social enterprise: definition
Social enterprises are businesses which exist to address social or environmental need.
Rather than maximising profit for shareholders or owners, profits are reinvested into the community or back into the business. It’s this which makes social enterprise the most exciting and inspiring business movement in the world.
The official definition of social enterprise to which SEL subscribes is:
'a social enterprise is 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' (DTI, 2002).
The movement is diverse and includes:
- credit unions
- housing associations
- community development trusts
- Social Firms
- community businesses
There is no single legal form used by social enterprises, however in 2005 a new legal form was introduced - the first for more than 100 years. The Community Interest Company is a bespoke legal structure designed for social enterprises with a built-in asset lock. However a social enterprise can also be a Company Limited by Guarantee, a Company Limited by Shares, or an Industrial or Provident Society. Many also take charitable status.
The 2005 Annual Survey of Small Businesses UK found that there are 55,000 social enterprises in the UK with a combined turnover of £27 billion. Social enterprises account for 5% of all businesses with employees, and contribute £8.4 billion per year to the UK economy.
In London there are 3400 social enterprises registered as companies limited by guarantee. The vast majority are SMEs with less than 10 employees, and turnover of less than £0.5m. London’s social enterprises provide 104,500 jobs, with a combined turnover of £4bn and the London Social Enterprise Network, which is run by SEL, has more than 1000 members and is the biggest such network in the country.
The social enterprise movement operates in all markets, using different models and structures to address a vast array of needs, and they are quietly transforming the world - addressing its most complex social and environmental challenges in innovative and sustainable ways.