What is a Social Enterprise?

Have you ever bought the Big Issue? Read it over a bar of Divine chocolate? Watched Jamie Oliver’s Fifteen? Visited the Eden Project? Shopped at the Co-op? If your answer is yes, then you already know a bit about social enterprises: businesses that are changing the world for the better.

Social enterprises are businesses that trade to tackle social problems, improve communities, people’s life chances, or the environment.  They make their money from selling goods and services in the open market, but they reinvest their profits back into the business or the local community.  And so when they profit, society profits.  

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…..and also here, as Prime Candidate.

The term ‘social enterprise’ came about from the recognition that in the UK and across the world, there were organisations using the power of business to bring about social and environmental change without a single term to unite them.

Since the term started being more widely used in the mid-1990s, there has been a lot of discussion (and sometimes confusion) about what social enterprise is, and whether the social enterprise label could be ‘hijacked’ by businesses that aren’t social enterprises, but are keen to pretend they are.

These are valid concerns, and need proper consideration, that’s why we at Prime Candidate have been accredited and certified by Social Enterprise UK, the National body for Social Enterprise.

At a time when the spotlight is shining more brightly on social enterprise than ever, and many are looking to it as the future for social change, those of us in the sector must protect our collective ‘brand’ and the values we stand for. That is not to say that we shouldn’t be open to new ideas and new models which may challenge our pre-conceptions, but align with our values.

There are some clear characteristics of a social enterprise, including:

  • 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
  • Be autonomous of state
  • Be majority controlled in the interests of the social mission
  • Be accountable and transparent

The social enterprise community agrees that the primary aim of all social enterprises must be a social or environmental one.

 Accountability and transparency

As they’re organisations operating in the wider interests of society, we believe that transparency and accountability are critical for social enterprises.

While we believe accountable structures are desirable, we recognise that there are many different ways in which organisations can protect their social mission.

Other social enterprises take a more traditional ‘company’ structure with a board of directors that are legally accountable for the organisation’s social mission as well as its financial performance.

Other entrepreneurs are attracted to social enterprise because it allows them the flexibility to be responsive and dynamic. So they may choose to have a small number of company directors but no independent board, because their accountability arguably lies with their customers. In these cases and in all other we believe that transparent financial, social and environmental reporting is absolutely essential, allowing the sector, customers, employees and investors to make the judgement on an organisation’s social credentials.

 About Social Enterprise UK

The national body for social enterprise and a membership organisation, offering business support, do research, develop policy, campaign, build networks, share knowledge and understanding, and raise awareness of social enterprise and what it can achieve. They also provide training and consultancy and develop bespoke business and information packages for clients of all kinds.

Members come from across the social enterprise movement – from local grass-roots organisations to multi-million pound businesses, as well as the private and public sectors. Together with members, they are the voice for social enterprise.

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