website is a good place to start. Search for social enterprises that are doing something similar and get in contact. There are a number of organisations in the North East region that provide specialist advice for social enterprises – try entering ‘business support’ into our search facility.
Much of the support available to mainstream business is relevant to social enterprises starting up, as they often face many of the same barriers. Contact Business Link to find out what is available.
www.businesslink.gov.uk/northeast
3. Are social enterprises real businesses?
Yes.
4. Are social enterprises not-for-profit?
Not really, although many social enterprises use this term. All enterprises need to earn more than they spend or else they will fail. What makes social enterprises different is how they use their profits (or surplus).
5. Are charities social enterprises?
Most charities are not social enterprises although some charities have set up social enterprises to generate income for their main charitable work.
6. Is a social enterprise the same as an ethical business?
No. They are two different business models. A social enterprise's main purpose is to fulfil its social and/or environmental goals. This is achieved by reinvesting the majority of the profits back into the business. An ethical business tries to achieve its financial goals while minimising any negative impact on society or the environment.
7. What is the best legal structure for a social enterprise
It depends on the circumstances, the people involved and what they want to achieve. You should be clear about your business and social objectives before you start to think about legal structures.
Social enterprises use a wide variety of legal forms including: companies limited by guarantee, companies limited by shares, community interest companies, industrial and provident societies, charitable incorporated organisations etc.
8. What is a CIC?
A community interest company (CIC) is a type of limited company designed specifically for those wishing to operate for the benefit of the community rather than for the benefit of the owners of the company. All CICs have an ‘asset lock’ that restricts how profits and assets can be used. Some social enterprises are CICs but many are not. www.cicregulator.gov.uk
9.. What is the Social Enterprise Mark?
The Social Enterprise Mark is a label which tells customers that a product or service comes from a social enterprise. Enterprises wanting to use the mark must provide evidence against an agreed set of criteria that proves they are a social enterprise. The Social Enterprise Mark was launched as a pilot project in South West region in November 2007 and in 2009 it started to be used by social enterprises in other regions. It is likely that the Social Enterprise Mark will be refined and relaunched in 2010. www.socialenterprisemark.co.uk
10. When did social enterprise start?
The history of social enterprise in the UK can be traced back to the 1840s in Northern England where the first co-operatives were set up to provide good quality food at affordable prices and access to education to the families of factory workers.
The current resurgence of social enterprise started in the late 1990s with the coming together of different traditions, including co-operatives, community enterprises, enterprising voluntary organisations and other forms of social business.
11. What is a social entrepreneur?
A social entrepreneur is someone who works in an entrepreneurial manner, but for public or social benefit, rather than to make money. Social entrepreneurs, like business entrepreneurs, tend to be creative, ambitious, pragmatic and not afraid to make mistakes. People who work in social enterprises are not necessarily social entrepreneurs.
12. What are social accounting and social return on investment?
These are tools that social enterprises can use to demonstrate and quantify the social and environmental value of their activities.
www.thesroinetwork.org www.socialauditnetwork.org.uk
13. What is the triple bottom line?
In financial accounting the bottom line is the profit (or loss) a business has made. With a social enterprise the triple bottom line is the social, economic and environmental value of its activities.
A good example addressing the triple bottom line is a furniture recycling enterprise. It generates income by providing donated items at affordable prices to those in need, it trains and employs people disadvantaged in the jobs market, and it reduce waste going to landfill. Another example is a rural community transport scheme that helps to stimulate the local economy, reduces social isolation, and tackles traffic congestion and pollution.
14. What is the Social Enterprise Coalition?
The Social Enterprise Coalition is the UK's national body for social enterprise. Established in 2002, the coalition represents a wide range of social enterprises, umbrella bodies and networks, with a combined membership reaching more than 10,000 social enterprises. The coalition provides a powerful platform for showcasing the benefits of social enterprise while supporting and representing the work of its varied members, influencing national policy and promoting best practice.