What do we mean by social enterprise?

6 June 2010 | By Cause4 staff

In the past 10 years we have seen an explosion of new organisations branding themselves as social enterprises. Government figures estimate that there are 62,000 (social enterprises) in the UK, contributing over £24bn to the economy and employing approximately 800,000 people. With their importance growing, a crucial question to ask is what do we exactly mean by the term ‘social enterprise’?

Essentially social enterprise organisations combine the principles of modern profit-making business whilst being motivated exclusively by uniquely social values. Many modern businesses would consider themselves socially responsible and the era of Corporate Social Responsibility has seen all sorts of invaluable initiatives undertaken by business - motivated essentially by profits – in supporting charities and the communities on their doorsteps. However, this should not be confused with new ‘Social enterprises’ where social and environmental purpose is central to the organisation’s mission. Social enterprises aim to make profit but their profits are re-invested in order to further their mission for positive change, enabling them to achieve even more significant positive outcomes.

One of the best-known social enterprise projects is Jamie Oliver’s restaurant Fifteen. Opening in 2002 the project aimed to take vulnerable and disadvantaged young people, offer them chef’s apprenticeships and put them to work to produce a restaurant offering fine Italian dining in the heart of London. It exists to provide young people with an avenue towards a better future. However, what is crucial is that it is run and exists as a successful business (a turnover of £4 million in 2007 is credit to this) with exclusively social values at its core. Herein lies the most important balance that social enterprises must entertain so that core values do not compromise profit making and that profit-making does not detract from core values. Without this balance a social enterprise becomes just another business or just another charity. As Jamie Oliver himself notes: ‘Without the social purpose Fifteen is just another fancy restaurant...without the product, we are just another youth centre unconnected from the market and the real demands of the restaurant business.’

So what of Social Enterprises in 2010? What is their future and how successful are they becoming? A 2009 ‘State of Social Enterprise Report’ confirmed that in 2009 over two-thirds of all social enterprises made a profit, even in the heart of the economic downturn. A further 20% of these broke even which, when compared to many businesses in the downturn, is a huge achievement for the industry as a whole. 70% of current Social Enterprises are able to re-invest profits back into the communities in which they operate, helping them to further their central mission, benefiting from the backing of Trusts, individual philanthropists and the corporate sector. 71% of all Social Enterprises seeking funding last year received between 75% and 100% of what they requested.

The Social Enterprise sector is alive and well, the future positive. We are in for some exciting times.

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