Intro To Social Enterprise

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INTRODUCTION TO SOCIAL ENTERPRISE

UDAY THAKKAR & ROBERT FOSTER

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INTRODUCTION

What is Social Enterprise?

No legal definition

Anyone can call themselves a social enterprise – and many do

Organisations that have been practising social enterprise have been around for a long time though the term itself is new

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GENERAL CHARECTERISTICS - 1

Social Enterprises are businesses that trade in order to fulfil social aims

They bring together people and communities for economic development and social gain

There are usually 4 defining characteristics, two of which are controversial

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GENERAL CHARECTERISTICS - 2

Non-controversial

Enterprise oriented

Social aims

Controversial

Social ownership

Restricted profit distribution

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GENERAL CHARECTERISTICS - 3

Enterprise means some form of trading or service delivery

Social aims means profits generated are used for the benefit of the community

This could be that surpluses/profits are used directly for the community

Or

Reinvested in the business to grow it

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GENERAL CHARECTERISTICS - 4

Community ownership requires stakeholder participation in the ownership or indeed there is no ownership, but control of the business is under the Stewardship of individuals or organisations as representatives of the wider community

Restricted profit distribution means that shareholders are not rewarded through dividend distribution

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OFFICIAL DEFINITIONS

The DtI defined social enterprise as being: “A business 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.”

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PROFIT DISTRIBUTION

Profit distribution causes a problem when defining social enterprise

Generally accepted that there should not be any profit distribution to the owners, unless the owner is a charity/voluntary/community body

However many recognised social enterprises distribute profits

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PROFIT DISTRIBUTION - 2

Co-operatives claim to be the earliest form of Social Enterprise, yet they exist for the benefit of their members and they distribute profits to members. (Too big? Too powerful?)

Recently introduced legal structure, a Community Interest Company which is a company limited by shares, is allowed limited profit distribution

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COMMERCIAL TRANSACTION

COMMERCIAL ORGANISATION OWNERS

CUSTOMER

£

£

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S E TRANSACTION FLOW

SOCIAL ENTERPRISE

COMMUNITY

CUSTOMER £

£

BIGGERSOCIAL

ENTERPRISE

CHARITY£

£

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CONFUSION ISSUES - 1

Community

What is the “Community”, for Co-Ops it is their members, what about the John Lewis “Partnership”?

Legal Structure

Able & Cole are a partnership – distribute organic produce through schools and contribute 25% of the turnover to the school. Are they a Social Enterprise?

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CONFUSION ISSUES - 2

Activity

Is the Day Chocolate Company/Divine Chocolate a social enterprise?

Is Body Shop?

Is Innocent?

Grant funded charities vaguely playing at enterprise?

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CONFUSION ISSUES - 3

Funding

Sari UK, sales to public, profits used for employment, training and recycling. High risk/High personal responsibility

Powers that be are suspicious of enterprises that have not originated from the voluntary/ statutory sectors

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ORGANISATIONAL TRANSITION

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DIFFERENCES

In USA social enterprises tend to be Value Driven Businesses

They do not get Government support on the whole

Have to be financially sustainable

Have to fund themselves by means other than grants

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TYPES OF BUSINESSES

Charities Trading Arms

Employee - owned businesses

Credit Unions

Co-Operatives

Development Trusts

Social Firms

Intermediate Labour Market Companies

Community Businesses

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TYPES OF BUSINESSES - 2

Employee - owned businesses

They range in size such that Greenwich Leisure employs over 1,000 people

Eaga partnership aims to get up to 10,000 with a turnover of £1 billion, and is also looking to get a stock exchange listing.

Don’t forget John Lewis Partnership

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TYPES OF BUSINESSES - 3

Community Businesses – trading organisation which is set up, owned and controlled by the local community. The aim is to be a focus for local development and to create self-supporting jobs for local people

The community defines itself through either

Geography

Socially, i.e. ethnicity, marginalised groups

Shared interest

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Social Enterprise Organisations

Organisation Service Customer

Ealing Community Transport transport and recycling Local government

Pecan Project Training, manufacture, retail, recycling, employment creation

Business, public, other charities

NewCo Kitchen units, door and window frames manufacture

Local government, business, public

Green-Works Recycling office furniture Big business

The Phone Co-Op Telephone and communication services

Businesses, public

Day Chocolate Company Marketing ethically produced chocolate

public

Oxfam Shops Retailing donated books, clothes, CD’s, DVD’s etc.

public

Able & Cole Delivery of organic fruit and vegetables

public

Sari UK Fashion and retail public

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OFFERING

Ethical values

Environmental values

Commitment to the community

Skills retention

Multiple outputs

Work on the margins – excluded or marginal communities, unattractive markets, market trailblazers

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MARKETING AND NETWORKING - 1

Use your ethical/social perspective to your advantage

General public, commercial and statutory support for this mode of operation

Specific interest from public sector in provision of public services

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MARKETING AND NETWORKING - 2

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MARKETING AND NETWORKING - 3

Use social enterprise value addition, meaning

Relevant services due to closeness to beneficiaries and users

More responsive, dynamic and pro-active than traditional business models

Innovative service delivery models due to wider stakeholder engagement (similar to open source development model)

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MARKETING AND NETWORKING - 4

Use your status as a social entrepreneur to market your organisation, yourself and your vision

Martin Luther King said “I have a …”

Believe in the power of dreams, and others will follow

Heads, Hands and Hearts

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MARKETING AND NETWORKING - 5

Heads: Back up your idea with solid figures

Demonstrate the need

Hearts: Appeal to the emotions

Use stories and case studies to affect changes in attitude

Hands: Be specific when you ask help

It does not have to be financial, it could be a contract, access, speaking opportunity etc.

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POLITICAL IMPERATIVE

Government push towards social enterprise as a delivery mechanism

Government push for voluntary and community organisations to reduce grant dependency

Grant making trusts also looking for “Exit” strategies

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FUNDING BENEFITS

Having even a partial self generated income stream tends to make it easier to get funding

Retain greater control over the projects

Ruralnet is a charity that set up a social enterprise. The SE now generates more in grant income than the charity.

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LONG TERM

Currently a lot of free support

Many people jumping on the band wagon

Will have to learn to pay for support

Will have to work hard at being competitive – not only commercial organisations but large charities and indifference poor knowledge from procurement officers

BECOME SUSTAINABLE

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Contact details

Red Ochre 020-7785-6295

Uday Thakkar [email protected]

Robert Foster [email protected]