In its simplest term, social enterprise is a business that trades in pursuit of a social or environmental purpose, with profits principally used to further that purpose rather than maximise returns for owners or shareholders. In the UK, social enterprise refers to the purpose and approach of a business rather than to a specific legal structure. So yes, social enterprises are businesses, in the sense that they need income, customers, sensible decisions and a model that can keep operating. The difference is what the commercial activity is designed to achieve.
What is a social enterprise?
A social enterprise is not defined by a particular product, sector or legal structure; what sets it apart is what happens to the money it makes. Like any other business, a social enterprise sells goods or services and needs to generate enough income to operate. The difference is that its social or environmental purpose sits at the heart of the business, with profits primarily used to further that mission rather than simply being distributed to owners or shareholders. That mission could be creating employment opportunities, reducing waste, improving access to services, supporting a local community or tackling a particular social problem.
It is also important to distinguish a social enterprise from a legal structure. Some social enterprises are set up as Community Interest Companies (CICs), but being a CIC and being a social enterprise are not the same thing. Others operate as companies limited by guarantee, co-operatives or other business structures.
Likewise, a social enterprise is not automatically a charity. Charities and social enterprises can have similar aims, but social enterprises are built around trading and generating income through commercial activity.
In simple terms, the defining feature is not what the organisation is called: it is the combination of purpose, trading and reinvestment.
Social enterprise, charity or CIC?
Part of the confusion is that social enterprise, charity, CIC and purpose-led business are often bundled together as though they mean the same thing. A charity is an organisation established for charitable purposes and subject to the relevant charity law and regulation. Charities can trade in certain circumstances, and some operate commercial activities very successfully, but being a charity does not automatically make an organisation a social enterprise.
A CIC is a specific type of limited company created for organisations carrying out activities for community benefit. It has additional requirements, including a community interest statement and an asset lock intended to protect assets for the organisation’s social objectives. So, a CIC can be a social enterprise, but social enterprise and CIC do not mean the same thing.
Then there are conventional limited companies with a strong social or environmental purpose. Some may genuinely operate as social enterprises, depending on how the organisation is structured, governed and how profits are used. Others may simply be purpose-led commercial businesses. There are shades of grey, which is one reason arguments about definitions can become more complicated than the organisations themselves.
For anyone setting one up, the choice of structure has consequences for governance, tax, investment, asset ownership and regulation, so proper legal and financial advice is sensible. For everyone else, the useful distinction is simpler: ‘social enterprise’ tells you what the business is trying to achieve; terms such as CIC tell you something about how it is legally structured.
Social enterprise in the real world
The easiest way to understand the model is to look at how purpose and commercial activity work together in the real world. For many social enterprises, the product or service they sell is not simply a way to fund the mission; it is part of how that mission is delivered.
The Edinburgh Remakery is a good example. Based in Leith, it describes itself as both an environmental charity and social enterprise. Its work centres on repair, reuse and the circular economy, from refurbishing and selling second-hand technology to running repair services, workshops and initiatives designed to tackle digital exclusion. Customers can buy refurbished devices, while businesses can use its IT disposal services. Alongside this, the organisation delivers community activities and repair projects. In other words, the trading activity and the social purpose are closely intertwined.
This combination also creates an interesting communications challenge. A social enterprise may be clear about the impact it wants to make, but it still needs people to understand what it offers and why they should choose it. When MEERKATworks worked with The Edinburgh Remakery, that meant helping to define a brand proposition that could communicate both sides of the organisation.
Another example is the National Disability & Carers Card Scheme, which supplies secure photo ID cards designed to provide recognised proof of disability. The card helps people communicate that they may require assistance, special access or simply a little extra patience, without having to repeatedly explain their circumstances. The scheme is officially run as a social enterprise that aims to make a positive difference in the world. It funds its operations through card sales and is operated by a private limited company, National Disability Card Ltd, which was founded by family caregivers.
The MEERKATs have worked alongside this social enterprise to promote their solution for demonstrating disability status. To increase awareness, MEERKATworks planned and bought a carefully targeted, cost-efficient, ITV advertising campaign across the South-East of England.
Media planning can make limited budgets work harder
Social enterprises rarely have unlimited marketing budgets, which makes careful media planning especially important. Spread the budget too thinly, across the wrong channels and the campaign won’t be meaningful. The first step is to understand exactly who the organisation needs to reach and what it wants them to do. Only then can you decide which media channels are most likely to reach that audience effectively within the available budget.
Geography can make an enormous difference; a community-focused organisation may benefit from concentrating activity within a small radius rather than paying for national reach it cannot use. A social enterprise selling services to businesses may require a completely different combination of channels and targeting. Channel choice follows the audience, which could mean outdoor advertising in a specific location, digital activity built around defined interests or behaviours, audio, print, television or a combination of formats. The right answer depends on the task. Frequency should always be considered when planning your campaign, as seeing an unfamiliar social enterprise once is not the same as remembering its name when you need the service three months later.
Make your media budget work harder for your mission
If you run a social enterprise and need to reach more of the right people, MEERKATworks can help you plan and buy media around your audience, objectives and budget. We work with purpose-led organisations to identify where their audiences are, which channels are most likely to reach them effectively and how to build campaigns that support both awareness and commercial goals.
Talk to the MEERKATworks team today about media planning for your social enterprise.