Social Enterprise in Anytown: John Pearce 2003

Social Enterprise in Anytown: John Pearce 2003

Defining social and community enterprise

It is certainly true that considerable amounts of energy and passion have been devoted to the debate about definitions and that the process can sometimes be a distraction. However, a clear and unambiguous understanding of what social enterprises are and of the values on which they are based is essential, for two reasons.

First, it is important to differentiate social enterprise from the other sectors, to establish its unique selling point. Some would prefer social enterprises simply to be a subset of the private or public sectors, absorbed into their value and practice frameworks and coupled to their purposes. If social enterprises are part of the third sector (which is ‘another way of doing things’), then it is essential that the values which distinguish social enterprises from private and from public enterprises are quite clear.

Second, it is important to know what is not a social enterprise, especially if certain fiscal and other benefits are to be offered to social enterprises to encourage their growth and to strengthen the third sector in the UK economy. There follow nine definitions – with a bias towards the community enterprise end of the spectrum – which illustrate how the term has evolved.

Definitions of social enterprise

1) 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 profits for shareholders and owners.’

Source:  Social Enterprise: A strategy for success (London, Department of Trade and Industry, 2002).

2) Social enterprises are

not-for-profit organisations.
Seek to meet social aims by engaging in economic and trading activities.
Have legal structures which ensure that all assets and accumulated wealth are not in the ownership of individuals but are held in trust and for the benefit of those persons and/or areas that are the intended beneficiaries of the enterprise’s social aims.
Have organisational structures in which full participation of members is encouraged on a co-operative basis with equal rights accorded to all members.’

 Source:  M.D. Evans et al., Key Concepts, Measures and Indicators (Conscise Project, Middlesex University, 2000). 

3) “.. organisations who are independent of the state and provide services, goods and trade for a social purpose and are non-profit-distributing.’”

Source: Enterprise and Social Exclusion, report of the National Strategy for Neighbourhood Renewal: Policy Action Team 3 (London, HM Treasury, 1999).

4) Social enterprises are competitive businesses, owned and trading for a social purpose – and have three common characteristics:

Enterprise orientation – [are] directly involved in producing goods or providing services to a market…seek to be viable trading concerns, making an operating surplus.
Have explicit social aims … have ethical values … are accountable to their members and the wider community for their social, environmental and economic impact.
Social ownership – are autonomous organisations with governance and ownership structures based on participation by stakeholder groups … profits are distributed as profit-sharing to stakeholders or used for the benefit of the community.’

Source: Introducing Social Enterprise (Social Enterprise London, 2001).

5) ‘Community enterprise organisations working for sustainable regeneration in their community through a mix of economic, environmental, cultural and social activities. They are independent, not-for-private-profit organisations. locally accountable and committed to involving local people in the process of regeneration.’

Source: Development Trusts Association, London, Annual Report 2000

6) ‘A community co-operative is a multifunctional business run for local benefit and directly owned and controlled by the community in which it operates. Some of its activities may be social in character, but it must make a profit overall.’

Source: Community Co-operatives (Highlands and Islands Development Board (HIDB), 1977).

7) ‘A community business is a sustainable commercial enterprise which is owned and controlled by the local community. It aims to create jobs and related training opportunities and to encourage local economic activity. Profits are used to create more jobs and businesses and to generate wealth for the benefit of the community.’

Source: Definition of Community Business (West Calder, Community Business Scotland, 1991).

8) ‘Social enterprises try to make a profit, but they operate on a not-for-personal-profit basis, applying any surplus they create to furthering their social objectives. They put people first and, through their economic activities, seek to deliver employment opportunities and other social, environmental, or community benefits.’

Source: Opening the Gateway to Birmingham’s Social Economy (Birmingham Social Economy Consortium, 2001).

9) ‘A community enterprise is a non-profit-making organisation which is controlled and run by local people in the community. It is sustainable in the sense that it manages to raise enough funds through its activities or through fundraising in order to make ends meet financially.’

Source:  All You Ever Wanted to Know about Community Enterprises (Voluntary Action Lochaber, 2002).