This chapter will provide a useful context for most groups:
Social enterprises are business-like entrepreneurial organisations with primarily social objectives. Their surpluses are mostly reinvested back into their business or the community to help achieve these objectives and change people’s lives for the better. Social enterprises are not driven by the need to maximise profit for shareholders and owners.
In essence, social enterprises use business solutions to achieve public good. They tackle a wide range of social and environmental issues and operate in all parts of the economy, helping make it stronger, more sustainable and socially inclusive.
Social enterprises have the potential to spot and move into gaps where services are not being provided. They can add value by providing services in innovative ways which better reflect the needs of patients and users.
The Social Enterprise Coalition, the UK’s national body for social enterprise, has more about the definition of social enterprise.
The Government’s 2006 Social enterprise action plan is an important milestone that could encourage thousands of new social enterprises to start up and flourish in the UK. There are already at least 55,000 such enterprises in the UK with a combined turnover of £27 billion per year. Social enterprises account for 5% of all businesses with employees and contribute £8.4 billion a year to the UK’s economy - that’s almost 1% of the GDP. So as well as raising awareness of what social enterprise can achieve, the Social enterprise action plan aims to:
The Office of the Third Sector website has more about the definition of social enterprise, the cross-Government Social enterprise action plan, and the Third sector public services action plan.
Any social enterprise will want to adopt the best possible model for serving its customers and values. But what options are there?
‘Legal form’ is the term used to describe the way in which any business is set up and the rules and regulations that govern it. Whether your social enterprise is new or wants to make changes to its existing structure - there are several legal forms open to you. The choice you make will depend on a range of different factors including: the social purpose of your enterprise; the people and stakeholders involved; the scale on which it intends to operate;
and the way it is financed.
Choosing the most appropriate legal structure is vital. Getting it right first time will ensure your organisation has the scope to function legally and effectively, both now and well into the future.
In brief, the legal forms for social enterprises are:
Where to go for more information:
Whether you are totally new to the concept of legal forms, or already have some knowledge, there is a wealth of information available to help you.
As with any business, success for social enterprises means having the funds to set up the organisation; cope with day-to-day cash flow; and grasp opportunities for growth and investment when they arise. Identifying and securing the most appropriate sources of finance are two of the first and most challenging steps facing any social enterprise.
A dependency on grants and a reluctance to borrow has, according to many commentators, characterised the third sector in the past. But things are changing fast. Right across the UK, social enterprise organisations are proving they can compete with their private sector counterparts and, by mixing money know-how with their sense of mission, they are generating impressive financial turnovers and transforming communities as a result.
This sort of success, however, depends on sound financial planning.
Climbing the ladder - a step by step guide to finance for social enterprise is a practical guide produced by Social Enterprise London. It includes information on preparing an operating budget; finding capital; financial management; and preparing accounts.
Other sources of advice or potential finance
Loans and borrowing:
Adventure Capital Fund – helping organisations to become stronger and more self-sufficient through enterprise.
BIGinvest – which encourages business-like responses to social problems and lends directly to social enterprises and community development finance institutions.
Bridges Community Ventures – the UK’s first community development venture capital company, which invests in ambitious businesses in the most under-invested parts of England.
Charity Bank – a bridge between people who would like to have a deposit account that benefits society, and organisations that can deliver excellent charitable solutions.
Community Development Finance Association - the trade association for community development finance institutions (CDFIs). These are sustainable, independent financial institutions that provide capital and support for organisations to develop and create wealth in disadvantaged communities or underserved markets.
Co-operative and Community Finance - provides loan finance to co-operatives, employee-owned businesses and social enterprises. It raises money primarily by the issue of public shares and lends it for projects with a social purpose and collective benefit.
The Co-operative Bank - provides financial services with a commitment to conduct its business in a socially and environmentally responsible way.
Local Investment Fund - offering loans to social and community enterprises that have been unable to secure income from traditional sources. By providing loan finance, it enables them to move from grant dependency towards self-sufficiency.
Triodos Bank - an ethical bank that offers a comprehensive range of banking services for social businesses, charities and groups. It lends money only to organisations and businesses pursuing positive social, environmental and cultural goals.
Unity Trust Bank - a socially responsible bank providing services to the trade union, social enterprise, charity, voluntary, credit union and membership organisation sectors.
Grants and funding advice:
Breakthrough - set up by Community Action Network and Permira (private equity firm) to provide strategic support and growth capital to selected established social enterprises to help them scale up their businesses.
The Department of Health - is establishing a social enterprise investment fund from. April 2007.
Early Growth Funds - this programme was developed by the DTI Small Business. Service to encourage risk funding for start-ups and growth firms.
Futurebuilders England - a government-backed investment fund to help the voluntary. and community sectors deliver better public services. It provides a combination of grants. and loans for organisations that deliver public services.
Government Funding - an online portal for the social economy sector with gateways to a. range of government bodies, including the Department of Health and the Department for. Communities and Local Government.
Philanthropy UK - promoting and sharing knowledge and best practice to all those. involved in giving. A key objective is to widen participation in the giving community.
Profunding - offers up-to-date news and information to all those involved in raising. finance for social economy organisations.
The Sustainable Funding Project (NCVO) - encourages and enables social economy. organisations to explore and exploit a full and diverse range of income and finance options. to develop a sustainable mix of funding.
The Third Sector Capacity Building Programme – set up by the Department for. Education and Skills (DfES) to increase the involvement of local groups in development. and decision-making relating to children’s trusts. It also aims to improve local groups’. competitiveness when bidding for children’s and young people’s services contracts.
A brief explanation is at:
The UK Social Investment Forum - the UK’s membership network for socially. responsible investment (SRI). Its primary purpose is to promote and encourage the. development and positive impact of SRI amongst UK-based investors.
Venturesome - offers loans and investment support that fill the gap between grants. and bank loans.
People both starting up and working in new social enterprises will bring with them a wide range of skills, and they should have the freedom to use these in their new organisations.
You may wish to develop new skills which will help you successfully compete for funds in the newly-emerging health economies. Skills around leadership, financial management, business planning, project management and knowing how to successfully obtain funding will be important. While many of these skills may be learnt on the job, they may also be developed in other ways, whether through courses or some form of job placement or work shadowing.
Social enterprises and entrepreneurs are valued for the creativity and fresh thinking they are bringing to sectors such as housing, recycling; food; transport and many more. They are often valued because they are in touch with the grass roots. One of the strengths of social enterprises is their capacity to be in tune with the needs of service users and communities, resulting in the development of services that are really needed.
We can’t invite this sort of innovation into the health and social care sectors without being ready for redefined and even radically new models of care.
However, no changes to services should ever be proposed, planned or carried out without consulting and fully involving patients, service users and local communities.
Whom do you need to consult and when?
Section 11 of the Health and Social Care Act 2001 says NHS organisations have a statutory duty to involve and consult patients and the public on the following:
Although Section 11 does not directly apply to non-NHS organisations, primary care trusts (PCTs) must make sure that the duty to involve and consult the public is complied with when a service is commissioned, under NHS arrangements, from any other provider - including social enterprises, third sector bodies and independent companies.
The Department of Health has produced detailed guidance on how to involve patients and the public in service delivery and design.
Other useful information on involving patients and the public includes:
The property options for social enterprises will vary depending on your circumstances. However, there are some useful guiding points which will help to get you started:
Using NHS property: social enterprises considering the use of NHS property should see the Estatecode guidance for NHS Trusts and primary care trusts (PCTs) available on the Department of Health website. This gives information on the leasing or the sale of NHS assets. It includes information on town planning, all aspects of leases, management of property and sales of land and buildings.
Discretionary grants: you should also contact your local PCT to enquire about. discretionary grants that may be available to assist in the acquisition or improvement. of non-NHS premises. These grants, however, are subject to budgetary provisions. and conditions. Full details of all PCTs are available on the NHS website.
Local Authorities and English Partnerships: are other sources of public sector. accommodation that social enterprises should consider. English Partnerships
publish details of surplus public assets on their website every three months.
Regional Development Agencies and the Business Link network: may be able to provide. advice and information supporting social enterprises with their accommodation needs.
Get professional advice: If you are considering the use of premises owned by the NHS,. other public sector organisations or the private sector, before going ahead, always take. professional advice from a property sales or letting specialist and a solicitor. Such specialist. advice may include looking at private sector options, where other more profitable. commercial users could be used to support the social enterprise.
Find more useful information at:
Please remember that independent financial advice should always be sought when. considering property investment or ownership.
Social enterprises providing services on behalf of the NHS are required to use the NHS logo in line with the NHS identity policy. This helps patients and the public identify and access NHS services and helps to reassure them that services are provided in line with NHS standards and values. The Department of Health branding team is currently developing guidelines specifically for social enterprises and these will be made available via the NHS Identity Website.
For further information and support in the meantime please contact the NHS Identity Helpline by email or call 020 79725250.
Please note that the NHS logo is a registered trademark and can only be used in. accordance with our guidelines or with advice from the NHS Identity Helpline.
