A social enterprise is a business that trades in order to create a social impact. It makes money in the same way a business does – by selling goods and services. Revenues are then used to cover costs, pay salaries, to develop the business and to invest into making a difference for the common good.
While social enterprises can make a profit, the core goal is not simply to create wealth. A social enterprise aims to be self-sustaining by trading on a cost-recovery basis, and breaking even may be regarded as a successful outcome.
Paul Harrod, Chief Executive Officer, Evidence to Impact, says:
“Social enterprises have a number of advantages – they seek impact ahead of profit. They need to be sustainable, but break-even can be a great success, which it would not be for a private business.
“With research that is publicly funded, targets the NHS, or schools, or the public sector as the end customer, it is arguably only right that any intervention is delivered on a cost recovery basis.”
Social enterprise offers an excellent model to support the achievement of research impact. It is a pathway that some universities have already recognised as being important for commercialisation of social science.
Social Enterprise Explained defines a social enterprise as having a clear sense of its social mission. This means it will know what difference it is trying to make, who it aims to help, and how it’s going to go about it.
Access to funding
A social enterprise can access social investment and charitable funding sources that would not be available to a for-profit business.
Compared with for-profit businesses, social enterprises are unlikely to attract traditional venture capital. This can make it difficult to scale up a social enterprise and there is often competition between social enterprises for the funding that is available. This means many social enterprises operate at a relatively small scale, perhaps with only one member of staff.
Like businesses, there are many different structures that a social enterprise could take, including cooperatives, charitable incorporated organisations, and community interest companies that are limited by shares or by guarantee.
Get help in setting up a social enterprise
There are resources and tools online, including:
- Social Enterprise UK, which is the UK’s largest network of social enterprises, and a leading global authority on the social enterprise model
- School for Social Entrepreneurs, which provides training and resources for aspiring social entrepreneurs
- The Young Foundation, which provides resources and support (including investment loans) to social enterprises to tackle education inequality
- The National Council for Voluntary Organisations, an extensive searchable knowledge base which has how-to guides on setting up and running a charity or social enterprise, including building a team and raising funding.
Some universities have also set up dedicated resources and support for social enterprise in their institutions, including:
- Coventry University Social Enterprise, which provides support and mentoring, and gives businesses with economic and social benefits the opportunity to work with the university
- Oxford University Innovation’s Social Ventures, which provides bespoke support for social enterprise as a route for research impact at the university.