GOSW Social Enterprise Workshop Oct 2010

Social Enterprise Workshop Government Office for South West & SWRDA Julie Harris RISE 22 nd October 2010

Overview
RISE
Context and current reports
Social enterprise standards
Broad underpinning knowledge
Understanding social enterprise

RISE
RISE is the voice for South West social enterprise and supports the development of sustainable social enterprise in the region.
Membership
BAN
Newsletter
Projects – marketing, leadership, food, housing, health and social care

The Big Picture
Private Sector
Civil Sector/ Social Economy
Public Sector

What are they?
Social enterprises have 2 primary aims:
They trade
They apply profits to social purpose

What are they?
Some definitions:
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 (dti)
Businesses that aim not only to make money, but also to have a positive effect on the communities they serve, the people with whom they work and their own employees
(Co-active Ltd)
Social enterprises are businesses that trade in order to pursue a social aim (Business Link)

Social Enterprise Mark
National programme
290 holders (and growing)
Marketing
www.socialenterprisemark.org.uk

What are they?
Social enterprises are:
‘ More than profit’ organisations
Seek to meet social aims by engaging in economic and trading activities
Have legal structures which ensure that all assets are not in the ownership of individuals but are held in trust 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

What are they?
Characteristics
Enterprise orientation – they are directly involved in producing goods or providing services to a market
Social aims – they have explicit social ethical values including a commitment to local capacity building. They are accountable to their members/stakeholders and the wider community for their social, environmental and economic impact (RISE)

Example - COSMIC
Providing ICT support and services
Turnover £500k, 13 employees
> 50% income from trading
Membership
Focus on rural ICT, skills, employment
Digital Inclusion …and now .. leadership

Rural ICT

Digital Inclusion

Employment and Skills

Leadership Development

How are they different?
How are social enterprises different from
‘ traditional business’?
voluntary and community organisations?
p ublic sector?
Clear focus on social objectives
Trading and generating profits – financial, social, environmental

Measures of success
Traditional business
Operates in the interest of the owner or shareholders
To make profit
A social enterprise has broader measures
Profits are invested in social purpose
Local good-quality employment
Spending money in the local economy
Providing an alternative business model

Social Enterprise / Community Sector
Profit-driven trading Public service, non-trading

Where do Social Enterprises fit in Big Society?
Public services – delivery and support
Health and social care
Community Land Trusts
Free schools
Probation, rehabilitation and offender schemes
Worklessness
Asset Management and Community Buildings
Supply chains

Characteristics of a successful social enterprise
Gaining independence and autonomy through trading
Entrepreneurial, innovative, risk-taking behaviour
Flexible and adaptable practices
Customer and community focus
Stakeholder engagement

Their values
Not just to make a profit – having social purpose
To make a difference:
In the way they are managed, owned and accountable
In the way they deliver goods and services
In the way they work with their community and stakeholders
In the way they do business

Forms of social enterprise
Community Interest Companies (run by and for a particular community)
www.cicregulator.gov.uk
Co-operatives (businesses owned and run by a group of people for the benefit of their members)
www.coop.co.uk
Development Trusts (community based and owned regeneration enterprises)
( www.dta.org.uk )

Forms of social enterprise
Social Firms (businesses that have a significant number of employees with a disability)
( www.socialfirms.co.uk )
Trading arms of some charities
Charitable company with a community business that transfers surplus to the charity
Industrial and Provident Societies
Credit Unions, community owns shares in a shop or centre

What do they do?
Offer social or environmental goods and services
e.g. recycling or childcare
Trading to provide (or cross-subsidise) social or environmental goods or services
Trading arms of some charities
Use processes or ways of working that have significant social benefit
Care workers organise themselves as a co-operative in order to take control of their work environment

Why choose social enterprise?
Founders of social enterprises are motivated by
A desire to improve their community
Values that motivate partnership working
Member involvement
Concern for local services

Where do they come from?
Local residents are offered a community facility if a sustainable business plan can be written
A crèche is becoming large and parents would like to develop to a full-time nursery
Local residents in partnership with the local council develop a disused site as business units to improve employment opportunities
Community recycling project develops into sustainable business with local employment
Voluntary group wishes to expand its activities and become more commercial
A group of workers buys a business from their retiring manager

Where do they come from?
A community centre offers training and skills development through accredited courses
A group of workers creates a co-operative catering business
A funded project coming to the end of its funding package wants to continue by charging for services and delivering under contract
Regeneration activity has inspired a community to set up a development trust to continue managing community assets
Community composting through volunteers has grown and needs to become a community business

Social enterprise in the UK
At least 55,000 social enterprises in the UK (SEU, Summer 2006)
Represents 5% of all businesses with employees
Combined turnover of about £27 billion
Previous research (SEU, July 05) found that the South West was the 3 rd largest region for social enterprise in the UK

Social enterprise SW
Around 6,000 social enterprises and growing
Examples from local authorities –
Sandwell Community Caring Trust
Tone Leisure
Pluss
Selwood Housing
Community Foster Care

Social enterprises – the driving force!
Local needs
Village shop
Nursery
Business units
Local opportunities
Regeneration programmes
Community-owned assets – the community centre
Recycling
Voluntary sector
Sustainability issues

Setting up a social enterprise – the issues
Defining your mission and attracting others
Agreeing business and social purpose
Planning business viability
How to handle profits and assets
Democracy and accountability

Voluntary organisation to social enterprise
The big issues include:
Culture change
Business structures
Business planning
Accountability (funding bodies - stakeholders)
The workforce can be a mix of staff and volunteers

Incorporation
A social enterprise is usually an incorporated body (a company)
Protects individuals from personal liability
Winding up – debt
Something going wrong
Needs to be seen to be accountable and open
Difficulties of engaging people if no safeguards
Own legal identity
Limits of protection

Forms of Incorporation
Private sector company options
Company limited by guarantee
Company limited by shares (private or public)
Social enterprise sector company options
Company limited by guarantee
Community Interest Company
Industrial and Provident Society (IPS)
Charitable or not charitable?

Forms of Incorporation
Social enterprise constitutions enable
One member one vote
Clear membership terms supporting the objects of the society
Surplus distribution for social purpose
Community assets to be safeguarded
Distribution of assets or bonuses evenly among the members of a co-operative

Models of social enterprise
Co-operatives – IPS
Workers own the business – worker co-operatives
Co-operative Consortium – self-employed people or other businesses come together to form a consortium or marketing co-operative
Community Business – CIC, Company Ltd by Guarantee
Owned and run by a community
Representation from the workforce, the locality, other organisations
Development Trusts
Asset-based development with community ownership
Often a range of projects under one umbrella organisation

Sources of start-up capital
Membership subscriptions or share capital
Start-up grants and loans
Borrowing from financial institutions
Community Development Finance
Leasing and hire purchase
Personal funds
Fundraising
Volunteer labour
Asset transfer

Sources of start-up capital
Commercial Loan
Community Development Finance Institutions:
www.cdfa.org.uk
Bridges Community Ventures Ltd
Charity Bank
Cooperative and Community Finance
South West Investment Group
Triodos Bank
Wessex Reinvestment Trust Group

Trading Income
Consider:
Reinvestment in the social enterprise
Keeping adequate reserves
Looking beyond grants
Making use of tax incentives

Trading income
Robust financial management is needed
Why?
Accountability
Communication between board and operational management
Trading income, managing cash flows, reporting on grant targets
A mix of trading income and other income
Impacts on profit/loss, health of the business

Support systems
National
Co-operatives UK www.cooperatives-uk.coop
Social Firms UK www.socialfirms.co.uk
Social Enterprise Coalition www.socialenterprise.org.uk
Development Trust Association www.dta.org.uk

Support systems
Regional
Regional Infrastructure for Social Enterprise (RISE) – or often equivalent in other regions
Networks for advisors (in the South West RISE runs the Business Advisors Network)
Business Links
Regional Development Agency
Local
Look up your local support organisations. The RISE website gives a list of these in the South West. www.rise-sw.co.uk There is also a list on the Social Enterprise Coalition website www.socialenterprise.org.uk

Questions and Discussions
Contact details –
Julie Harris
01392 435775
[email_address]

GOSW Social Enterprise Workshop Oct 2010

by Julie Harris

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