social enterprise

I am going to be writing regular blog entries on issues which I feel are important to the sector and use the SEYH blog as an opportunity for discussion in the sector.

The first entry is something we probably think is basic and take for granted, that is what is a social enterprise and where do the limits lie. Most of us accept the old DTI definition which is posted on the homepage of this website:

“A social enterprise is 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.”

This still leaves a huge amount of room for debate and it is a discussion that infrastructure organisations have all the time.

The 2 major issues are:

Where does the traditional voluntary and community (VCS) sector end and where does social enterprise start and on the other side what is the dividing line between social and private enterprise.

The traditional VCS are always accused of being too grant reliant and that they need to meet a minimum threshold of income generation before they can be recognised. Some people talk about 30% or 50% income generation as a threshold. There is a big push for conversion to social enterprise for VCS organisations with grant funding being squeezed.

I am personally fairly relaxed about traditional VCS organisations re-defining or co-defining themsleves as social enterprise as long as they have an element of income generation and the intention is to increase that element of their organisation.

The private sector has started to develop sister or subsidiary social enterprises through a CIC or social entrepeneurs are setting up traditional private limited companies alongside social enterprise structures. The dividing line is where is profit reinvested, if its dissapearing off to a parent or sister company or there are issues around governance which lack transparency maybe we should define those companies as private sector. Although who polices this is another interesting question. I am not sure that it is SEYH's role to be the social enterprise judiciary!

A number of other questions arise from this including - What are the routes into social enterprise? This will be the subject of my next blogpost so come back next week and check out the next post. We are working on a comments feature for logged in users.

Alex Sobel - General Manager SEYH