Charities are different from Social Enterprise Organizations because Social Enterprise Organizations aim to be self-sustaining or become profit making organizations. Social Enterprise Organizations are businesses that are driven by profits and are also driven by social aspects too. Charities rely on donations from outside sources and volunteers while a Social Enterprise pays their staff a realistic wage.
A Social Enterprise, other than having paid employees, faces challenges of having a double line of profit and a social conscience. There are business leaders who have found that with the challenges of a Social Enterprise Organization that the challenges are rewarding.
When an organization, such as a Social Enterprise, has a double bottom line, the complexities increase for making the organization even more profitable. The philanthropic aims of a Social Enterprise Organization open several options for other sources of income. These other options of income become more valuable in the start-up phase of a Social Enterprise Organization. For companies that have a social mission, there are many private sector groups and government groups that have grants and loans for these types of businesses.
When it comes to a Social Enterprise Organization there area many forms of social missions that this type of organization can have. For instance, the organization’s profits can be used to support a charity or other nonprofit organizations, for instance they can help support the Women’s Junior Leagues that help provide or Rainbows United who help provide people with a better standard of living due to reasons beyond their control, those who are disabled or various other reasons. These types of community facilities offer housing in trade for work in their shops.
Social Enterprises are interpreted different around the world because of the unlimited number of social missions that can be undertaken in any country. For example, the United Kingdom focuses on using any surplus to help benefit their citizens, mainland European countries focus on social ownership rather than individual ownership, and North Americans focus on social improvement skills that are direct results from the work of the organizations.
Three Social Enterprise Organization Characteristics
Social Enterprises are owned and managed by stockholder groups such as users or clients of the organization, staff members, and local community groups.
A Social Enterprise Organization has certain stated and binding ethical values that they must follow. These values are not limited to and can include: environmental improvement and preservation, training and providing local services, creating jobs, and committing to local capacity building.
The Social Enterprise Organizations thrive on being profitable trading organizations that are involved with the production of goods or services to market to others in their areas directly.
Selecting a Social Enterprise Structure
There are certain legalities that Social Enterprise Organizations must follow so that the owners of these types of organizations can benefit from the business aspect while other legalities will not allow the owners to benefit.
United Kingdom Social Enterprise Structures
CIO (Charitable Incorporate Organization)
The CIO is a new legal structure that has started in 2006. The governance and management are similar to those of a limited company. There are different terminologies that are used to stating who is in charge of a CIO. For example, a charity trustee is the director. The members and trustees cannot benefit from the enterprise under normal circumstances.
Community Benefit Society (Industrial and Provident Society)
A Community Benefit Society is similar to a co-operative. This type of organization benefits the community rather than the members of the organization. The nonmembers are the main beneficiaries if the enterprise and the members cannot benefit from the organization because of this.
Co-operative (Industrial and Provident Society)
Co-operative members can only benefit through the trade with other members rather than the shareholders. The Co-operative is managed by an elected committee who is voted in by the members who are allowed one vote.
CIC (Community Interest Company)
There are similarities between a CIC and a limited company. A CIC has additional restrictions that ensure the community will benefit from the organization. Dividends cannot be paid to the members of a CIC.
There are directors that manage the company on behalf of the members and the directors or members can benefit from a limited company. In some cases where the company is limited by a guarantee, members cannot be paid dividends.
An unincorporated association is an informal organization and it is not formally owned by any one person or group. An unincorporated association has the maximum flexibility of what can and cannot be done in this type of social enterprise. This type of organization has the minimal amount of legal protection for the officers of the organization.
With a trust social organization, they use a trust as the legal concept and the assets are held in a trust account which is managed by a board of trustees that are legally responsible for the assets of the organization. The trustees may not benefit from the organization under normal circumstances.
The same kind of structuring that the United Kingdom uses in their Social Enterprise Organizations can be used and are found in other countries throughout the world.