Social Enterprise Series: Part 1 – Are Social Enterprises the Future?

This will be the first in a series talking about social enterprises. If anyone has anything to add or would like to write about their own experiences with social enterprises then do get in touch.

Social enterprises are first and foremost a business; it has to generate a profit in order to survive. However it is different to a traditional enterprise as it has at its heart a social aim to achieve. This means that the activity must lead to a benefit for the/a community.

Where public limited companies have shareholders who claim a personal dividend on the investment, a social enterprise has the community of shareholders i.e. the profits from such an enterprise cannot be claimed by the individual director but must be either invested in the socially beneficial activity already being undertaken into the community.

A social enterprise located in what is known as the third sector, straddles the social benefits of the public sector with the efficiency of the private sector. This can lead to a larger multiple effect of original investment thus creating larger ‘dividends’ for the community.

Social Enterprises also have specific local knowledge which national organisations do not. This opens up the opportunity for a public/third sector partnership.

This will also become apparent with the future decentralisation of the state and an ideological shift towards localism. With local authorities controlling a larger budget [due to the closing down of central government Quangos], a need for local knowledge/expertise will increase.

They are also present in developing countries in a slightly different guise; but the core principles are the same. The future posts will discuss these topics in more detail. 

“The future’s bright, the future’s local”

Advertisements

3 thoughts on “Social Enterprise Series: Part 1 – Are Social Enterprises the Future?

  1. I do believe that the phrases “not for profit” and the “third sector” should be eradicted from the language of the Social Economy. The phrase “Greater then Profit” gives a far more accurate context for the operation of a Social Enterprise. Like Greece and Portsmouth FC operating with no profit / surplus will end in tears…and i would never want to deemed “third” class…

  2. What nonsense! I don’t even know where to start!

    “… the profits from such an enterprise cannot be claimed by the individual director …”

    Wrong. The Big Issue, founded by John Bird and Gordon Roddick in 1991, has long been considered the UK’s most eminent social enterprise. At the same time as offering many thousands of homeless people the opportunity to earn a legitimate living, the highly successful business soon made multi-millionaires out of both Bird and Roddick.

    “Social Enterprises also have specific local knowledge which national organisations do not.”

    Wrong. From where has this poor author got the idea that social enterprises must be local organisations? Global Ethics, the organisation behind the ‘One’ product range, is a fantastic example of a worldwide social enterprise. Founded by three friends in 2003, the product range has expanded from bottled water to now include vitamin water and condoms and is promoted by David Tennant and a group of other celebrity ambassadors. All profits from the ‘One’ range are used to fund humanitarian projects in the developing world through the One Foundation.

    “This will also become apparent with the future decentralisation of the state and an ideological shift towards localism”

    What? What on earth is the author on about? What is the assumption of ‘future devolutionist ideology’ based upon, and what the heck has it got to do with social enterprise? May i again refer you to the countless number of social enterprises with national and international reach, dozens of which make for fascinating case studies.

    This article could not possibly have provided a more feeble and confused view of the world of social enterprise. A 2005 survey reported that 55,000 social enterprises in the UK have a combined turnover of £27bn, contributing over £8.4bn to the UK economy. Social enterprise is big business, it’s got absolutely nothing to do with ‘localism’ and its connotations of car boot sales and church fetes.

    • First of all, thank you very much for your post – it has brought up some key and interesting points. However I feel, from the strength of your post, that you may have misunderstood what my aims of such an article was.

      ““… the profits from such an enterprise cannot be claimed by the individual director …”

      Wrong. The Big Issue, founded by John Bird and Gordon Roddick in 1991, has long been considered the UK’s most eminent social enterprise. At the same time as offering many thousands of homeless people the opportunity to earn a legitimate living, the highly successful business soon made multi-millionaires out of both Bird and Roddick.”

      The point of a social enterprise is that the profits, or in this case ‘surplus’, is reinvested into the community (whatever or where ever that may be), the social enterprise (in order to continue to deliver the services) or to give to other beneficiaries (such as charities). It is true that the directors can have a good wage – this is exactly the issue though. They are not receiving the profits individually; they are receiveing a remuneration wage. A subtle difference, but an important one none-the-less.

      ““Social Enterprises also have specific local knowledge which national organisations do not.”

      Wrong. From where has this poor author got the idea that social enterprises must be local organisations? Global Ethics, the organisation behind the ‘One’ product range, is a fantastic example of a worldwide social enterprise. Founded by three friends in 2003, the product range has expanded from bottled water to now include vitamin water and condoms and is promoted by David Tennant and a group of other celebrity ambassadors. All profits from the ‘One’ range are used to fund humanitarian projects in the developing world through the One Foundation.”

      I do not feel my comment is incorrect. Many social enterprises within the UK have superb local knowledge which public bodies may not have. This local knowledge can be invaluable. I do agree that there are global social enterprises which also have fantastic outcomes but the point of my particular point was to highlight what social enterprises on a local level could achieve. As this section is a series, there will be articles about global social enterprises and I welcome you to contribute to such posts.

      ““This will also become apparent with the future decentralisation of the state and an ideological shift towards localism”

      What? What on earth is the author on about? What is the assumption of ‘future devolutionist ideology’ based upon, and what the heck has it got to do with social enterprise? May i again refer you to the countless number of social enterprises with national and international reach, dozens of which make for fascinating case studies.”

      This part relates to the iminent decentralisation of British politics. I feel this is hugely important to social enterprises whose value added is local, community knowledge and those who can target ‘hard to reach’ demographics. While your distinction between small, local social enterprises and large global social enterprises is justified, I feel many people interested in community outcomes need to know the benefits of such schemes.

      “This article could not possibly have provided a more feeble and confused view of the world of social enterprise. A 2005 survey reported that 55,000 social enterprises in the UK have a combined turnover of £27bn, contributing over £8.4bn to the UK economy. Social enterprise is big business, it’s got absolutely nothing to do with ‘localism’ and its connotations of car boot sales and church fetes.”

      The article written was designed to promote discussion about social enterprises and its benefits. You state that £8.4bn was contributed to the UK economy by social enterprises, I would like to ask what you think the proportion of that money was generated by ‘global business’ compared to smaller run, local enterprises. There are a huge number of locally run social enterprises tendering for many specific contracts within their local community – this increases the efficiency of the targets as well as adding substantial value to the local community. I would also like to emphasise the point that I advocate locally based social enterprises and their benefits; just because they are not international and global does not devalue them to ‘car boot sales and church fetes’.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s