What are Social Enterprises?
19/04/2021 (Staff Post - Iain Cunningham )
I have been supporting social enterprise start up at Engage Renfrewshire for over 10 years, but despite there being over 6000 social enterprises in Scotland, and social enterprise adding £2.3bn gross value to the Scottish economy I still come across misinformation, confusion and a general lack of knowledge of the business format. So let’s break down clearly what a social enterprise is.
A social enterprise, just like any business, operates in a market economy mirroring the private sector.
Social enterprises sell products or provide services, they employ paid staff, pay taxes and file accounts. Instead of awarding financial dividends to directors, profits are used to benefit the community through creating social or environmental impact.
A social enterprise is a trading business, selling goods and services. It aspires to financial independence through trading.
In Scotland a business is recognised as a social enterprise if it has an “asset lock”.
This means that all goods and finances belong to the company and not to any individual.
All SE’s should be incorporated and registered with the appropriate regulators, ie
- HMRC Companies House, as a Company Limited by Guarantee
- Office of Scottish Charities Regulator (OSCR)
- Community Interest Company Ltd by Guarantee (CIC) Regulator
- Financial Conduct Authority
Not all social enterprises are charities and not all charities are social enterprises.
KLAS Care CIC Ltd by guarantee is a local social enterprise with no charity status, providing affordable childcare service in Renfrewshire. KLAS Care charges fees in order to sustain itself and reinvests profits into subsidising fees for low income families, resulting in inclusive access to their service.
Finding Your Feet is a charity which supports families affected by amputation or limb absence through a range of sporting initiatives and social inclusion projects, designed to positively affect both physical and mental wellbeing. The charity does not charge fees for its services and relies on grants and fundraising to sustain itself.
Over lockdown the interest in social enterprises has spiked, seeing 4 new SE’s start up, and we are currently supporting 15 Renfrewshire groups to secure funding, process asset transfers and ensure their governance and business standards are in place. With no sign of this interest slowing down it’s important that the SE model is recognised and understood, by consumers, supporters and other businesses.
To see a full list of the Social Enterprises on our directory click the link below.