Social Enterprise

Social Enterprise is a way of doing business. Social enterprises are organisations that trade goods and services for social and environmental purposes and whose profits are primarily reinvested in those purposes rather than being distributed to individuals.

The 2005 Annual Survey of Small Businesses UK found that there are 55,000 social enterprises in the UK with a combined turnover of £27 billion. Social enterprises account for 5% of all businesses with employees, and contribute £8.4 billion per year to the UK economy.

There are well known social enterprises operating at national and international levels - well known examples of social enterprises include The Big Issue, Jamie Oliver's restaurant Fifteen, and the fair-trade chocolate company Divine Chocolate- but many are small local organisations, often working in the most disadvantaged areas. Many social enterprises have emerged from the voluntary sector and retain their structures and operating characteristics . As such, social enterprises often face unique issues in growing their businesses and accessing funding.

Social Enterprises are usually set-up as Companies Ltd by Guarantee or as Community Interest Companies(CICs). More information on the differences between these can be found in the Group Structure section of this Toolbox.

Support for Social Enterprise

The Scottish Government has pledged to support the development of social enterprise in Scotland and has introduced several funding streams to facilitate this (details below).

The Scottish Government has produced the Enterprising Third Sector Action Plan, 2008-11 which it believes will help to create the right conditions in which an enterprising Third Sector - including social enterprises - can thrive, enabling the third sector to play a full role in the development, design and delivery of policy and services in Scotland.

It recognises the importance of the third sector in helping the Scottish Government achieve its purpose of creating a more successful country with opportunities for all to flourish, through achieving sustainable economic growth.

The action plan will help to meet the Scottish Government national indicator to increase the social economy turnover in Scotland.

It contains a series of actions to be delivered over the period 2008-11 around seven objectives.

* Opening markets to an enterprising third sector
* Investing more intelligently
* Promoting social entrepreneurship
* Investing in skills, learning and leadership across the third sector
* Providing support for business growth
* Raising the profile of enterprise in the third sector
* Developing the evidence base

This action plan is funded through £8.75 million of the £93 million identified for the development and support of the third sector in the Scottish Government budget in November 2007. In addition to this, £30 million has been allocated to the Scottish Investment Fund and £12 million for direct investment in enterprising third sector organisations through the Third Sector Enterprise Fund.

The Scottish Government has also created an Enterprising Third Sector Zone on its website Enterprising Third Sector Organisations Zone which points social enterprises and all enterprising organisations in the third sector to support that is provided through the Scottish Government's Enterprising Third Sector Action Plan.

There are a number of other national networks or organisations which have been established to support social enterprises. These are listed below with links for you to follow.

Aspire to Enterprise - Scottish Government programme providing a range of Business Support Services to ambitious, developing social enterprises in Lowland Scotland. In the last 2 years the programme has supported 130 social enterprises from the Borders to Aberdeen.
The programme offers access to development support to organisations with the drive and potential to increase their trading and become more sustainable social enterprises.

Forth Sector - have some good publications which can be downloaded offering support to Third Sector Businesses eg A Business Planning Guide to Developing a Social Enterprise and Tendering for Public Sector Contracts.

Scottish Social Enterprise Coalition - the national collective lobbying and campaigns voice for social enterprise in Scotland. It is a membership-led organisation representing the needs and interests of social enterprise to politicians, policy makers and opinion formers.

Senscot builds and services a network to help social entrepreneurs become more effective.

Highlands and Islands Enterprise and Senscot have recently produced a guide for social enterprises called: Contracts, Service Level Agreements and Grants:Understanding the Differences. The guidance clarifies the defintions of these different financial arrangments and looks at the legal implications of each set-up.

DTA Scotland gives support to fledgling or established Development trusts - , organisations that are independent and under community control and draw together the energy, commitment and creativity of local people to tackle local issues. Through enterprise and the ownership of local assets, development trusts address the economic, social, cultural and environmental needs of their communities.

Business Know How North East is part of a wider national programme to forge productive third – private sector exchange

Networks 1st - a web portal reflects the collective identity of the Local Social Enterprise Networks (LSENs) across Scotland. It provides SENs with the opportunity to share information and resources online but it also takes the form of gatherings, both regional and national.

First Port - Free business support and awards to new-start social entrepreneurs throughout Scotland

Pilotlight Scotland - offer a free uniquely managed capacity-building process, exploring your vision and giving you the skills to develop a strategic Business Plan.

Plunkett Foundation - run the only UK widesite and network for community-owned rural shops where you can get information about setting up and running a community-owned shop. Explore the shop directory to learn more about the 230+ communities already running their own shop. Curently only a few examples from Scotland .

Community Retailing Network - has been set up to support and promote sustainable community-owned shops by helping new shops set up and existing ones to grow. The Network enables community retailers to share ideas and resources as well as offering practical support. Contact: info@communityretailing.co.uk or phone 0845 8978

Scotland UnLtd - supports inspirational social entrepreneurs – all of whom are committed to making a positive change in their communities. These individuals have developed innovative and sustainable business solutions to a wide range of social concerns. They operate a grant scheme - UnLtd Millennium Awards - but their site provides a wealth of information on social enterprise.

The Social Enterprise Academy - was set up in 2004 as a responsive social business with the capacity to tailor learning and development for people working in, or towards, a leadership role in the social economy.

Realising your Enterprise Potential - You can access free, confidential mentoring support from experienced mentors with expertise in the areas of greatest interest to you.
Whether it’s successfully bidding for tenders, managing cultural change or developing your organisation's sustainability, they can match you with the right mentor for your needs.

Acquiring Business 4 Good programme - has a series of events planned across Scotland to promote business acquisition in the Third Sector.Full details on their website of topics and locations.

Funding for Social Enterprise

Whilst many social enterprises can, and do, access traditional grant funding, reliance on these sources can lead to an organisation’s activities being constrained in order to meet funder’s criteria. Also, funding is becoming increasingly difficult to access and eligibility can be dependent on the
social enterprise’s legal structure. Similarly, mainstream loan finance may be difficult to obtain when an organisation is asset poor, income doesn’t
necessarily come from traditional sources, or when levels of finance sought are relatively low. There is also a reluctance within the sector to access this funding because the focus on social purpose within organisations leads them to concentrate on sustainability at the expense of growth, which might involve greater risk to their service.

The Scottish Social Enterprise Coalition has produced excellent publication useful to Social Enterprises. This is available to download by clicking here.

Some sources outlined in this Toolbox can be accessed by clicking on the links

Aberdeenshire Community Asset Fund

Big Issue Invest

Scottish Government Scottish Investment Fund

Scottish Government Third SectorEnterprise Fund

Social Entrepreneurs Fund

Third Sector Resilience Fund - open only until 4th Dec 2009.

Triodos Opportunties Fund

Unltd Advantage

Unltd 4iP Awards - for digital projects

Unltd Millennium Awards

Bridges Social Entrepreneurs Fund