Social enterprise – creating social or environmental benefit is the primary objective

The FunFactory in Dundee, a children's soft play experience, is one example of a social enterprise, a business run for the benefit of those who use it, not to make profits for the owners or shareholders
The FunFactory in Dundee, a children's soft play experience, is one example of a social enterprise, a business run for the benefit of those who use it, not to make profits for the owners or shareholders
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The most up-to-date picture of social enterprises in Scotland was unveiled last month by Aileen Campbell, Cabinet Secretary for Communities and Local Government. The Social Enterprise Census 2019 revealed that there are now an estimated 6,025 social enterprises operating in Scotland – an increase of more than 800 since the first census in 2015. Social enterprises employ over 88,000 people and according to the report is also making a sizeable £2.3 billionn contribution to Scotland’s economy.

That said, awareness of social enterprise amongst the general public could be better. Many people reading this may not have heard of social enterprise or would certainly find it difficult to point to one or explain what it is. However, it’s likely that many will have bought something from them or used one of the many services that they provide.

That’s because social enterprises operate across a number of sectors including running cinemas and sports facilities; delivering health and care services; hospitality and catering; employment and training; recycling and reuse; retail and creative industries; tourism and many others. Examples include Locavore Café in Glasgow that also provides healthy veg boxes; Aberfeldy’s Birks Cinema; Badaguish Outdoor Centre in Aviemore; The FunFactory in Dundee or Edinburgh’s Bike Station.

In simple terms, social enterprises are businesses that trade in the 
marketplace – with the primary objective of creating social or environmental benefit. However, where they differ from mainstream business is that no profit is distributed to owners, shareholders or investors – instead any surplus is wholly reinvested to deliver positive social or environmental benefits for society. In essence, this reflects an ‘asset lock’ which is a legal or constitutional clause that prevents any social enterprise assets being used for private gain. The purpose of an asset lock is to ensure that it is the public who wholly benefits from a social enterprise and money cannot be appropriated for private benefit.

The values of social enterprise

Social enterprise is best described as an inclusive business model – underpinned by ethical, fair and inclusive business practices. It is a model that is consistent with and aligned to the seventeen Sustainable Development Goals (SDGs) to which the Scottish Government was an early signatory. The most recent mapping delivers a decent report card in this area – providing evidence that social enterprises strive to be good employers, adopt fair work practices and are leading the way in gender equality, the living wage and flat pay ratios.

For example, the 2019 Social Enterprise Census reveals that women continue to play a leading role in social enterprise with a good gender balance on boards and 65 per cent being women-led. In fact, social enterprises are more likely to have female leadership than SMEs for example where only 23 per cent are women led.

Over 70 per cent of social enterprises are registered charities. As trust in charities has weakened, social enterprises are anxious to ensure that they are held to the highest standards. As such many social enterprises subscribe to the Voluntary Code of Practice for Social Enterprises in Scotland.

This Voluntary Code was established by the social enterprise community to promote and protect the core values and behaviours of the social enterprise sector in Scotland. The 1,100 current subscribers, including the examples highlighted above, are committed to adhering to these values and behaviours in their everyday operations. It therefore allows the general public a framework to hold social enterprises to account.

The importance of the Voluntary Code is recognised in Scottish Government’s Social Enterprise Strategy for Scotland (2016-26) where it states: “ … the Voluntary Code provides the benchmark criteria and values by which social enterprises in Scotland can be identified and recognise each other”.

The steering group for the Voluntary Code of Practice for Social Enterprises in Scotland