About social enterprise

What is a social enterprise?

Social enterprises are businesses that trade for a social and/or environmental purpose. Like any other business, social enterprises need to make a profit but it is how they work and what they do with these surpluses that make them different. Rather than maximising profits for shareholders and owners, any profits or surpluses they make are reinvested into the social or environmental purposes they were set up to tackle.  

Social enterprises come in all shapes and sizes, from large national companies to small community-based enterprises.  The Big Issue, the Eden Project and Jamie Oliver's restaurant chain Fifteen are examples of social enterprises.

They operate across Wales and in every sector of the economy. Welsh examples include Glas Cymru - the company that owns Welsh Water, Galeri in Caernarfon, FRAME a community re-use organisation in Pembrokeshire and Ten Green Bottles.

What types of social enterprise exist?

Social enterprises can take a number of legal forms. This includes:

Co-operatives and mutuals: Co-operatives and mutuals are democratically-owned businesses which give employees, customers or members a stake in the business.

Credit Unions: Credit Unions are a distinct type of co-operative which provide financial services to members, often in areas of social and financial exclusion.

Housing Associations: Housing Associations are voluntarily-managed companies providing affordable housing for rent and for sale. They give priority to those in greatest need and reinvest any surplus income in maintaining or adding to their housing stock.

Social Firms: Social firms are commercial businesses that provide integrated employment for people with disabilities or other disadvantages in the work place.

Development Trusts: Development Trusts are community run organisations that are concerned with the economic, social, environmental and cultural needs of their community. They are owned and managed by the local community and aim to generate income through trading activity that enables them to move away from dependency on grant support.

Community Interest Companies: CICs are limited companies created for the use of people who want to conduct a business or other activity for community benefit, and not for purely private advantage.

What is the history of social enterprise in Wales?

Social enterprise has a long tradition in Wales. The father of the co-operative movement, Robert Owen, was born in Newtown, Montgomeryshire and ever since Wales has been at the forefront of social enterprise innovation in the UK. Indeed, Wales is well known for its strong record of community-led grassroots development.

According to Welsh Government data (2009 mapping exercise) today there are an estimated 3,000 organisations carrying out social enterprise activity with a combined turnover of some £2.2 billion. They account for around 50,000 jobs and over 105,000 volunteering opportunities across Wales.

What is the difference between a social enterprise and a socially responsible/ethical business?

A social enterprise's primary purpose is its social and/or environmental mission and they use business techniques to directly address this mission. Any profits they make are used to further their social and/or environmental mission, be that in maintaining or expanding its services, creating new projects, employing new staff, investing in new facilities, anything really that improves tor enhances the good work they carry out. It is said that social enterprises often have a double or triple bottom line - that is, they focus not only on making profits to keep the business going, but also focus on people and planet.

An ethicalor socially responsible business is a business that thinks about its social and/or environmental impact and attempts to minimise it. We think its great that more and more businesses are beginning to think about more than just making profits but these companies are not social enterprises because, whilst they may make a conscious effort to be more socially and/or environmentally responsible, they focus on the traditional business bottom line - that it, to make profits for shareholders or owners. 

Where can I get advice on starting up a social enterprise?

As with any other business, starting up a social enterprise will often require substantial advice and support. Much of the support available to mainstream business may be relevant to starting up a social enterprise, so as a first point of call, it might be useful to visit the Welsh Government's Business Start Up page and Start Up Britain.

The Welsh Government have also got some helpful tips on setting up a social enterprise and our partners, Social Enterprise UK, have developed a range of publications which provide information on legal structures, finance streams and other support general support on starting a social enterprise. Visit Social Enterprise UK's resource library here.

And if you're looking for star-up capital, have a look at Finance Options for Welsh Social Enterprises.

And finally, you can of course contact the Welsh Social Enterprise Coalition on 02920 486379 and we'll be happy to help in any way we can.