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What is a Social Enterprise?

Ever wondered? We explore common questions and the differences between charities and social enterprises.

Written by High Life North
Published 26.06.2020

By Nicki Cawood

Most people are aware of what a business is and how one works. What about social enterprise businesses, though?

You may have heard of this type of business but not know quite how they work. This article will change that and explore the ins and outs of social enterprises.

A social enterprise, or community interest company (a type of company officially introduced by the Government in 2005) is a type of business that aims to change the world for the better. They aim to make a profit the same way any business does, however, a social enterprise reinvests or donates their profits to the community, to those in need or towards creating social change in a positive way.

What’s the difference between a charity and a social enterprise?

At first glance charities and social enterprise look alike. Both types of business aim to achieve some form of social mission. They both need to be sustainable businesses so that they may continue to achieve their goals.

They are funded differently, with charities often relying upon donations and year-long fundraising efforts. Social enterprises often sell goods or services, ploughing their earnings back into the business and their chosen beneficiaries.

How Can You Make Money When Running a Social Enterprise Business?

If you have the passion to create a social enterprise business and the motivation to actively work towards helping others or the environment, that is wonderful. Even the most open-hearted individuals need to pay their bills and put food on their table, though. How does this work with a type of business whose profits go back into the business to ensure growth and to fund various projects? 

While the profits earned do need to sustain the business, you may pay yourself and other staff a salary. Dependent on how the social enterprise is set up and run, some might choose to receive dividends or a mixture of salary and dividends. All CIC businesses are monitored by a board of trustees who ensure that profits are allocated efficiently to sustain the business, pay staff and feed into the social missions that the business represents.

Examples of Social Enterprises

Here in the North of England, there are numerous social enterprise businesses, many of which might be on your doorstep. A quick internet search will highlight many of these brilliant businesses and the great work they do for countless causes.

If you are looking for examples of social enterprises, you may have heard of The Big Issue which is a recognisable one. Have a look and find what other social enterprise businesses are out there. You might be surprised.

There are many benefits to setting up a social enterprise business, not least being able to affect change in a meaningful and practical way. These types of enterprises may also apply for numerous grants and government funds, although this isn’t the easiest of processes. If you are thinking about setting up a social enterprise, ensure that you get proper advice in advance.

If your interest is purely curiosity-based, do some further research into national and local social enterprises and support them where you can. Increasingly popular as a business model, it is clear to see why this way of working is attractive to many.

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