The role of social enterprises in new communities
Social enterprises are businesses that operate on a not-for-profit basis, reinvesting their income to meet a range of social, economic and environmental objectives.
A social enterprise is a business with primarily social or environmental objectives whose profits are reinvested for that purpose, rather than being driven by the need to maximise profit for shareholders and owners. There are a number of company models available to social enterprises including mutual organisations and cooperatives. Since 2005 social enterprises have been able to register as Community Interest Companies. These are limited companies, that pass a 'community interest test'. Assets are 'locked' in order to ensure that profits remain dedicated to the social or environmental purpose of the organisation.
In establishing and managing new communities, social enterprises could fulfill a number of functions, such as maintaining community buildings or open spaces, or providing services for the community, for example care services for older residents. Some businesses might also be able to generate profits from selling products created from community assets, such as produce form allotments or refurbishing old computers.
- Social enterprises are more likely to innovate and experiment than traditional models of business because they are usually designed to fill a gap in existing services that cannot or will not be delivered by the public and private sectors
- Social enterprises can reach socially excluded people by providing volunteer, training and employment opportunities
- Socially run local businesses in a neighbourhood can contribute to a sense of local identity, helping to develop the self-confidence of local people
- Social enterprises are usually set up to retain and reinvest profits back into the local economy.
Social enterprise action plan Scaling new heights (2006)