When is a Social Enterprise not a Social Enterprise?

And does it matter?

We had an interesting discussion at our recent Social Enterprise Day event about the definition of social enterprise.

In general terms it doesn't really matter. We presented it as a continuum, with private business at one end and charity at the other, with social enterprise in the middle and the boundaries rather fuzzy. Of course, as with any model, it cannot reflect the full complexity and we are now thinking about adding a third dimension to show the public sector, which increasingly will position itself to take advantage of the strategic drive for more social enterprise and the resources which will follow.

In our view, this is all healthy, because the social enterprise sector can only benefit from the best folk from private business, the community and voluntary sector and the public sector, bringing their talents to bear.

Where the detail starts to matter is when we get to governance.

It is quite obvious that, in a modern society, an organisation set up to represent the interests of social enterprises and to promote the growth of the sector, will be controlled by social enterprises themselves. The alternative is the colonial option, where "those who know best", also known as "the powers that be", swan in with advice to putative and actual social enterprises then return home to the comfort of public sector security or private sector profit. If social enterprise wants advice from experts outside of the sector, it must have the choice. The default mechanism would be to first trade within the sector.

Let the medium be the message!

Back to governance and the continuum.

There are clear indicators of social enterprise to be found in constitutions and memoranda and articles of associations. Surely, the key question is: what happens to the profits?
This will separate the private from the social.

To differentiate the public sector and the community/voluntary sector from social enterprise, it is usual to look at the balance of grant and trading income. We have suggested 25% trading and moving towards more. Others go higher.

All this is detail, which needs sorting out transparently. None of it should suggest the superiority of one sector over another. Morally, we might argue that a pure charity, with volunteers and supported by philanthropy, is first in the queue for paradise. In practice this thought is muddied by the point that the biggest philanthropists at present are Bill Gates and Warren Buffet!

Back to the subject. Whilst we have some reasonable definitions of what a social enterprise is and is not, the fuzzy areas at the edge will always exist and we can cope with that on a case by case basis.

Since social enterprise is driven by the heart as well as the head, I reckon we will know one when we see it!

steve