What is a Social Enterprice?
A social enterprise is a socially conscious business that is committed to bringing about positive social changes through its profits. Social enterprises aim to make profits through their businesses, but they use their profits to create lasting impact in communities or tackle environmental issues.
There has been a rise in social enterprise in recent years and social enterprises are growing within our communities and on our high streets in all sectors. In this article, we answer 'what is a social enterprise?', outline the features of a social enterprise, explain the difference between social entrepreneurship and social enterprise and consider examples.
A social enterprise is a type of business that aims to enact positive social change through its financial activities. The objective of a social enterprise is to benefit society by using and sometimes donating its profits to fund training programmes, improve community facilities and promote sustainable goods to protect the environment. The mission of social enterprises is usually to profit society and impact communities in a positive way.
There are many social enterprises operating in various sectors, and the growth of social enterprises is high. Most social enterprises have the following nine features:
- A social or environmental objective that is clearly articulated in its official documents.
- Transparency regarding its operations and their impacts.
- Commitment to investing or donating 50% of profits towards a social or environmental objective.
- An independent enterprise that earns 50% of its income through trading.
- Gender-sensitive and environmentally conscious.
- Profit generated stays within the company.
- Investors receive only what they have put in.
- Financial and economically sustainable.
- High levels of job satisfaction among staff.
How are social enterprises different from standard enterprises?
Although social enterprises are known to generate profit, it's what they do with their profits that sets them apart from other businesses. Rather than distributing profits among shareholders, the social enterprise reinvests its funds in the social mission that it has chosen. Social enterprises have strong links with charities and non-profit businesses. They sometimes have access to funds through government grants and alternative funding systems.
How do social enterprises use their funding?
Social enterprises reinvest their profits into their social mission. Once they meet the overheads and costs of running the enterprise, they spend the money on the mission that drives them, like providing affordable books, sports equipment or training opportunities.
As consumers and investors are becoming more conscious of the impact of businesses on society and the environment, they are more interested in sustainability. Customer purchases and investment in more ethical goods and services is increasing in recent times and will continue in the future.
What difference are they making in society?
The growing presence of social enterprises is impacting society in a positive way. Social enterprises address and tackle unmet needs in communities and raise consumer awareness of these issues. Offering employment and training opportunities is often the core mission of social enterprises. According to the State of Social Enterprise, research findings on social enterprise were optimistic and show that:
47% of social enterprises have been operating for less than five years
44% increased their turnover in the last twelve months
74% made a profit or broke even last year
72% are living wage employers
47% have female leaders
Models of social enterprise
The model is the basic structure that an enterprise follows to make a profit and bring value to its customers. Models vary according to the mission or objective of the enterprise, the size of the target population and how the enterprise integrates or intends to integrate into the community. The three principal models which are popular in social enterprise fit broadly into the categories below:
Donation: The donation model is when a business donates a product to charity every time a customer buys a product. Products can be tangible goods like books, clothing, or edible products, though companies might pledge to make a positive contribution to the environment by planting a tree or supporting a recycling project.
Employment: The employment model is when the major role of a business is to create employment and training opportunities. Social enterprises often create employment for individuals from marginalised groups and minority backgrounds who may face discrimination in the workforce.
Transformative: The transformative or innovative model identifies a need in society and creates a product to fulfil the need. This model comes up with new ways of doing things to drive change and deliver positive outcomes.
The differences between social enterprise and social entrepreneurship
Although there are similarities, social entrepreneurship and social enterprise are two fundamentally different concepts. Social entrepreneurs tend to see gaps and opportunities to solve social problems and use existing business strategies to implement these solutions on a large scale. Social enterprises are specifically created to address an unmet need or needs in society. Confusion between the terms is common.
Social entrepreneurs use business tactics to improve existing systems and come up with innovative approaches to address unmet needs in societies. They often drive changes within their industries to meet specific social goals such as helping minority groups and underrepresented communities. They might focus on addressing barriers to accessibility within communities or providing affordable products, services or funding. Social enterprises
Social enterprises try to meet societal needs but also aim to create profits within their business. Profits are their way of making their business more sustainable and reinvesting the profits is ultimately a way of increasing the positive impact of their mission.
ChooseWell UK Ltd is a certified member of Social Enterprise UK
ChooseWell UK Ltd make luxury , ethical liquid hand soaps. They are a small British business with a big mission to make a difference. The business started with a simple idea. What if money from the sale of an ordinary household item could be put towards extraordinary causes. What if soap could be more than just soap?
ChooseWell donates 100% of profits to help protect people and the planed, by supporting the lifesaving and life changing work of their charity partners.