There is no single legal definition of a social enterprise and hence can cause confusion both in the the organisation as well as for the consumers and clients.
The UK Government definition of social enterprise is that these 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.”
The State of Social Enterprise survey carried out in 2015 shows that it is a dynamic movement with almost half (49%) of all social enterprises in the UK less that five years old. Most encouragingly it also showed an inclusive and diverse leadership: 40% of social enterprises are led by women; 31% have Black Asian Minority Ethnic directors; 40% have a director with a disability.
(https://www.forbes.com/sites/pragyaagarwaleurope/2018/07/26/how-to-create-a-business-that-does-good-with-a-social-enterprise/#176d7d665aa9)
Companies can either be Companies limited by guarantee (CLG) or Companies limited by shares (CLS); CLGs have no shareholders, only ‘members’ who cannot profit personally from the company. A CLS can be a social enterprise, but will often require adaptation (eg stating what will happen with profits, putting social mission in governing documents).
The Community interest company (CIC) is a structure specifically created for social
enterprises in 2005; there have been about 1000 registered each year since then. A
CIC can either be a CLG or CLS, and it has additional protections in place: every CIC
has to report on its social mission (‘community interest’) each year, there are limitations (for CLS) on profit distribution, and all CICs have a clause which means any assets are retained for community benefit. Because of these additional protections, CICs can often get access to some grant funding and are understood as being clearly a social enterprise.
To register or find more information see
cicregulator.gov.uk or companieshouse.gov.uk
Registered charities can be social enterprises, as long as the amount of income they earn from trading is more than 50%; the main difference from CICs or companies is that they are more heavily regulated (by the Charity Commission), you have a board of voluntary trustees (rather than directors), and there are some limitations on trading – it generally also takes longer to register. On the positive side, because of the heavier regulation, charities have greater access to tax reliefs (for example on business rates) and grants from foundations. See charity-commission.gov.uk for more information. Co-operatives are the other most common form for social enterprises; cooperatives are more participative and democratic in their ownership models. As can be seen from the table below, there are two main types of co-operative, the community benefit society (CBS or ‘BenCom’) and the more standard industrial provident co-operative society (IPS). The CBS has social objectives built into its governing documents, so is often chosen, but an IPS can be a social enterprise too. Co-operatives are regulated by the Financial Conduct Authority (FCA). (https://www.socialenterprise.org.uk/Handlers/Download.ashx?IDMF=b5514bc0-5a3b-4c4e-afe1-d8aaec3ebb19)
- https://startups.co.uk/what-are-the-legal-issues-regarding-social-enterprise/
- https://www.socialenterprise.org.uk/Pages/FAQs/Category/FAQs
- https://www.unltd.org.uk/uploads/general_uploads/DLA-Piper-Legal-Structures-for-Social-Enterprises-1.pdf
- https://www.gov.uk/government/publications/legal-forms-for-social-enterprise-a-guide
- https://www.socialenterprise.org.uk/Pages/Category/Looking-to-start-a-Social-Enterprise
- https://www.gov.uk/government/publications/social-investment-tax-relief-factsheet/social-investment-tax-relief
- https://www.the-sse.org/resources/starting/what-funding-is-available-for-social-entrepreneurs/
This module will include a theoretical presentation and non-formal activities to make the social workers aware of some of the organizational needs of the social enterprisesUpon completion of this Module, trainees should:
- To understand what are some of the main needs in terms of organization when it comes to create a social enterprise.
- To give some assessment tools that can be used when it comes to volunteers management
- To understand in a better way the organization issues of managing social enterprises
