At a time when common solidarity might seem a bit questionable, it fills us all with a little comfort to know that genuine do-gooders still exist out there – somewhere – even in the cut-throat world of business. In contrast to profit-mill business models, these companies strive to turn their profits into tangible benefits for their communities and society at large.
These are social enterprises and there’s a desire to see more of their good work replicated, as we move into a perhaps shakier future.
What exactly is a social enterprise though? And what separates this from, say, companies who try to operate sustainably and offer perks to their workforce? Well, The Big Issue, The Eden Project, Divine Chocolate and Cafédirect are all examples that you may well have heard of and, as explained by Socialenterprise.org.uk:
“[They] trade to tackle social problems, improve communities, people’s life chances, or the environment. They make their money from selling goods and services in the open market, but they reinvest their profits back into the business or the local community. And so when they profit, society profits”.
Whilst the premise of social enterprise might seem simple, and possibly increasingly fundamental, there are some key considerations to bear in mind if you’re thinking of embarking on your own enterprise;
- Having a clear social and/or environmental mission set out
- Being able to generate the majority of your income through trade
- Being prepared to reinvest the majority of all profits tendered
- Being independent of the state
- Being majority controlled in the interests of your social mission
- Having an obligation to be fully transparent and accountable
If this all still sounds good – and your intention is to set out and do good – firstly, well done! But secondly, it’s important to consider the legal structure of your business.
Putting in place a legal structure might be a requirement of certain stakeholders that you wish to seek support from. It may also be necessary depending on the types of activities you plan to engage in, as well as perhaps providing further credibility to your cause – in the eyes of your target consumer – and offering some protection in terms of personal liability. A company Limited by Guarantee is a good legal structure for social enterprises, since they don’t have to have a share capital but still benefit from limited liability.
When determining the most appropriate legal structure for your social enterprise, you’ll want to consider ownership of the business, how you might tackle initial and ongoing funding, as well as profit distribution and how you will undertake governance of the organisation and its operations.
If you haven’t quavered at the above, the startup arena has birthed some incredibly inspirational social enterprises in recent years – and these trailblazers are not just paving the way but actually changing a mindset that was, traditionally, quite stuck in its ways.
London-based Rubies in the Rubble began as a response to founder Jenny Dawson Costa’s disillusionment with the amount of waste she would see at her local market – most of which could still be put to good use. The brand developed a range of relishes from produce which would have otherwise been thrown away, and now their goods are stocked in delis and supermarkets across the country. The brand also shares delicious pearls of wisdom with its online community – suggesting how to put food to good use before binning it – and they employ people who have struggled to get back onto the employment ladder.
The Real Junk Food Project is a social enterprise which started as a community “Pay as you Feel” café, intercepting local waste produce and serving healthy meals to its local community on a pay what you can afford basis. Within its first year in operation, the project had prevented over five tonnes of food waste – food which went on to feed more than 4000 people. Last year its crest got that little bit bigger, with the introduction of the UK’s first “avoidable food waste” supermarket. Again, the social benefit is twofold in that waste is being prevented and those who are struggling to feed themselves and their families can either pay whatever they are able to or choose to volunteer their services in exchange for food. Gives you a warm fuzzy feeling, doesn’t it?
“All eight directors currently work 10-12 hour day shifts on a voluntary basis and take no money from the company”.
Big businesses are beginning to sit up and take notice, and this is encouraging because it’s exactly this kind of support that social enterprises desperately need if they are to size up and work on a national, and even global, scale. Ultimately, we’d all like to see a bit more “help thy neighbour”, but the problem with social enterprise is that there can be something of a glass ceiling once they’ve reached a certain size. With all the passion and morality in the world, investment, expansion and sustainability can become a runaway train if the Social Enterprise doesn’t have adequate support, and this is where corporations can step in.
Larger businesses have a wealth of experience in creating structure. They are well versed in how to scale up and remain cost efficient – as well as providing commercial and marketing expertise and strategising for the future.
The Buy Social Challenge – launched in April 2016 – has seen a host of large corporations pledge to align their supply chain with social enterprises, meaning that the money that they would have spent elsewhere can be ploughed back into the community cause. And socialenterprise.org.uk references an expansive list of corporate partners – each playing their own role in supporting social enterprise within the UK.
Kevin Ellis, Chairman and Senior Partner at PwC, notes that it’s more important than ever to support social enterprises and, ultimately, those who benefit from their cause;
“PwC spends over £600m on procurement each year – so we decided to direct an increasing amount to “buy social”. What does that mean? If we buy products and services from social enterprises, we can create employment for those who find it hardest to access the jobs market – such as the homeless, ex-offenders, care leavers, the long-term unemployed or those with disabilities. All have talent to offer and are willing to work hard, if given the opportunity and the right sort of support”.
One thing’s for certain, the world could always use a few more good Samaritans.