What is Social Enterprise?

A social enterprise is a business that trades to tackle social problems, improve communities, people’s life chances, or the environment.

This might sound like charity work, but social enterprises are businesses. They make and do things that earn money and make profits like any business, but it is how they work and what they do with their profits that is different: working to make a bigger difference, reinvesting the profits they make to do more good. They do this in lots of different ways - creating jobs for people who would otherwise be left out; reinvesting profits in community projects; protecting the environment, providing vital services for people who might not get them otherwise. It’s this combination of doing business and doing good that makes social enterprise one of the most exciting and fastgrowing movements in the UK and across the world.

Social enterprises come in all shapes and sizes and social entrepreneurs come from all parts of society and age groups - young people are becoming social entrepreneurs and retired people are just finding their socially enterprising selves, groups of public sector workers are coming together to form social enterprises, (with encouragement from the Government!), school groups, community groups who want to tackle a local problem, and people in private businesses who want to do business in a different, more ethical way.

There is a legal structure to suit any type of social enterprise business, including a Company Limited by Guarantee, Charitable Incorporated Organisation, Co-operative, Unincorporated Organisation, Community Interest Company, Industrial & Provident Society and Company Limited by Shares.

So what makes a social enterprise a social enterprise?

The term ‘social enterprise’ came about from recognition that there were organisations throughout the world 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.  So in broad terms a social enterprise should:

  • 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.

Still confused? .... read more in this short paper 'So what makes a social enterprise a social enterprise?' produced by Social Enterprise UK, or perhaps watching these short videos will help ...