1.2.3 - Types of For-Profit Social Enterprises

What is a social enterprise ?

It is a business or organisation that aims to generate revenue and achieve social, environmental or cultural objectives

What does a social enterprise do ?

It combines the principles and practices of traditional business with a focus on addressing social issues and creative positive social impact

What else does a social enterprise do ?

It reinvests a significant portion of their profits back into their mission rather than maximising profits for shareholders

What do social enterprises in the private sector do ?

They look to make a profit whilst improving one or more aspects of society such as environmental, education or health concerns

What do social enterprises in the private sector aim for ?

• Create jobs

• Improve social mobility

• Provide opportunities for marginalised groups

Advantages of social enterprises

• They often develop creative and innovative solutions to social challenges

• By generating revenue they can become financially self-sustaining
  This reduces their reliance on donations and grants, making them less vulnerable to political and economic change

• They create jobs which supports economic development particularly in developing communities

• They provide training and employment which can lead to increased social mobility and better quality of life

• They work with a wide range of stakeholders

Disadvantages of social enterprise

• Achieving financial stability can be difficult, especially during the initial stages

• Balancing a social mission with making money can be a delicate balancing act

• They have to navigate complex legal frameworks and tax structures

• It may be difficult to quantify and measure the success of social enterprise activities

• It may be difficult to grow

• Obtaining additional finance to expand into new markets or reach a larger audience is likely to be difficult

What do social enterprises in the public sector do ?

They provide socially-focused services with the aim of making a profit or surplus

What are cooperatives ?

They are a form of for-profit social enterprise that are owned and run by and for their members with the principle that working together means more power

What does each member in a cooperative own ?

Each member owns one share and has one vote on key decisions

What happens to profits in a cooperative ?

Profits are either shared equally between members or reinvested for their benefit

Disadvantages of cooperatives

• Decision-making can be time-consuming as members have the right to have a say

• When a member leaves a cooperative their share is relinquished and they receive no further benefits

• Disagreements can occur when members possess differing social and commercial objectives

What are the different types of cooperatives ?

1. Employee cooperative

2. Community cooperative

3. Retail cooperative

4. Producer cooperative

5. Financial cooperative

6. Housing cooperative

Characteristics of employee cooperative

• Owned equally by workers within the business

• Each employee has a vote in business decisions

• Profit is shared equally between employees

Characteristics of community cooperative

• Owned by members of the local community

• Members usually contribute time as well as finance to the cooperative

• Profit is commonly reinvested to continue providing socially valuable products

Characteristics of retail cooperative

• A group of independent retailers come together and operate under one brand name

• Buying power is increased and marketing costs are shared

Characteristics of producer cooperative

• Groups of manufacturers work together during the production process

• Sharing and maximising the use of expensive capital equipment is often a key aim

• They are common in agriculture

Characteristics of financial cooperative

• Organisations that provide financial services to individuals that may not otherwise qualify for standard banking products

• Focused on a particular community

• Social aims take precedence over profits

Characteristics of housing cooperative

• Organisations that provide housing for members

• Members collectively own and benefit from socially cohesive and lower cost dwellings