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Social enterprise: What is it and what to consider



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A presentation by Amanada Johnston from Social Enterprise NI helping participants understand more about what social enterprise is, what you need to consider if thinking about starting a social enterprise, what support is available and gave some examples of local social enterprises.

Social enterprise: What is it and what to consider

  1. 1. Mission To be the voice of Social Enterprise across Northern Ireland, connecting, supporting, developing and sustaining vibrant businesses to create social change. Vision Social Enterprise is recognised and valued as a business model through which society profits. ●
  2. 2. Government definition • 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.” • A social enterprise is a community
  3. 3. However they all have three things in common • Business Focus – surplus from trading • Social Purpose – local jobs / services • Social Ownership – not for individual gain • Profits are invested back into the business People Profit Planet
  4. 4. The Social Enterprise umbrella covers • Consumer co-operatives (circa 1840s) • Housing associations (1900s) • Trading arms of charities (1940s) • Credit unions (1960s) • Workers’ co-operatives & employee-owned firms (1960s) • Community businesses & community enterprises (1970s) • Development trusts (1980s) • Social firms (1990s) • Intermediate labour market projects (1990s) • Social businesses (1990s) Dates in brackets indicate when this type of enterprise first started In the UK Did you know? The 6th most popular coffee brand in the UK is owned by CaféDirect The Co-operative is Britain’s biggest farmer with 85,000 acres of land
  5. 5. Diversity of Social Enterprises
  6. 6. • DETI mapping estimates in the region of 470 Social Enterprise across NI. (Pwc 2012) • Social Enterprises make up 12% of the Third Sector and contribute 49% of the sectors turnover. • Social Enterprises employ 40% of those working in the third sector some 12,200 people and 13,400 volunteers • 68% of Social Enterprises reported a profit/surplus in 2010/11, compared to 54% of C&V organisations • 77% were planning expansion •Highest density of SE’s emerging in Belfast and Derry/Londonderry Northern Ireland
  7. 7. “We already know of the work of social enterprises, charities, community and voluntary organisations in partnering with the public sector to provide services. They do exceptional work to a very high standard and frequently cost far less than similar but less effective services provided by the public sector. They are a growing part of our economy and are dealing with social issues in ways in which government simply is not able to. “It is my firm belief that it is time we examined how we could make even greater and better use of this sector in supporting us in government to achieve the outcomes we have agreed are necessary for Northern Ireland. Minister for Finance Simon Hamilton Political will
  8. 8. Councils role in making it work locally  Senior level buy-in and activity linked to local policy and strategy  Creating opportunity through commission and procurement  Encourage and supply chains  Lead in innovative approaches to problems  Consult and broker relationships with SE  Meet and Greets with all Super Councils
  9. 9. How do they differ from Charities? Charities and SE’s have a lot in common • Independent from Government, not answerable to shareholders or investors • Both aim to create social value However Social Enterprises take a • Business approach – focus on earning income from sales not grants • Legal structures – Non Charities have more flexibility and different options of ownership, entrepreneurial leadership, and ability to access finance. • Unrestricted Income
  10. 10. Legal Structures There are many legal structures and selecting the right one is important. It will define how you do business, who is involved and what you with your profits. Frequently used legal structures include • Company Ltd by Guarantee • Community Interest Companies • Co-operative models
  11. 11. How many legal structures are there?In Principle….. • Sole Trader or self employed • A partnership • A limited Liability Company – share and guarantee • Franchises • A limited liability partnership • A Co-operative (Industrial and provident society) • A Community Interest Company
  12. 12. Challenges for Community Groups • Concept of profit a Non profit Atmosphere • The Absence of Business Skills and Knowledge • Behaving Like a Business • Maintaining Competitiveness • Attracting the right social entrepreneurs • Leveraging social finance – share capital
  13. 13. 3 Essentials • Have a clear and researched business model • Be clear what your social aims are • Make a profit and use it to further your social aims
  14. 14. Top Tips • Don’t rely on grant alone to sustain you – don't put all your eggs in one basket • Innovate around new income streams • Increase revenue • Reduce costs • Don't trade on being a SE, trade on quality and community good • Market what you do with profits • Show the social good
  15. 15. Social Value in Public Expenditure What do we mean by Social value? Social Value is about maximising the the impact of public expenditure to get the best possible outcomes Social Value measures more than just Financial transactions and direct purchasing or goods and services It includes additional benefit to communities… • Health • Happiness • Wellbeing • Inclusion • Empowerment
  16. 16. If £1 is spent on the delivery of goods, services and outcomes, can that same £1 also be used at the same time, to also produce a wider benefit? Social Value asks the question:
  17. 17. “Instead of paying for failure, which is what we have been doing sometimes, we'd start to pay for success. We construct contracts in such a way that the company or charity or social enterprise who are delivering for you only get paid when they hit certain measured outcomes," Simon Hamilton. Social Value and Payment by results
  18. 18. • Grants • Service Level Agreement’s • Procurement • Investment Income Streams
  19. 19. Grants • Given to a charity/ social enterprise / for a specific project or purpose. • You won’t need to pay a grant back, but there’s a lot of competition and funding can be very restricting and at times make it difficult to meet your social purpose. Service Level Agreement • A service level agreement (SLA) is a contract between a service provider and the Customer (i.e Health Trust, Council etc) that defines the level of service expected from the service provider. • SLAs are output-based in that their purpose is specifically to define what the customer will receive. Income Streams
  20. 20. eTendering is the use of secure, web-based collaborative tools by buyers ands suppliers to conduct the tendering process online Gov’t Procurement / eTendering
  21. 21. • Improved efficiency (faster response/evaluation and reduced timescales) • Reduce tendering costs (no ccourier / printing costs) • Compliance with EU procedures and procurement best practice • Improve tendering visibility and governance (access 24/7) • Robust audit trails and reporting • Supplier profiling and response prepopulation Key Benefits of eTendering
  22. 22. • Local Banks – in particular Ulster Bank are very keen to support Social Enterprises and and recently ran an Investment Readiness Workshop • Charity Bank - • UCIT - Investment
  23. 23. How the successful ones do it• Highly Entrepreneurial, Innovative and Responsive • High-quality care at affordable prices and generating economic and social benefits • They are rooted in local communities • Local services responding to local need e.g. shift patterns • Able to act quickly when they see a problem • Create jobs in local communities • Don't DO IT to the communities, DO IT WITH
  24. 24. Where to get support • Social Enterprise Hubs – 11 hubs across NI • Unltd if you are a social entrepreneur • Local Super Councils • Local Enterprise Agencies • Rural Development Programme
  25. 25. QUESTIONS ??
  26. 26. Amanda Johnston 07734 286 211 Office: 028 9046 1810 Contact us
  27. 27. Thank You