Social enterprise
Social enterprise either refers to the activity of trading, selling goods and services, for a social purpose or an organisation that undertakes this activity.
The sector has seen a recent growth in income generating organisations and activities and general charities now earn 50% of their total income. The income generated by social enterprises in the wider civil society is estimated to be £77 billion. This is almost ¾ of the total income for civil society. [1] There is a growing expectation from both within the VCS and funders that organisations will engage in some form of income generation in order to become self-sustainable. There is a growing interest from all three main political parties in this activity, and Capacitybuilders have recently invested £6 million in support for social enterprise over the next 3 years.
What are the implications?
- Some form of income generation expected in every bid
- A blurring of boundaries between the VCS, public sector and the market leading to the mainstreaming of the VCS
- An increase and diversification of levels and sources of VCS income
- Further polarisation of the sector
- An increase in the number of general charities as the definition of social enterprise incorporates a wider range of charities and activities
- Increased political interest in this aspect of the sector with both a Brown government and Cameron emphasising the importance of income generation for VCOs
- More sustainable organisations that are less reliant on short-term grants and contracts and are able to plan more effectively for the future.
Moving forward
Income generation may vary from selling products or publications, providing training, renting office space to running a transport or membership scheme.
- As some form of income generation becomes expected in more funding bids, what form of income generation would be most suitable for your organisation?
Developing some form of income generation will require some investment for staff training, new equipment and capital to finance the set up period. This can involve a significant amount of time and investment for your organisation depending on the type of activity.
- Are there any training programmes that might be able to help your staff develop new skills required to run a social enterprise? It is important to plan, pilot and evaluate before launching on a big scale.
Organisations typically finance the start of trading through one off grants, loans or organisational reserves.
- How can your organisation identify particular funders or funding streams that are interested in promoting sustainable funding?
Income generation can present a culture change for some organisations as it often challenges accepted ways of working.
- How can you make sure any income generation schemes you set up have the involvement and buy-in of everyone in the organisation? Getting staff involved as soon as possible is often an important step in doing this.
Want to know more?
There’s more to business than you think - A guide to social enterprise
Published by: Social Enterprise Coalition – an infrastructure body for social enterprise
Date: 2003
Format: PDF
What is it? A guide to social enterprises using a series of case studies from around the UK.
How useful is this? This guide aims to provide information and inspiration on social enterprises. It includes basic definitions and background information to social enterprise as well as some more detailed information explaining the legal and financial aspects. The case studies explore what social enterprises are doing, why they have chosen the social enterprise route, and how they are negotiating a range of challenges to successfully deliver their goals.
Other comments:
Social Enterprise Action Plan: Scaling new heights
Published by: Cabinet Office – a Government department
Date: 2006
Format: Outline on web with link to full PDF document
What is it? This report outlines the Government’s plans for assisting with the expansion of social enterprises and includes 31 short case studies.
How useful is it? The executive summary provides an overview of plans for enabling social enterprises to develop. The action plan seeks to drive change particularly around: fostering a culture of social enterprise; improving business advice, information and support available to social enterprises; tackling the barriers to access to finance that restrict the growth of social enterprises; and enabling social enterprises to work effectively with government to develop policy in the areas of expertise.
Other comments:
Social enterprise think pieces 2007
Published by: The Cabinet Office – a Government department
Date: 2007
Format: PDF
What is it? A set of ‘think pieces’ by five leading thinkers on the future of social enterprise.
How useful is this? These think pieces were commissioned following the launch of the social enterprise action plan in November 2006 and aim to inform both policy-making and the wider debate about social enterprise. They cover the following topics: future scenarios for social enterprise; the future of social enterprise within ethical markets; how measuring and communicating social value can make social inclusion competitive; how innovation in social enterprise can be encouraged and spread; and the role of social enterprise in creating and maintaining employment for disadvantaged groups.
Other comments: The final papers will be published in Autumn 2007, outline proposals are currently available.
Social enterprise - In whose interest?
Published by: New Statesman
Date: 2004
Format: Web
What is it? An article looking at the proposal of Community Interest Companies (CICs) in the Companies Bill.
How useful is this? Although a little dated this article provides some useful information, outlining the social enterprise movement and the options for setting up social enterprises. It goes on to look at some of the benefits Community Interest Companies (CICs) will have over social enterprises but also some of the drawbacks.
Other comments:
References
Recent discussion
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David
NCVO Research TeamThe UK Civil Society Almanac – which has recently been published – might add some insight to this driver.
We looked at social enterprise activity in Civil Society, by looking at trading activity conducted by a wide range of organisations.
As well as social enterprises such as co-operatives, community interest companies, etc, we also included social enterprise activity conducted by charities and universities (amongst others).
This produced a total for social enterprise activity of £77 billion, over two-thirds of the total income of Civil Society.
More information on the Almanac can be found at www.ncvo-vol.org.uk/almanac including a free guide to how we produced the social enterprise activity figures.