What is a social enterprise?
A social enterprise is a business with primarily social or environmental objectives. Profits are principally reinvested for those objectives, with surpluses being returned to the business or the community it serves, rather than being used to maximise profit and owner or shareholder value.
The term 'social enterprise' does not have a formal legal meaning and is not a formal status with HMRC or other government agency. It is a general description that could be applied to many legal forms of organisation including those with charity status. These legal forms may be.
- company limited by shares
- company limited by guarantee
- charitable incorporated organisation
- community interest company (CIC)
- community benefit society
- sole trader or business partnership
A social enterprise expects to generate revenue from the goods, services or facilities they provide, although this income may sometimes be supplemented by other sources of funding.
A social enterprise might enjoy some tax benefits but these should not be assumed. They are often dependent on your legal form and its tax status and should be clarified with HMRC before proceeding on a basis which relies upon tax benefits for financial viability.
Case study: Travel2Give
Travel2Give operated as a high street travel retail business. After working with a local children's charity their priorities changed and now they are registered as a Community Interest Company. They sell holidays and work with travel operators to donate money to their charity partners. Read the Travel2Give case study.
- Setting up a social enterprise video training. Our Studyzone training course for those who want your charity to start trading or you're about to set up a business with a social impact. Learn how to clarify your social purpose and the types of products or services you’re looking to sell and find out how to make a long-term difference by ensuring the sustainability of your business model.
- Social Enterprise UK is a national membership body for social enterprise.
- Setting up a social enterprise pages on GOV.UK
- Get Legal from Bates Wells Braithwaite law firm provides online legal documents and information for charities, voluntary organisations and social enterprises. It includes a very useful decision making tool for new organisations to determine an appropriate legal form developed with NCVO