What is Social Enterprise?

Here is an explanation of some terms you may not be familiar with.

Social enterprise

This is a way of doing business that makes positive social and/or environmental changes. Social enterprises believe there are other things as important as making profit. These may include working with homeless people, or young people who have problems, or helping the world’s poorest people get out of poverty. There may also be an environmental element to it, such as encouraging people to recycle.

Social enterprise is a general term which covers lots of types of business, or ways of working, which include:

Company limited by guarantee

These are businesses where the board of directors (the people who run the company) are interested in community activities. Profit is put back into the company or given to the community that they work with. The Social Enterprise Academy is a company limited by guarantee.

Community interest companies (CIC)

This is another type of business run specially for community benefit. It is a new way for organisations to legally define themselves as social enterprises and is important because it clearly shows that the business only uses its profits for a social purpose. Bookdonors is set up as a CIC.

Co-operative

A co-operative is a business which is owned and controlled by its members – these could be the people who make the products or provide the services, or who buy or benefit from them. There are lots of legal forms for co-operatives but all of them share the basic idea that only those directly involved in the running of the business should benefit from it. The Media Coop are a co-operative.

Development trust

Development trusts run buildings that provide services to the community. These may be anything from a local  shop to a doctor’s surgeryor a wind farm. They work in specific places and are owned by the local community. Check out Fintry Development Trust.

Fairtrade

An alternative approach to international (and often unfair) trade. Fairtrade pays workers and farmers a fair price and helps to improve living conditions in developing countries. Divine Chocolate and Cafédirect are Fairtrade organisations.

Intermediate labour market (ILM)

These aims to help those who find it difficult to find a job or get back to work by offering training and new skills. Fifteen, the restaurant group founded by Jamie Oliver, is an ILM.

Limited Liability Partnerships (LLP)

This is a form of partnership for community organisations. The partners in a LLP do not keep the profits for themselves and because of this they are not financially responsible for any losses the company might make.

Social firm

These are businesses that create jobs for people who can’t get them because they have a mental or physical disability. The Engine Shed in Edinburgh is a social firm.