An Introduction to Social Enterprise David Kelly Director of Policy and Strategy Jules Sebelin Business Support Co-ordinator

Outcomes Understand what a social enterprise is Understand the forms that a social enterprise can take Understand the forms of finance available to social enterprise Recognise a social enterprise in practice Understand the values of social enterprises

Social Enterprise East Midlands Established in 2002, SEEM is the East Midlands support and development body for social enterprise. As a community of social enterprises, social innovators, business support professionals and individuals, SEEM works to inspire, connect and support businesses trading to achieve social and environmental change.

Social Enterprise East Midlands Our main functions are: Raising awareness of the social enterprise business model Promoting investment and financial products Providing business support and access to tools Developing markets

What is social enterprise? A social enterprise is a business with primarily 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.

Blended values

SOPE Test Social aims Ownership Profit Enterprise

Social aims Explicit social aims such as job creation, education and training, the provision of local services, health and social care, environmental improvement, equality and diversity, overcoming disadvantage

Ownership Social enterprises may be owned by their users, customers, employees, the wider community, trustees, public bodies or a combination of different stakeholder groups.

Profit Profits are not distributed privately. They are reinvested back into the business or distributed within the community to sustain and further their mission to create positive change

Enterprise Social enterprises are directly involved in the production of goods or the provision of services which are traded in the market

SOPE Social aims - social benefits are a primary objective Ownership – democratic or participative ownership/governance ensures social purpose as primary driver Profit - reinvested to achieve social purpose Enterprise - income derived from trading

A variety of structures Community Businesses Social Firms Co-operatives Credit Unions Trading arms of voluntary organisations/charities Development Trusts

A variety of forms Company limited by guarantee (60%) Company limited by share Industrial and Provident society (co-operative society and community benefit society) Limited Liability Partnership Community Interest Company (CIC) Group structures and charitable status

A resilient business model State of Social Enterprise Survey 2009: “Social enterprises are recession-busters” Twice as confident of growth as SME’s 56% have grown in last year compared to 28% of SMEs Less than 20% have seen turnover drop compared to 43% of SMEs

So isn’t it just an ethical business? No. The two are distinct business models. A social enterprise's main purpose is to fulfil its social and/or environmental goals. This is achieved by reinvesting the majority of the profits back into the business. An ethical business tries to achieve its financial goals while minimising any negative impact on society or the environment.

Exercise 1 Do you know any social enterprises?

Large ones Small ones Local ones National ones International ones

Some well known social enterprises Fifteen The Big Issue Divine Chocolate Café Direct Welsh Water (Glas Cymru) Greenwich Leisure Eden Project John Lewis Partnership Co-operative Bank Grameen Mondragon Corporation FC Barcelona / Real Madrid

Exercise 2 Why is there an increasing interest in social enterprise?

Policy drivers Public sector budget pressures; Shift from grants to contracts, and budget pressures in the community and voluntary sectors; Government social enterprise strategy; Office for Civil Society; National Procurement Strategy for Local Government: The drive to localism; Big Society The personalisation agenda in health and social care; Commitment to user and community led services.

Is it a social enterprise Is it independent? Does it trade? Does it have social objectives? Is it in social ownership? What happens to the profits?

Exercise 3 Are these social enterprises?

Some more examples

Provides telephone, broadband and internet services The fastest growing consumer co-operative in the UK Owned by its customers and run solely for their benefit An ethical approach to all business, dealing in a fair and just way, promoting people’s well being and minimising environmental impact Over 6,700 members Incorporated in England and Wales under the Industrial and Provident Societies Acts

Hill Holt includes a wide diversity of products: ecological management, furniture manufacture, low carbon construction, renewable energy, charcoal manufacture. “The idea is to mix activities that can create profit, provide a community resource, and help young people and those on government work schemes, who contribute to the labour and gain in return from training and a sense of achievement.“ A community controlled; not for private profit; membership organisation

A Northamptonshire-based social enterprise which designs and sells a unique range of fluorescent, reflective products to encourage more children to walk to school and be safe and seen near traffic. They also supply environmentally-friendly promotional products for campaigns and events. Began life as a walking bus project A worker co-operative, £250,000+ turnover, 100% traded income

Markets Healthcare - East Midlands Community Dental Association Social Care - Shepshed Carers Education - Unique Social Enterprise Environmental services - Hill Holt Wood Construction and maintenance - Newlife Construction Arts & creative industries - Soft Touch Sports & leisure - Adrenalin Alley Financial services - Nottingham Credit Union Food and drink - The Healthy Hub Retail – STRIDE Manufacturing - Brightkidz

What’s driving social enterprise growth? Big Society A different way to do business Ethical consumerism Corporate sector Public service reform Public sector spinouts

The national picture 62,000 businesses 5% of all businesses with employees 800,000+ employees £27bn pa turnover £8.4bn pa contribution to GDP Trading in most sectors

In the East Midlands social enterprises Higher than average awareness of social enterprise Lower than average numbers of social enterprises Growing number of high profile, higher turnover social enterprises

Myths Social enterprises don’t make profits Social enterprises only provide “social services” Social enterprises rely on grants Social enterprise is a young and immature sector The social enterprise sector represents only a tiny part of the overall economy Social enterprise are expensive to support.

Challenges The right support Finance Access to markets Skills Consumer and commissioner understanding and recognition

Business planning for social enterprise motivation preparation assessment test your idea exploration business planning start up

Finance for social enterprise grants loans equity community share issue bond issue programme related investment patient capital

Key finance issues operational cash flow capitalisation revenue sources security trend analysis

Sources of finance High street bank Social Investment Business (Social Enterprise Investment Fund, Futurebuilders) Social Enterprise Loan Fund UnLtd Venturesome Co-operative and community finance Community Development Finance Initiatives Big Invest UK Social Investment Forum Bridges Venture

Social enterprise values Social aims are essential to the character and operation of social enterprises. Social enterprises continuously balance their financial and social goals. They may distribute surplus to meet their social goals, or accept higher costs, forgo income, or forgo part of their trading surplus.

Social enterprise values The values base of a social enterprise consists of 2 main elements its social mission (or social aims) other core values In successful social enterprises the activities or cost centres that contribute most to fulfilling the values also contribute most to income – there is no conflict between values and commercial success – instead the values are themselves an integral part of the commercial business proposition

Social enterprise values increasing social capital reinvestment in the local economy building integrity and honesty into everything we say and do fighting for social inclusion and against social exclusion providing meaningful training and work experiences treating everyone – members, employees, customers, suppliers – with fairness and respect caring for members, employees and customers

Social enterprise values minimising environmental impact helping the community producing quality goods and services fostering a supportive and safe environment for employees and members “love, respect, courage, creativity and impact” The Big Issue “passion, professionalism, creativity and bravery” The Furniture Resource Group

Social Enterprise Mark The Social Enterprise Mark is a label which tells customers that a product or service comes from a social enterprise and is creating a social or environmental benefit. Developed by RISE and the Social Enterprise Coalition The Mark is awarded to businesses who meet specific criteria that demonstrate they are working primarily for social and/or environmental goals, and that at least 50% of their profits are reinvested towards those goals 16 Mark holders in the East Midlands

Why social enterprise? Changing the world Rebalancing the economy Not in it ‘just’ for the money No more ‘business as usual’ Inspire and innovate

Tips start small - gain experience and build a track record. research your market remember the dual challenge of meeting social aims AND developing a successful business aim to be independent - grants and public funding may be available to help get you started but become independent from these sources as the business develops work out what help you need and where you can get it. you will need lots of different skills and energy to succeed. build a network of business specialists and people who understand your objectives

Never doubt that a small group of committed people can change the world: indeed, it’s the only thing that ever has. Margaret Mead

Why do it? What do you think makes people set up a social enterprise? How do they balance social and business outcomes?

Outcomes Understand what a social enterprise is Understand the forms that a social enterprise can take Understand the forms of finance available to social enterprise Recognise a social enterprise in practice Understand the values of social enterprises