Social enterprise is about helping the third sector become as financially sustainable as possible. Here in Midlothian we are very proud to have strong, locally-led social enterprises that provide valued services throughout our towns and villages.
Social enterprises come in many shapes and sizes, from parent-run after school clubs to large housing associations. In Scotland, The Voluntary Code of Practice for Social Enterprise sets out a clear definition of what makes a social enterprise:
- A social enterprise is a trading business – selling goods and services – but whose primary objective is to achieve social and/or environmental benefit. Social enterprises are different from those charities and third sector organisations which do not aspire to financial independence through trading.
- Regardless of its legal form, the constitution of a social enterprise will include the requirement that profits are reinvested in the business or in the beneficiary community – and not distributed to private owners, shareholders or investors.
- The constitution will always require that on dissolution, the assets of the social enterprise are reinvested in another organisation with similar aims and objectives. Taken together, criteria 2 and 3 are referred to as the ‘asset lock’ (the defining characteristic of a SE) which distinguishes it from the private sector.
- Social enterprises are constituted and managed in an accountable and transparent way, particularly with regard to the community they serve.
- Social enterprises are distinct from the public sector and cannot be the subsidiary of a public body.
For more detailed information about social enterprise you can visit the website of SENScot, the Social Enterprise Network Scotland.