What is a social enterprise?

There are more and more social enterprises in the UK and around the world, businesses doing more than just generating profits

Not all firms exist to create big profits so that they can funnel them into the pockets of shareholders – some use that cash to drive positive social change.

If you’ve ever heard about social enterprises but wondered how they work, here’s everything you need to know. 

How does a social enterprise work?

Social enterprises exist to make the world a better place.

They aim to make a profit like traditional businesses but the end goal is not to generate dividends for investors, social enterprises take their profits and reinvest or donate them into projects, ideas or initiatives that create positive social change in communities.

By selling products and services on the open market, social enterprises create employment and investment in their chosen sector or local communities. They use the money generated to tackle social problems or provide training and employment opportunities for people who are unable to access work.

Social enterprises can be big or small – from coffee shops and cinemas, to pubs and leisure centres, banks and bus companies. They can offer socks to homeless people for every sock bought in their shop like Jollies Socks. Or create innovative products that help disabled people and promote social inclusion using the proceeds from the sale of bags like Trabasack. Or making jewellery can also help people with anxiety be welcomed back into the community, just as the creators of Haringey-based Studio 306 do.

What is an example of a social enterprise?

Social enterprises can be magazine publishers too – like The Big Issue. We are one of the oldest and biggest social enterprises in the UK.

All the profits made by the Big Issue Group are reinvested back into helping vendors with a ‘hand up, not a hand out’. Like many social enterprises, we tackle social problems, improve people’s life chances and support communities across the country, whether through social investment with Big Issue Invest, or by vendors selling the magazine or receiving support through The Big Issue Foundation, our charitable arm.

As Big Issue founder John Bird said: “Making pictures frames with a social echo – you get what you want while giving somebody in need support – is as I said quintessentially what my work is about. Create a trail of good behind you.”

How many social enterprises are there in the UK?

Social Enterprise UK (SEUK) looks after the biggest network of social enterprises in the UK and counts stars like Michael Sheen among its fans.

The governing body works with six government departments to lead public policy for social enterprises and they also keep track of how social enterprises contribute to the economy. 

At SEUK’s last count, there were 100,000 social enterprises in the UK that contributed £60 billion to the economy.

The sector also employed two million people although these figures are subject to change with the Covid-19 pandemic’s impact on the economy still hitting the jobs market.