Social Enterprises

Charity Trading

Community and voluntary groups can consider the viability of earning income by different means, for example, by renting out spare office capacity , or offering services such as consultancy and printing. It should be noted that there can be difficulties, for example confidentiality issues, and being generally distracted from core charitable objectives.In the worst case scenarios, charities can find themselves substantially subsidising commercial activities. However, there are also excellent examples whereby charities both fulfill core objectives in the very process of generating trading income.

For further guidance please see the Charity's Commissions 'Accounting and Reporting by Charities: Statement of Recommended Practice' which you can find on their webpage: www.charitycommission.gov.uk/Library/publications/pdfs/sorp05textcolour.pdf

Also, 'Trustees, trading and tax - How charities may lawfully trade' on appropriate webpage www.charity-commission.gov.uk/publications/cc35.asp

Social Enterprises

A charity may undertake such a substantial element of trading that it should establish 'a trading arm', and ensure full separation of charitable and trading activities. Charity shops are notable examples of trading enterprises run by charities. Many people woud perceive them as social enterprises, but it should be noted thatthere is no legally -recognised definition of a social enterprise.

Private businesses can, and do, argue, that they are social enterprises because their owners state that they are trading primarily for social benefit, rather than for 'profit'. The American businessman, Warren Buffett, trades for profit but, as he intends leaving the bulk of his wealth to a charitable trust, his admirers regard him as a social entrepreneur. On the other hand, some charities, whilst not trading for profit, have been criticised for paying high rates of renumeration to their senior managment. Whether an organisation can reasonably be defined as a social enterprise, or indeed a charity, should not only be accessed on the basis of its legal form, but also on what it does, and how it behaves.

Social enterprises have often been described as the 'not-for-profit' organisations, but this is inaccurate as they can, and indeed often must, make profits. Sometimes the sector is described as 'non-profit distributing'. However, this description excludes not only organisations where profits are distributed to shareholders and senior managers, but also organisations where profits are distributed within worker co-operatives, and  employee- owned, enterprises.

A widely used, but not a legally-recognised , definition of 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.

Whether an organisation can be reasonably defined as a social enterprise, should be judged on its substance. Social enterprises can be local community enterprises, social firms, co-operatives, and large-scale organisations operating nationally or internationally. Some start as businesses which develop a stong social purpose, a well-known example being John Lewis/ Waitrose. Others start as voluntary sector organisations, which develop a trading activity.

There are, broadly speaking, five qualities of a social enterprises -

• The organisation has economic and social purposes written into its constitution
• The organisation is controlled, or strongly influenced, by its beneficiaries
• The organisation is independent - it has its own local management committee/trustees
• The organisation's activities are for the benefit of a community of place and/or interest
• The organisation earns some proportion of its income through trading

There are regional social enterprise support orgnaisations . Waltham Forest orgnaisations interested in social enterprise can obtain more information from Social Enterprise London (SEL) www.sel.org.uk

• Office of the Third Sector
  The Office of the Third Sector has responsibility for policy making affecting social enterprise. They also help promote and champion social enterprise, take action needed to address barriers to the growth of social enterprises and identify and spread good practice for the sector
• Social Enterprise Coalition
  SEC is the UKs national body for social enterprise. The voice for the sector, they support and represent the work of members, influence national policy and promote best practice.
• Social Enterprise Training and Support (SETAS)
  Developed by the Social Enterprise Training & Support Consortium (setas) this website is an information resource to help you find the most appropriate social enterprise training, support or relevant publication.
• Social Firms UK
  Social Firms UK aims to create employment opportunities for disabled people through the development and support of Social Firms.