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FAQs and Jargon Buster

FAQs

1. What is "Social Enterprise"?

Social enterprise is a dynamic and inspiring way of doing business. Social enterprises are innovative, independent businesses that exist to deliver a specific social and/or environmental mission. See the full definition.

2. Can you give me examples I may have heard of?

The Big Issue, Cornerstone, Kibble Education and Care Centre, The Wise Group, Glasgow Housing Association, Link Group Ltd, the Eden Project in Cornwall, Capital Credit Union, The Grameen Foundation and the Homeless World Cup are all examples of social enterprises. To access the Directory of Scottish Social Enterprise, to give you more examples of social enterprises in Scotland click here.

3. What is Social Enterprise Scotland?

Check out our full story.

4. Who runs Social Enterprise Scotland?

We have just six paid staff members, three full time and two part-time, plus two or three volunteers at any one time. See the latest staff and also Board membership list here. The organisation is continually growing in terms of members and associates, access the most recent membership list here.

5. What is the difference between a social enterprise and an ethical business?

The two are distinct business models. A social enterprise's main purpose - the reason for existing - is to fulfil a social and/or environmental goal. This is achieved by reinvesting profits back into the business - they are 'asset locked'. An ethical business simply tries to achieve its primary financial and profit goals while minimising any negative impact on society or the environment.

6. How big is the social enterprise community?

Scotland has a large and diverse number of social enterprises. Traditionally there has been an issue with mapping the community due to the variety of definitions and some social enterprises not self-identifying as such or not being connected to relevant networks. We now have two studies that have sought to address this, Scale as well as Substance - Social Enterprise in Glasgow and the more recent Scotland-wide Mapping Social Enterprise in Scotland, that estimates around 3500 social enterprises, though we believe this figure is much higher.

7. I’m interested in starting my own social enterprise, can you help?

There are a number of organisations that offer support to anyone who wants to become a social entrepreneur. Take a look at our one-stop resources webpage for all social enterprise support in Scotland. Contact us if you want a contact or more information on any aspect of support and development.

8. Is there any funding available for my social enterprise?

There are a number of funding streams available to social enterprises and social entrepreneurs - take a look at our resources page.

9. What is Social Return on Investment (SROI)?

SROI is an approach to understanding and managing the impacts of a project, organisation or policy. It is based on stakeholders and puts financial value on the important impacts identified by stakeholders that do not have market values. For more information on SROI click here. Social Accounting and other methods of impact measurement are also used.

10. What are Community Benefit Clauses?

Community Benefits are contractual requirements which seek to deliver wider social benefit within a procurement contract. To form part of the criteria according to which contracts are awarded, Community Benefit clauses must be included within the contract i.e. where a contract may have traditionally been for construction, a training and recruitment element may be included as part of the specification for that contract. For more information click here. These can be used in both private and public sector contracts and can be of great value to social enterprises.

11. Where can I find more information about social enterprise?

Please take a good look around our website for more information and get in contact with us.


Jargon Buster

Below are listed the most common words and phrases you are likely to come across in the social enterprise sector.

Aa

Asset based development

A development strategy that recognises that the possession of tangible assets (land, buildings or a dedicated income) is the key to achieving the goals of self-sufficiency, independence and sustainability which underpin community based regeneration organisations.

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Bb

Best value

The current arrangements for reviewing the effectiveness, efficiency and economy of public sector services, and the measure of value for money in public sector procurement.

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Cc

Cluster

Firms tend to improve their commercial performance through direct and indirect forms of collaboration, or sharing of resources, customers, inputs, often resulting in location advantages from close proximity with each other.

Common bond

Credit unions all have a common bond. They determine who is able to join them. A community or residential bond refers to anyone who lives in a certain geographical area. A live or work bond refers to people who work and live within a certain geographical area. An employment or industrial bond refers to all employees in a company or group of companies. An associational bond refers to membership of a trade union, trade association or other group.

Community business

A trading organisation which is set up, owned and controlled by the local community and which aims to create self supporting employment for local people and also act as a focus for local development. The terms community business is often used by social enterprises that focus on local markets and services.

Community care plans

Plans are publicly available for each local authority which outline or update local community care provision or strategy.

Community development finance institutions (CDFIs)

These organisations lend and invest in deprived areas and markets that cannot access mainstream finance, including social enterprises.

Community development venture capital fund

A venture capital fund, run for profit, which is targeted at communities that lack investment.

Community enterprise

These are organisations trading for a social purpose with a community base.

Community Interest Company (CIC)

A legal form for social enterprises, which became available in 2005. CICs report to an independent regulator on how they are delivering for the community and how they are involving their stakeholders in their activities.

Community loan fund

A community loan fund is a CDFI that provides loans.

Company limited by guarantee

A company registered with Companies House with members rather than shareholders; members guarantee a nominal sum for paying liabilities and can also pay a regular membership subscription. Charities, Development Trusts, Social Firms and Community Businesses frequently use this form of incorporation.

Company limited by shares

A company registered with Companies House which is controlled by its shareholders. This form is often used for trading subsidiaries of charities.

Competitive tendering

Arrangements for procuring services that involve tendering by more than one potential provider. Tenders are assessed against best value criteria that assess quality and cost.

Co-operative

An organisation owned and controlled by its members which is incorporated under the Industrial and Provident Societies Act and regulated by the Financial Services Authority. Another popular form for social enterprises.

Corporate social responsibility (CSR)

A wide ranging set of concepts that relate to businesses conducting their activities responsibly. Factors include environmental impacts, employee and customer health and safety issues, participation in local communities (being a good neighbour), good corporate governance, other social issues and ethical and fair trading. CSR proponents argue that these issues are core to the long term sustainability of all businesses and apply equally to both small locally based businesses and large multi-national listed companies.

Credit union

A financial co-operative, which is owned and controlled by its members. As well as being a good savings option, with successful credit unions paying an annual dividend of up to 8%, the money saved can be used to make low interest loans to other credit union members. Only people who come within the common bond of the credit union can join it and make use of its services. The credit union is directed and controlled by a volunteer Board of Directors.

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Dd

Development trusts

Development trusts are defined as organisations that are:

  • engaged in the economic, environmental and social regeneration of a defined area or community,
  • independent and aiming for self sufficiency,
  • not for private profit,
  • community based and owned and,
  • actively involved in partnerships between the community, voluntary, private and public sectors.

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Ee

Equity finance

Funds invested in a business in the form of shares. Investors usually have a say in the running of the company and also receive a dividend from profits.

Ethical investment

Investment which is screened to ensure it has no links to activities which the investor would not wish to support.

Externalisation

The transfer of in-house services which were previously delivered by publicly employed staff, to the independent sector.

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Ff

Fair trade

It implies a trading partnership which aims to encourage sustainable development for excluded and disadvantaged producers. Supporting partner businesses seek to do this by promoting and providing better trading conditions, conducting awareness raising activities and campaigning.

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Ll

Labour Market Intermediaries

Community based organisations that are close to local people, are able to relate to unemployment issues and understand business needs. They act as job finders, brokers and support people in the early months of work.

LETS

The terms LETS refers to local exchange trading schemes. They are community-based mutual aid networks in which people exchange goods and services without the need for money. They are an organised form of bartering.

Local Social Economy Partnerships

There are 30 partnerships across Scotland and the aim is to support the development of the social economy. Core partners include Scottish Enterprise or Highlands and Islands Enterprise, the local authority and the local council for voluntary services.

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Mm

Micro-enterprise

A very small business, usually defined as "a business with fewer than 10 staff". Sometimes defined as "a business with fewer than 5 staff". 89% of all UK businesses have fewer than 5 employees. Some Social Enterprise such as development trusts run programmes to assist Micro-enterprise.

Micro-finance

This term refers to small savings and loans facilities with no (or a very low) minimum deposit. It also refers to other financial services such as insurance, money transfers and bill payments that are designed for people on low incomes.

Micro-loan fund

This is a fund providing small loans and therefore a particular form of micro-finance. A micro-loan fund is a specialised form of financial service based on distinct products specially designed to service micro-enterprises and is not merely the occasional provision of a very small loan.

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Nn

Non profit or not-for-profit

Terms used to describe companies which may well make a profit, but do not distribute their profits to shareholders, instead using them for social or community benefit or reinvestment in fulfilling their social aims.

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Pp

Patient Capital

These are investments tailored to the third sector that enable community enterprises to generate income streams that are sustainable, without the immediate burden of making interest and capital repayments.

 

Public Social Partnerships

This is a model of quality public service delivery. Social enterprises tender for services in the procurement process and then deliver a service in partnership with the local authority.

 

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Rr

Regeneration

A programme of local development which addresses physical, social, environmental and economic disadvantages in both rural and urban areas. This is an important agenda nationally, regionally and locally, with the Government’s Neighbourhood Renewal Unit steering national policy.

Registered social landlords (RSLs)

More commonly referred to as housing associations, RSLs are independent not for profit organisations that are registered with the Housing Corporation.

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Ss

Service Level Agreement

These are agreements with suppliers that define the service they will provide, and sets out the responsibilities and priorities of the supplier under the agreement.

Single outcome agreement

Single Outcome Agreements are agreements between the Scottish Government and each council which set out how each will work in the future towards improving national outcomes for the local people in a way that reflects local circumstances and priorities.

Social accounting and social auditing

Social (or ethical) accounting and auditing are all methods of measuring and reporting an organisational social and ethical performance. An organisation conducting a social audit makes itself accountable to its stakeholders and commits itself to following the audit's recommendations.

Social capital

A term used to describe the non-financial resources – such as trust, partnership, shared values – which enable a community to thrive and function more effectively.

Social economy

Sometimes also called the ‘third sector’, this part of the economy exists between the private and public sectors and includes social enterprises, voluntary organisations, foundations, trade unions, religious bodies and housing associations.

Social enterprise

Social enterprise means doing business with social aims. ‘Doing business’ means trading goods or services in a responsible way and making money from it. The social and environmental aims of a social enterprise can range from creating employment and regenerating communities to preventing tonnes of waste going to landfill unnecessarily. There are social enterprises working in many different sectors – from health and social care to recycling, and from Fair Trade to leisure services.

Social firm

A business created to provide integrated employment and training to people with a disability or other disadvantage in the labour market.

Social Return on Investment (SROI)

SROI is a way of putting a monetary value on investment. It helps organisations evaluate how effective the social impact of their service is, which financial returns alone don’t take into account. The tool allows organisations to make continuous improvements and achieve best value. This is particularly useful for opening up the public procurement market.

Surplus

The profit in some social enterprises is referred to as a "surplus" instead of a "profit".

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Tt

Triple bottom line

When an organisation attaches equal importance to social and environmental objectives as well as to financial objectives.

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Uu

Urban renaissance

A term used to describe the rediscovery of the opportunities offered by cities to accommodate changing population, work and leisure patterns through the creation of practical, attractive, safe and efficient urban areas that offer a desirable quality of life.

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Vv

Venture Philanthropy

It is way of charitable giving that provides long term investment and capacity building support to the voluntary/community sector.

Voluntary organisation

Usually a charitable body established to achieve a social purpose but which depends largely on grants and donations for its revenue.

Social enterprise is a dynamic and inspiring way of doing business. Social enterprises are innovative, independent businesses that exist to deliver a specific social and/or environmental mission.