What is Social Enterprise?

Selnet subcribes to the definition as detailed below: Organisations requesting membership and / or services will be asked to demonstrate that they comply with these characteristics.

Social Enterprises will have:-

Social Aims

Organisations that have explicit social aims such as job creation, training or the provision of local services. They have ethical values. Their profits are principally reinvested to achieve their social aims. Increasingly social enterprises measure their social impact.

Enterprise Orientation

Organisations are directly involved in business activity, supplying goods or services to a market and earning incomes as a result.

Social Ownership

Many social enterprises are also characterised by their social ownership. They are autonomous organisations whose governance and ownership structures are normally based on participation by stakeholder groups (e.g. employees, users, clients, local community groups, social investors) or by trustees or directors who control the enterprise on behalf of a wider group of stakeholders. They are accountable to their stakeholders and the wider community for their social, environmental and economic impact. Profits can be distributed as profit sharing to stakeholders or used for the benefit of the community.

Nothing New - A Brief (and potted) History of Early Social Enterprise in England

This short history provides excerpts from MacDonald M. & Howarth C. (2008) Social Enterprise Experiments in England: 1660 - 1908 delivered to the Social Enterprise Research Conference, LSBU.  For a full copy of the paper please contact Matt MacDonald This e-mail address is being protected from spambots. You need JavaScript enabled to view it

The first documented instance of social enterprise activity arose as a result of the plague (Black Death) epidemic of 1665. As wealthy families fled London, many poor people were left unemployed.  Thomas Firmin provided the unemployed with raw materials for continuing their usual occupations and set up a factory scheme to provide employment for 1700 people. Firmin argued that these enterprises need not be wholly profit-making, the element of profit being there merely to mitigate and make more efficient the input of charitable funds ("the loss of two pence in the shilling as money well spent").

A further example of social enterprise can be found in the Colony of Georgia, in the Americas, although it quickly developed from the social model into a profit making concern. The Colony of Georgia, founded in the early 1700's, was established specifically to provide an appropriate environment for the employment and self-improvement of debtors.  It became the first recorded instance of charitable endeavour mainly funded by government.

By the late 18th and early 19th Centuries social enterprise activity can be seen to fall into 2 camps:

Firstly, the paternalistic provision of work-based service by the upper classes to provide moral and spiritual improvement, to discourage what was seen as the laziness and immorality of the poor, came to be seen as preferable to the giving of charitable relief. In her Oeconomy of Charity of 1801 Mrs. Trimmer, a leading light in the charitable world, describes the view that the poor should be trained, through work, to be "…useful members of the state, for their services are essential in the greatest degree, to the comfort and convenience of the higher orders of society" .  The Bath Society for the Suppression of Common Vagrants and Impostors, Relief of Occasional Distress and Encouragement of Industry, launched at the end of the 18th Century, provides the first recorded evidence of micro-finance practiced in the UK.  Under their scheme, loans for tools and occasionally for cash-flow were made to ensure the unemployed could continue to provide income for their families. The School for the Indigent Blind, formed in 1790 in Liverpool was perhaps the earliest example of a social enterprise model within education, providing employment training in spinning, basket weaving and music and employment opportunities for beneficiaries. The Philanthropic Society established a rehabilitation school for criminal children.  This was unusual for a charity of the day in that it was used as a sentencing tool by the judicial system and received payments for this service; an early example of a voluntary organisation receiving government support for performing what were essentially public police functions.  The Ragged Schools Union, led by Lord Shaftesbury, trained boys in seamanship skills for employment in the merchant navy. He also funded refuges for boys and girls, teaching carpentry, cobbling and tailoring in addition to seamanship skills, and domestic service skills to the girls. The Ragged School movement also spawned further social enterprise experiments, including industrial and commercial education, credit unions and income generating coffee shops/reading rooms.  The provision of social housing also adopted a social enterprise model, where investors in these schemes received a capped return on their investments (usually capped at 5%).

Secondly, the gradual achievement of employment contracts and voting rights allowed the working classes to plan and provide for their own welfare for the first time. The development of Friendly Societies were the first flowering of this phenomenon. The Chartist Land Movement was developed; a social enterprise scheme to provide income generating, self-supporting smallholding communities for working class members' families. Other initiatives, such as the Co-operative experiments of the Fenwick Weavers and the Rochdale Pioneers, were set up for similar social reasons, but also adopted the trade union and Friendly Societies' model, which was concerned more with provision for members than wider public benefit.  The development of the Industrial and Provident Society for Community Benefit model can be seen as the first instance of social enterprise organisations recognised by statute and the first recorded example of working class association being the method for delivering social welfare for the whole community, rather than through the philanthropy of the wealthy.

A precursor of modern fair trade practice can be seen in the introduction by the Salvation Army of new production methods for matches in 1891, setting up a factory specifically as part of a campaign to eliminate the use of yellow phosphorous (which poisoned workers). Although this raised the price of a box from 2½d to 4d people were willing to pay the premium, commercial manufacturers altered their practice and the Government banned yellow phosphorous.

Social housing, self help, employment training, Fair Trade, as an income generation strategy for Charities, micro-finance, delivery of public service under contract, and the moral and spiritual improvement of the dispossessed through work rather than "handouts", using social enterprise models, have all been tried before.  The use of social enterprise models appears to be most prevalent when the prevailing ethos is that the State should not be directly involved in the provision of public welfare.  Thus we see a relative decline in social enterprise provision throughout the twentieth century welfare state experiment until the "return to Victorian values" of the Thatcher project.