What is Social Enterprise?

The official definition of a social enterprise is: “a business or service with primarily social objectives whose surpluses are principally reinvested for that purpose in the community, rather than being driven by the need to maximise profit for shareholders and owners”. The key characteristics of a social enterprise are:

1. They trade i. e. sell goods and/or services and any profit or ‘surplus’ made as a result of their trading activities is either ploughed back into the business or distributed to the community they serve
2. They have a clear social purpose.
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   This may include job creation, or the provision of local facilities e. g. a nursery, community shop, or social care for the elderly.

3. They are owned and managed by the communities they serve

Why set up a social enterprise?

1. It utilises local skills and life experience
2. It can provide tangible benefits to specific sectors of the community: the young, the elderly, mums with small children
3. It uses business principles so that it is run in a professional way
4. It can help replace services withdrawn by central and local government 3rd sector(not for profit not part of public sector), social economy and non profit sectors broadly associated with the major economic roles of the public authorities police government via allocation of goods and services.
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   . redistribution through provision of wide range of services to deprived people via voluntary contributions work or money.

Also involved in preservence of economic life ie partner associations of local authorities helping people back in to work who are poorly qualified.

Challenges of 3rd sector - persistence of structural unemployment, need to reduce state budget deficits (now in the uk reduction of police employees), difficulties of traditional social policies and need for more active integration solutions could be to let 3rd sector associations help public authorities or maybe be privatised but fears of social deregulation and loss of acquired social rights.

Economic initiative

Social enterprise. new development throught Europe in 21st century aimed at social aims. Involves hole of 3rd sector. Enrich and renew and analysis of 3rd sector. Concepts of social economy concept of social economy is understood on the basis of legal characteristics and emphasising the principles that its organisations have in common. Social economy sub divisions:

• co-operative style organisations: - agricultural, credit and saving, consumer co-operatives, insurance co-operatives, retail cooperatives, housing etc. Due to competition of these various types some have become profit maximising competitors. Sum still keep co-operative characteristics and have renewed initiatives in social cooperatives. Initiatives which adopt closely related rules and practises. In developing countries and some industries having a social purpose.
• Mutual type organisations: - mutual component of 3rd sector includes organisations of various types which cater for the needs of local communities to organise themselves e.g. community insurance systems, security systems.
• Risks – health (costs of medication, treatment, hospitalisation), death (material support for families of deceased), funerals and bad harvests.

Associations:

• Freedom associations under legal regulations.
• Advocacy orgnaistions such as charities.
• Providers or services to their members, to other people.

All other forms such as productions of goods and services where profit is not the essential purpose.

These do not impose a great degree of legal formalisation, unless for purposes of statistical data for identifaction means. A lot of informal initiatives.

Non-profit-organisations – tax exempt

Eligible to receive tax deductions represent a large range of public benefit activities include schools colleges universities hospitals museums etc. Summary simularities of non profit organisations:

• They are formal, they have a certain degree of institutionalisation, which has legal personalities.
• They are private. Distinct from the state and organisations branching from the public authorities.
• They are self governing, they must have their own regulations and self governing bodies.
• They cannot distribute profits to their members, directors and set of owners.
• Must involve some level of voluntary contribution in terms of work or money.

Similarities between npo and social economy Formal structure, private nature since legal status of social economy is closer to the private for maximising sector rather than the public sector. Voluntary involvement, memberships freely entered in to. Structure and organisational rules.

Differences:

• Specification of goals, control over the organisation and the use of profits.
• Social economy goal seeks to serve members of the comunity rather than to seek profit.
• NPO approach can be profit maximisation as long as the profits do not go to owners.

Their goals can come about once profits have been achieved. Not explicit as to the goals npo’s wish to achieve. Social economy requires a democratic decision making process where the voice of the members are taken in to consideration and where there is a structure in place to achieve the goals. In NPO the decisions come from inside the organisation without the use of formal democratic activities, but through governing bodies. The non distribution aspects do not have a good way of control around this because of its accounting and administrative nature. Limitations:

Static do not refer to entrepreneurial activities and economic risk.

Social enterprises

Seem to combine elements of co-operatives and non profit organisations. New entrepreneurship Entrepreneurs do not have to be the owners of the company but are responsible or involved in making a change such as introduction of a new product or production method, gaining of new source of materials and recognition of a new sector or activity. Social enterprises, involvement of different partners or categories of partners. - transforms the way the activities are organised. E. g partnerships of diff countries e. g. childcare

Volunteers not innovative but make it possible to provide goods or services that were not previously available or only available to paid workers. We may say the visualisations of the third sector allow us to identify levels or social entrepreneurship. Social economy stresses that the aim is to serve members of the community rather then to generate a profit, whiles npo’s stresses importance of members or managers receiving a proportion of any surplus. Social economy does not exclude any possibility of limited distributions of profits goin to members.

There is a common feature between these and social entrepreneurship that is the requirement of production surplus to be ‘socialised’, reinvested in the development of the activity to be used for the benefit of people other then those who control the organisation. Both concepts involve benefits to community or groups, so justify the payment of subsidies to third sector organisations. This is also true for social enterprises that are financed both by the resources from the market and from public authorities in the communities name. Also involvement of non monetory resources such as voluntary work or donations.

Good will of 3rd sector for their services.. and allocation of resources across society are link with social enterprises. Features found in the social economy approach such as the democratic decision making are also seen in social enterprises since they are part of a dynamic organisation involving members of different criteria such as paid workers users, partners, volunteers, partners representing the community etc in management and controlling bodies because members have equal power no matter what stake they hold or have invested.

Challenges

• Under representations of organisations.
• Asia social entrepreneurs unrepresented globally.
• Reasons are language, culture and history.
• Risk assessment and contingency planning.
• Can mobile phone help Africa become cashless.
• Challenges of definition, data collection and measurement to show to researchers, policy makers and financiers.
• Support needs and growth challenges.
• Social enterprise or entrepreneur owners are more common in high areas of multiple deprivation, which contrasts to charities as they are more common in the wealthiest areas.

Social enterprises act as solutions to great challenges faced in the 21st century such as environmental and social challenges, which in turn is enhancing economic growth. Obtaining evidence base for personal investors. This is big gap in social enterprises. Scalability and financing issues of social enterprises. Sometimes social entrepreneurs turn towards a more charitable status as they become more established to achieve a means of ensuring their long term finance to keep the organisation going for longer.

Solutions

Working with others such as economic and social research council. 3.3 % of the adult population in the uk is engaged with social entrepreneurial activity and community purposes. There are no significant regional differences in the uk apart from some underrepresented groups and enterprises e. g. women and ethnic minority groups are more likely to engage in social enterprise activities rather then mainstream entrepreneurial activities. 11. 9 percent of people involved in early stages of entrepreneurial activity try to start a new social venture.

Carrying out surveys and working together with organisations such as economic and research council (esrc), the third sector research centre, delta economics. There should be a more inclusive approach to public policy so that all types of social enterprises are catered for and access to finance, coaching and mentoring be made available. The need for enterprises to establish themselves and challenges they face in terms of finance, market and perceptions. This should be more known around the UK so investors can look at statistics and figures and realises the value in this sector for them and for the society.

Questions? The changing nature of social enterprises How social entrepreneurs become social enterprises How social enterprises themselves grow Key findings Social entrepreneurs need to pay salaries and need external financings Social enterprises need growth finance to expand Distinguish between social enterprise social entrepreneurs and philanthropy. Successful entrepreneurs go towards philanthropy approach.

Social enterprise and social entrepreneurs set values and organisational goals in order to grown to achieve them. 5.8 percent of adult working population involved with entrepreneurial activity and 11.9 percent of these start a social venture. 35% of early entrepreneurs fall in to social entrepreneurship No significant differences between start up social entrepreneurs between men and women. Social entrepreneurial starts ups are higher concerning black and ethinic minority sectors (BAME) then any other form. 3. 8% white, 8. 9 from others. 6.7 from Indian, 10.5 from black African and Caribbean communities. Recreation, support, education and care services dominate early entrepreneurial start up and owner management activity.

34 % of social start ups and 24 percent of social owner managers receive greater than 50 % of their funding from public sources. 43% of social owner managed entities have a commercial revenue stream. Key implications it is important for investors and policy makers to realise that social businesses for profit deliver financially as well as socially as well as not for profit entities. When social entrepreneurs reach the ownership stage of the cycle they tend to recieive finance in terms of equity from shares from investors.

Until they reach this stage many social enterprises receive funding on a charitable status and public sector sources. Suggests social entrepreneurs have similar financial needs to mainstream entrepreneurs. Examples of social entrepreneurs and enterprises Ummah food is a social enterprise whose main attribute is social conscience. They combine the creation of halal chocolate products with philanthropy. Challenges, mainstream supermarkets have not responded to the huge value of this market which is estimated to be worth over 500 billions pounds by 2012.

This has enabled young entrepreneurs to grasp this opportunity. The social entrepreneur who opened this market was Khalid sharif. He has persuaded supermarkets such as tesco and asda to stock some halal products. More non muslim people are buying these products as a pose to muslims. This show that Khalid has opened a new market to market his idea. They are classes as a social enterprise as they give something back to the community. These features are, using marketing materials to support helplines and creating commercials which address the misrepresentations of muslims in the media.