Yesterday I posted a thread in 101 regarding the feasibility of an internet based social enterprise. I also offered to write a thread on this business concept for those unfamiliar this this type business model or for those who just wanted to know more. Bear in mind that although social enterprise is a global concept, my expertise is pretty much UK/EU based. However if anybody can add a more international scope to the thread I would love to hear it.
I have spent a reasonable amount of my professional career as a project manager or consultant working on delivering government services more efficiently, and this is where I caught the social enterprise bug. I was particularly influenced by a man I worked with called Charles Bicker (google Charles Bicker social enterprise uk).
So what is a social enterprise? Well in short it is a business (of pretty much any kind) and not a charity(although can have charitable status). The business model, like most other businesses is to make money, however the business has a social purpose and although it can provide salaries it can not in essence make a profit. All surplus revenues have to be invested back into the organisation (in order to grow become more efficient etc.) or to be invested back into society.
A social enterprise will tend to generate revenue in two ways:-
1) Direct revenue form the business, i.e. say if the social enterprise was a restaurant, it would (if successful) make money from the margins of selling food and drink (obviously after all other expenses were deducted.)
2) By generating a Social Return on Investment (SROI), i.e. if the social enterprise had an emphasis on getting young offenders trained and into direct employment (by direct meaning - employed within the social enterprise itself.) Overwhelming evidence shows that offenders who manage to get training and gainful employment are much less likely to re-offend. Dealing with offenders etc. costs society vast sums of money i.e. the cost directly related to their crimes, the cost of prison and supervision orders, the higher cost of health care related to this social group, savings to state benefits etc.. In addition there is a return that is harder to measure in monetary value i.e. the distress caused to victims of crime, safer communities etc..
In many cases an efficient social enterprise can generate a tidy sum through business activity however the savings made through its SROI will vastly exceed these sums. Even a small to medium social enterprise can generate millions in SROI.
Why social enterprise? Well from my perspective it came from delivering government services in a more efficient manner. Governments are notoriously inefficient, largely due to their huge size and their model of operation (too large a subject to go into here). A fact that is little known by the public, that in the UK (and I assume many other places in the world), the whole social care/welfare system would collapse if it were not for the "third sector" (charities volunteer groups etc..) and most of the work carried out by the "third" sector is provided by the government anyway, in the form of grants and commissioned services. For very different reasons (again too much to go into here) voluntary and charity groups are also generally far less efficient than private sector businesses.
In short social enterprise gives an alternative to privatisation. They tend to be run by businessmen in lean and efficient business structures but unlike most businesses their objective is not just to make money for themselves or their shareholders but to deliver positive social action.
There are a number of legal company structures that make up social enterprises, but in the UK they are usually formed as a Community Interest Company (CIC), an Industrial and Provident Society or a Company Limited by Guarantee (Limited Companies have to have their social mission clearly written into their Memorandum of Association and the mission needs to clear about reinvestment of profits.).
What types of businesses can be social enterprises?
Pretty much any.
Why am I writing about social enterprise?
I am a director of a social consultancy and trying to get the company really up and running with a number of projects. I'm writing on here to explore if online business will fit this model.
What exactly am I involved in?
Feel free to PM me. The same if you want to know more. I am also happy to share some of our projects or details of our work to those who are interested.