Social enterprise for creative passion and profit
In this episode of "From Creative Passion To Profit" we're talking about social enterprises, focusing on how they can be a great intersection between creativity and social good.
Social Enterprises in the UK: Models for Impact and Profit
We'll explore various business models prevalent in the UK, such as community interest companies (CICs) and cooperatives, and how they align profit with purpose.
By listening in, you'll learn about the structures that best serve your project's mission, whether it's addressing environmental issues or supporting community growth.
This is a must-listen for aspiring social entrepreneurs or anyone interested in the potential of social enterprises to drive change while ensuring financial viability.
You'll gain insights into the practical aspects of setting up and running a social enterprise.
We break down the different types of legal structures like CIOs, IPSs, and companies limited by shares, explaining the pros and cons of each. Perhaps you're someone who's pondered the complexities of choosing between democratic cooperation or a more traditional company flexibility with shareholders.
We'll help you understand how these models can fit the future landscape you're envisioning for your venture. These aspects are crucial if you’re looking to fundraise or strategise long-term impact, ensuring that your enterprise thrives both socially and financially.
Once you've listened, you'll be armed with the knowledge to make informed decisions about starting or supporting social enterprises.
You'll be able to discern which model might offer tax benefits or how you can structure your organisation for maximum social impact.
Whether you aim to run a cooperative supermarket or a community arts centre, this episode will equip you with the tools to plan thoughtfully and execute effectively.
So, if you're ready to turn that creative spark into something sustainable and impactful, get ready to listen so you can Plan it, do it, and profit.
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Transcript
In recent years, social enterprise has gained significant
Speaker:traction in the United Kingdom. It's a powerful business model
Speaker:combining profit making with social impact. In this week's
Speaker:From Creative Passion to Profit, I'm going to be looking at social enterprise,
Speaker:the different types of models and outlining what they are. And it has
Speaker:great relevance for creatives who often work
Speaker:with the social enterprises or run their own, are involved in
Speaker:the organizations that deliver that social impact while
Speaker:still making a return.
Speaker:Now, social enterprise organizations have the objective of
Speaker:addressing social and environmental issues while
Speaker:generating sustainable revenue. Now, there are a variety of business
Speaker:models in the United Kingdom and structures and it's crucial that we have a
Speaker:good awareness of what those are if we're going to be involved, engage or
Speaker:support the these ventures. Now, one of the more popular models is
Speaker:what's called a community interest company, CIC for
Speaker:short. Now, it's a popular model amongst UK social
Speaker:enterprises and they are designed to ensure that any
Speaker:surpluses and profits generated are primarily
Speaker:reinvested to deliver that community impact or to address and
Speaker:support the social causes they aim to address. Now, there's nothing
Speaker:wrong with making profits. Profits are an essential requirement
Speaker:for any individual and organization to continue to delivering
Speaker:their why. Now, CICs operate with a specific
Speaker:community purpose and they must also submit annual
Speaker:reports on their activities. CICs offer a flexible
Speaker:structure enabling social entrepreneurs to combine social impact
Speaker:with a sustainable financial model. As a side note, within
Speaker:a cic, which is essentially a company, a corporate body,
Speaker:you can have one that's called limited by guarantee or one that has
Speaker:shareholding, which can encourage external investment. The
Speaker:second type of model that exists is a cooperative, or to give it its more
Speaker:full name, a cooperative benefit society. Now,
Speaker:cooperatives are also another popular and prevalent UK
Speaker:business model within the social enterprise sector. Now, these
Speaker:organisations are owned and democratically controlled
Speaker:by their members. These members can be employees, clients,
Speaker:customers or even the local community.
Speaker:They operate on the principles of collective decision making,
Speaker:shared profits and a focus on the well being of their members. So
Speaker:we're going to use that term democracy. You could argue that a cooperative is
Speaker:a very democratic body. Most of us will come across co ops
Speaker:in the context of the famous supermarket joint. Now, co ops
Speaker:often prioritize fair trade practices and promote social
Speaker:and environmental responsibility. As we delve into
Speaker:this topic, let's have a look at something called social enterprises Limited by
Speaker:guarantee. Now, this is a structure commonly used by
Speaker:organizations in the United Kingdom that reinvest their
Speaker:profits, whether it's for social, environmental or other similar
Speaker:goals. These enterprises do not have owners or shareholders
Speaker:as you might meet in a normal private company. Instead, they have what
Speaker:are called guarantors who agree to contribute a nominal
Speaker:amount, typically a pound, in the event of the company no longer
Speaker:trading or being wound up. Now this structure provides a level of financial
Speaker:security while also aligning the mission of
Speaker:the organization with its legal structure. Now while we
Speaker:continue talking about that, let me mention a few other types of
Speaker:social enterprise. Now there is the IPS, to give it
Speaker:its abbreviation, an Industrial and Providence Society. These are often
Speaker:referred to as cooperative or community benefit societies and
Speaker:they are a legal structure specifically designed for social
Speaker:enterprises. Now, IPSs, or industrial and Providence Societies
Speaker:prioritize the well being of their members and the wider community,
Speaker:emphasizing the democratic control and and shared benefits. This
Speaker:enables social enterprises to access various tax benefits and
Speaker:also funding opportunities available exclusively to
Speaker:cooperative entities. The last model I'm going to mention, and this is by no
Speaker:means an exhaustive list, is called a CIO or a charitable
Speaker:incorporated organization. Now, a CIO is a legal
Speaker:structure that is particularly suitable for social enterprises that have
Speaker:their main objective being for charitable purposes. And there is
Speaker:a legal definition of what a charitable purpose is. Now,
Speaker:CIOs provide limited liability protection to the members while
Speaker:allowing them to enjoy the tax benefits associated with charitable
Speaker:status. So for example, if you are a registered charity,
Speaker:if you receive donations, it's possible to claim what's called gift
Speaker:aid, where if somebody gives for example £100, you as
Speaker:the charity can claim back an extra £25
Speaker:for from the tax office that's available to charities. It's not
Speaker:available to the other entities that I've referred to. This structure
Speaker:of a CIO is particularly beneficial for social enterprises
Speaker:heavily focused on delivering public benefits and engaging in charitable
Speaker:activities. Now before we conclude and summarize here folks, let
Speaker:me also mention a company that's limited by shares. I mentioned it
Speaker:earlier in the podcast. Now, a company limited by
Speaker:shares is a common legal structure for social enterprises in the
Speaker:United Kingdom. Now the concept of limited means means that if there are
Speaker:problems with the business, with the organization, the individual
Speaker:owners of that business, their exposure is limited to the
Speaker:value of the shares that they've acquired. Now, shareholders may or may not
Speaker:be involved in the mission of the social enterprise. So this structure
Speaker:allows social enterprises to raise capital from
Speaker:investors while also maintaining a focus on their social and
Speaker:environmental goals. So if you do decide, for example, to
Speaker:structure and set up a CIC limited by shares,
Speaker:you can have a private investment coming in which would inject
Speaker:some needed resources into your organization. So what can we
Speaker:conclude and summarize? Well, understanding the different business models and
Speaker:legal structures employed by social enterprises in the United Kingdom
Speaker:is crucial for anyone who's interested in supporting
Speaker:or starting such ventures. Whether it's through a cic, a cooperative,
Speaker:or a cio, social enterprises are growing and
Speaker:shaping a future where business and social impact go hand
Speaker:in hand. And as my concluding comment here when you do
Speaker:this, remember the idea of what's called substance over form.
Speaker:Think about what your future landscape looks like and
Speaker:design the structure around that. Don't say, let's set up a CIC
Speaker:and then see if we can make it work. Check out the show notes for
Speaker:a link. If you need any support and help, or any of these, then you
Speaker:know where we are. For now. Plan it, do it. Profit.
