'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'
Source: UK Government: DTI (2002)
But what does this all mean in practice?
Well there are many commercial organisations that have social objectives but in this instance it is with the aim that it will make them more financially valuable. They have an overarching responsibility to maximize shareholder value.
This is where the difference lies – a true social enterprise does not look to carry out social objectives to provide benefit to investors unless it helps them achieve their social goals and the profit they make is ploughed back into the business or straight into the programmes that their social objectives support.
What sort of things are classed as a ‘Social Objective’?
There are many things but here are some examples:
- Supporting community engagement.
- Working to help resolve social problems.
- Supporting work to help change peoples lives.
- Supporting work to help improve the environment.
To find out more about ‘Social Objectives’ take a look at our ‘Social Value: So What’ video