Social enterprise

The term 'social enterprise' can refer to a type of activity or to an organisation practising that particular type of activity. 

The Welsh Government, in line with the UK Government, defines a social enterprise (organisation) as: 

'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.' 

The activity of earning - generating income through trading goods and services - is also sometimes referred to as social enterprise.  

Organisations involved in social enterprise activity are often considered to have the following characteristics: 

1. Social aims

Such as job creation, training or the provision of local services. Ethical values may include a commitment to building skills in local communities. Profits are principally reinvested to achieve social objectives. 

2. Social ownership

Autonomous organisations whose governance and ownership structures are normally based on participation by stakeholder groups (e.g. employees, users, clients and local community groups) or by trustees or directors who control the enterprise on behalf of a wider group of stakeholders. They are accountable to their stakeholders and the wider community for their social, environmental and economic impact. 

3. Enterprise orientation

Being directly involved in producing goods or providing services. Whilst many voluntary and community organisations would not see themselves as businesses, a growing number would accept that they are more increasingly adopting business-like approaches to governance and management in achieving their overall aims and objectives.  

Social enterprises are sometimes said to have a 'triple bottom line' - the values that many maintain: people, planet and profit. Motivated by social, environmental and economic factors, rather than just the single bottom line of profit. 

Social enterprise however should not be considered as attempting to turn voluntary and community organisations into businesses, as the 'triple bottom line' emphasises, but about enabling organisations to become more financially sustainable by diversifying their income base and avoiding reliance on time-limited grant funding.