Make a difference and some money

They don't rely on volunteers and don't make profits for shareholders. So what are social enterprises?

Many final year undergraduates are now facing tough decisions on their future. There are a bewildering number of options. Consultancy still holds great appeal to students keen to flex their problem-solving abilities. Marketing and PR continues to fascinate the creative minds in the industry. With certain investment banks making large profits again, the financial sector has regained some of its old allure. And yet you hear surprisingly little about the non-profit sector. The desire to begin paying off student loans as soon as possible is unmistakable, particularly in this economic climate, but should we neglect the third sector entirely? What if you had the opportunity to earn decent money and make a significant difference to people's lives?

The major social changes and challenges of our time - AIDS, the environment, an ageing population, urban decay, drugs and crime, new information technologies and globalisation have all given rise to new forms of social action. Social enterprises are organisations which aim to serve the greater good. In addition, they have a role to play in the economic recovery of the UK, creating jobs and delivering growth. The last survey (2005) found that there are 55,000 social enterprises in the UK with a combined turnover of £27 billion, contributing £8.4 billion per year to the UK economy.

Despite this, there is still much confusion as to what a social enterprise actually is. In the UK any organisation can apply for charitable status, provided its purposes or aims are for the public benefit. However, there is no legal definition for a social enterprise, only a political one. The government's definition is "a business with primary social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners".

In other words, social enterprises are defined in part by what they are not. They are not (or at least not "primarily") concerned with enhancing the financial wealth of the organisations' owners, which distinguishes them from the private sector. In practice, social enterprises are non-profit organisations which operate in the social sector and tackle problems such as hunger, homelessness, environmental pollution, drug abuse and domestic violence. The Big Issue Company is perhaps the UK's best known example. Social enterprises often provide basic social needs, such as education and healthcare, that the marketplace by itself will not adequately supply.

In this day and age, many graduates may be prioritising what they wish to attain from their future job. Whereas in the past the perspective on success may have been typified by the adage "retire by 40", today's graduate might want to fulfil other needs which go beyond the desire for wealth, such as helping those less fortunate. In addition, social enterprises can provide graduates with employment opportunities in many different areas, including "hot" sectors such as the new media and green technology, all of which have the potential for further growth.

Social enterprises tend to be "people-centred" (rather than "profit-centred") and, through their economic activities, seek to deliver employment opportunities and other social, environmental and community benefits: things which could be more difficult to accomplish in other organisations. This isn't to say social enterprises are businesses which don't make a profit. They acquire their resources and distribute their goods and services much like the rest of the private sector. This reduces their reliance on philanthropy. Few social enterprises can or should be purely philanthropic or purely commercial. By definition, they should combine commercial and philanthropic elements in a productive balance. The challenge is to find a financial structure that reinforces the organisation's mission. For example, a museum might have both a profitable catalogue business and a highly subsidised research and acquisition operation which provides the productive balance.

Social enterprises aren't like other organisations in the third sector. They are run by entrepreneurs who assume economic risks in order to offer customers a more ethical way to consume, without any concession to quality. They act as innovators at the vanguard of new social movements; society's rapid response force to new issues. Angela Smith, the UK minister for the office of the third sector, says she "looks forward to seeing the development of more and more social enterprises across the country, providing viable solutions to social problems in their communities." As graduates you'd have the opportunity to give something back to those less fortunate, and you might even receive a little something in return.

3 UK social enterprises

The Big Issue

Established in 1991 and perhaps the UK's best-known social enterprise, The Big Issue provides help to the homeless population. Vendors buy the magazine from The Big Issue Company for 75p and sell it on for £1.50, keeping the difference for themselves. The Big Issue Company aims to make a profit both from the sale of the magazine and from advertising. This money is then reinvested into The Big Issue Foundation, a charity which tackles social issues in order to prevent homelessness further down the line.

The Fifteen Foundation

Founded by Jamie Oliver following a 2002 channel four documentary, the Fifteen Foundation aims to inspire disadvantaged young people (who often have a history of addiction, unemployment or homelessness) by training them to become chefs. Four Fifteen Foundation restaurants are now open worldwide (in London, Cornwall, Amsterdam and Melbourne) and the programme is continuing to grow, with fifteen new chefs having graduated in September 2009.

Bikeworks

A not-for-profit community enterprise based in East London and founded in 2007, Bikeworks use bicycles to tackle environmental, social and economic challenges in London. Donated bikes are repaired and resold, whilst bike mechanic training courses also bring in extra revenue. This money is then reinvested in local youngsters by teaching schoolchildren how to use bicycles safely.

Comments