Social enterprises

This is a Big Issue salesman in Bendigo, Australia. The Big Issue is a street magazine sold by homeless people. The magazine is now sold in the UK, Australia, Japan, South Africa, Kenya, Ethiopia, Malawi & Namibia. Image courtesy of Michael Valli.

Social enterprises operate in the market to achieve social goals. There is currently no universally accepted definition of social enterprise. This is because social enterprises can take numerous forms, are engaged in multiple spheres of activity and because legal structures vary from country to country. For example, in Italy, social enterprises are constrained by a non-distribution clause – that is, all income has to be reinvested in the enterprise. In the UK, the Community Interest Company (CIC) was created as a new legal form in 2004 to reduce the tensions between finance and mission. CIC status makes the social mission dominant and limits the returns on capital. There is an asset lock, which means that any asset sale must be at market value, or transferred to another CIC or charity, so that any increase in value is retained for the benefit of ‘the community of interest’. There is also a limit on dividends of 35% of profits. The term also covers a wide range of organisations from co-operatives to public service providers and community/voluntary associations to ‘work insertion’ organisations and companies limited by guarantee.  

Social enterprises can generate income in a myriad ways. Some may generate their income through direct provision of a service which helps meet their social or environmental objectives. For example, Turning Point in the UK provides – among other things - rehabilitation services for those affected by drugs or alcohol. Others sell goods and services to customers while working towards their objectives behind the scenes, such as the Arcipelago Co-operative which came out of the San Patrignano rehabilitation community in Rimini, Italy, or the Big Issue which is a magazine sold by the homeless.