What is Social Enterprise?
Social enterprise is a dynamic, ethical and more sustainable way of doing business. Social enterprises are innovative, independent businesses that exist to deliver a specific social and/or environmental mission.
Social enterprises trade in all markets, selling goods and services to individual consumers, local authorities, government and private businesses. Social enterprises aim to make a profit just like any private sector business. However, all profits or surpluses are always reinvested back into their social and environmental purposes. Social enterprises in Scotland have an "asset lock" on all their buildings, land and other assets. Without making a profit, social enterprises can't meet their social and environmental mission; they must be sustainable. The term "social enterprise" shouldn't be confused with private businesses that simply operate in an ethical way, charities that don't do business (or trade very little) or public sector arms-length companies (ALEOs), though some of these may be on a journey as "emerging" social enterprises. The Voluntary Code of Practice for Social Enterprise in Scotland contains the full criteria. The definition of social enterprise varies across the world and even within the UK. A robust debate about definitions, within a constantly evolving business landscape, is something to be welcomed.
What examples are there?
Diverse examples you may have heard of include: The Big Issue, The Wise Group, Divine Chocolate, Cornerstone, Kibble Education and Care Centre, media co-op, Glasgow Housing Association, Isle of Eigg Heritage Trust, Link Group Ltd, the Eden Project in Cornwall, Capital Credit Union, The Grameen Foundation, Mondragon Corporation in the Basque Country and the Homeless World Cup.
Where can I see social enterprise in action?
There's probably a social enterprise running a shop, art gallery, sports centre or cafe in your local area - take a look at the Directory of Social Enterprise here or contact us. Elected members, the media, public officials, private businesses and others can also contact us to arrange visits. Watch Social Enterprise Scotland TV.
What types of social enterprise exist?
Social enterprise is a diverse community and the more-than-profit approach is used by a huge range of organisations, of every size, operating in every corner of Scotland and in most sectors of the economy. A social enterprise is often simply a Company Limited by Guarantee with an appropriate "asset lock" and social mission etc. It could also be a registered charity (of which there are over 23,000 in Scotland) or a Scottish Charitable Incorporated Organisation (SCIO). Below are some of the common types (both descriptive and legal model) and a social enterprise is often one or more of these. Together they make up Scotland's social enterprise movement.
Co-operatives and Mutuals Co-operatives and Mutuals are democratically-owned businesses which give employees, customers or members a direct stake in the business. There are now around 600 co-ops in Scotland, with a turnover of more than £4bn a year and employing 28,600 people. Legal models are known as co-operative societies or community benefit societies. Co-operatives UK.
Social Firms Social Firms are commercial businesses that provide real, integrated employment for people with disabilities or other disadvantages in the work place. They may be registered charities, a CIC or other model. There are currently around 80 members of Social Firms Scotland.
Community Interest Companies CICs are limited companies created for the use of people who want to conduct a business or other activity for community benefit. They are required to report on activity to the UK CIC Regulator. Community Interest Companies Association and the CIC Regulator.
Development Trusts Development Trusts are community run organisations that are concerned with the economic, social, environmental and cultural needs of their community. They are owned and managed by the local community and aim to generate income through trading activity that enables them to deliver services. They might be a CIC or charity or other model. There are currently over 200 members of Development Trusts Association Scotland.
Credit Unions Credit Unions are a type of co-operative that provide financial services to members. Many operate in areas of social and financial exclusion, though more employers are now offering credit union membership and they're being accessed by ethical consumers. The largest offer a competitive range of mainstream financial products. There are over 100 credit unions in Scotland with over 280,000 members and assets of over £300m. Association of British Credit Unions Ltd (ABCUL Scotland) and the Scottish League of Credit Unions.
Housing Associations (aka Registered Social Landlords or RSLs) Housing Associations and housing co-operatives are voluntarily-managed companies providing affordable housing for both rent and sale. They give priority to those in greatest need and reinvest any surplus income in maintaining or adding to their housing stock. Many Housing Associations also support other forms of social enterprise through 'Wider Role' community regeneration/tenant support activity. There are around 160 Housing Associations and co-operatives in Scotland providing more than 277,000 homes and over 5,000 places in supported accommodation. Scottish Federation of Housing Associations.
Defining Social Enterprise: The Scottish Criteria
There is currently no legal definition of "social enterprise". A 5-point criteria was formed in 2010, by the organisations that form Scotland's social enterprise community, as an alternative. To sign or support the Voluntary Code of Practice for Social Enterprise in Scotland (that has now replaced the original criteria) click here.
Statistics and information about social enterprise in Scotland
Take a look at our one-stop webpage to find out about everything social enterprise in Scotland, including research, statistics, business support, policy, networking and lots more information.