The Benefits of Setting Up a Social Enterprise Entity

Do you want to set up a business with charitable or community-based objectives? Check out the benefits of setting up a social enterprise.

Must be good for a social cause

Have you realised there’s a need for change in the world? More people than ever are coming to terms with the new normal in a life post-pandemic, many of whom seek change for the better. Yet, there’s a stigma and dilemma behind setting up a company that profits whilst helping others.

A social enterprise entity balances charity and for-profit models. They bring the best of both worlds together for the greatest impact on society. There are services available online and through your local government office that helps.

We take a look at the main benefits of setting up a social enterprise in England or Wales. And, we’ll give you some inspiration for your project along the way!

What Is a Social Enterprise?

Social Enterprise

Social enterprises are organisations that use their resources to benefit disadvantaged groups or communities. They operate under different rules from traditional companies because they must be socially responsible. For example, they cannot make money unless they contribute back to society through charitable activities.

They may offer health care, childcare, training courses, employment programmes, housing projects, community centres, etc. They aim to improve lives and create sustainable jobs.

The SE model was part of the UK Government’s Enterprise Challenge Fund programme. This response came about following growing concerns over the sustainability of traditional charities. The aim is to help organisations develop their ideas into viable businesses.

The main benefits of a social enterprise include:

  • More funds to spend on projects and programmes within your chosen area
  • Increased recognition for steps the company is making to engage in social change
  • Increased respect and credibility, which in turn improves chances of receiving funding
  • Access to a network of like-minded individuals who can support your business
main benefits of a social enterprise

How Do I Become a Social Enterprise Entity?

The first step when starting your social enterprise is deciding how to operate. Do you want to run one yourself or join another venture? If you decide to go down the route of running your social enterprise, here are some questions to think about:

  • What is your experience in collaborative working, whether as a team or with customers?
  • Have you got enough time and energy to dedicate to your project without burnout?
  • How original and tested is your idea before you take steps to confirm it’s worthwhile?

Where Should I Apply for Grants?

There are several ways to approach applying for grant support. One option is to contact your local council or advisory board. They can offer advice on how to access funding.

They can also give guidance on applications and assist with finding suitable funding. Contact a national body such as Big Lottery Fund or National Lottery Charities Board. These bodies support new ventures and award grants based on merit alone. Yet, these tend to attract larger enterprises looking to expand.

The best way for a small social enterprise or one starting is to use a company like ourselves. We can help with both the setup process and the process of raising capital afterwards.

Grant Funding

What Is the History of Social Enterprises?

Social entrepreneurship has existed for hundreds of years, if not thousands. But as a formal entity, social enterprises trace back to the 1840s in Rochdale, Lancashire. The co-operative arose to combat exploitative factory conditions.

In the United Kingdom, a resurgence of social enterprise began in the mid-1990s. It brought together different businesses into a single entity with one goal: to create social change.

In 1999 the UK government launched its Social Enterprise Task Force to encourage growth in social enterprise. Since that time, the number of registered social enterprises has grown a lot. Today there are around 2 million active members across the country.

What Business Structure Do I Need?

The term ‘social enterprise’ can mean many things depending on whom you meet. Both business owners and academics alike use it. Some use the term to describe any organisation that uses profits to benefit the cause.

At the same time, others also refer to those who also pay shareholders whilst engaging in social change. Suppose you want to set up a business that has social, charitable or community-based objectives. In that case, you can set up as a:Limited Company 

limited company can exist in many forms. The two most popular are limited by shares and limited by guarantee. Limited by shares refers to multiple owners of the business.

Limited by guarantee ensures that each member is only responsible for a fixed value. Companies that adopt the guarantee approach recycle profits back into the business.

As a limited company, you are a separate entity from your business. So if your company goes under, you aren’t liable to repay the debt as yourself.Charity or Charitable Incorporated Organisation (CIO) 

A charity is a type of company that raises money for good causes. They do not operate on a profit, so they have strict rules and regulations about how they spend their money.

Charities also have trustees who advise and ensure the charity is operating at its highest level.Co-operative 

A cooperative business is a type of organisation that has been around for centuries. It’s one where the members own and control their company but also share in its profits.Sole Trader or Business Partnership 

Sole traders and business partnerships are businesses linked to one or two people who have equal responsibility in running the business. As they are their business, all liability falls on them should any debts incur or other liabilities. These are the most popular structures for small self-employed businesses.Community Interest Company (CIC) 

One of the lesser-known models is a Community Interest Company (CIC). Let’s look at how a CIC can maximise the potential of a social enterprise.

What Is a Community Interest Company (CIC)?

community interest company is a hybrid between a charity and a profit-making company. CICs form and run for the good of the community and engage in charitable activities. Yet, in doing so, they can engage in profitable activities to reinvest in the business.

What Are the Benefits of a CIC?

There are many benefits to setting up a CIC. One of these is that a CIC has the flexibility of a traditional public or limited business setup, allowing for the best structure to suit the needs of the business.  Further, a CIC can register as a social enterprise whilst engaging in charity-like activities.

As long as its purpose is clear, it can operate more freely within UK law than other setups.  A CIC can receive funding from others who wish to donate towards specific projects.

For example, they may want to help out a particular cause or group of people. It can be impossible to attain for companies limited by stakeholders, where stakeholders receive dividends.

A CIC can use its income to make investments to benefit the community. It helps to ensure that the organisation continues to exist after the initial investment period. An asset lock strengthens this in place and commits to ensuring the funds go directly to the cause in question. 

Benefits of a C.I.C

Other Benefits of a Social Enterprise

Of course, the benefits of running a social enterprise don’t stop at helping others. The benefits can focus around self-development, economic growth and education as well. The following list contains some additional benefits of starting a social enterprise.

Well Being

Better Wellbeing

It’s well-known those who work for a social enterprise are happier. This leads to increased productivity and creativity, not just for the enterprise owner but also those collaborating on the project

Skill Development

By getting involved in many areas of expertise, you gain experience across all aspects of the industry. This is a great way to get your foot into the door and build up an impressive portfolio that will help you stand out from other businesses when applying for funding.

Become a Part of Something Bigger

When you start your own business, you join a movement where everyone shares similar goals and ideals. Once you realise how powerful you are when you put your mind to things, you begin to see how much you can achieve.

Build Networks and Relationships

Build Relationships

You get to work alongside like-minded people. There’s no better way to learn about running a successful venturethan by working alongside others who have been doing so before you.

Working with clients and customers allows you to develop strong bonds with them. These connections often lead to new opportunities down the line.

Increased Awareness

If you do well at what you set out to do, word spreads fast. People talk about you, and this leads to increased brand awareness. In turn, this means more sales and greater profits.

The Main Benefits of Setting up a Social Enterprise Are Priceless

The above information should convince you that the main benefits of setting up a social enterprise are rewarding. That said, don’t try to run everything in one day.

Instead, think about which aspect of the business will provide the most value to society. Choose that area first. Then expand into the rest later.

It takes time to establish a profitable social enterprise. So, while you’re waiting for results, focus on building a reputation within the sector. After all, once you’ve built trust, then you’ll find it easier to attract funding from other sources.

Please Contact Us

Are you sold on the idea and need more support setting up your social enterprise? Then get in touch with us today, and let’s rewrite the future of social change together.

Arrange a FREE initial consultation.

0207 953 8913

How we can help

Call us today on 0207 953 8913 or complete our enquiry form in order to book a FREE initial consultation.

Categories: Charitable incorporated organisation (CIO), Co-operative, community benefit society, Community Interest Companies, Social Enterprises, Trust, Unincorporated association

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